Overcoming planning problems for energy projects

“The hardening attitudes of landowners towards utility companies has the potential to be a major stumbling block to achieving net zero.”

The government’s ambitious commitment to achieve net zero carbon by 2050 will inevitably require a major transformation of infrastructure if targets are to be met. Supply chains will need to be radically sized-up and established infrastructure upgraded.

This will only be achieved with the backing of landowners. Access to, and acquisition of, land is an inevitable consequence of the government’s race to reach net zero. And this is where utility companies are hitting a major stumbling block – experiencing a serious hardening of attitudes by landowners.

Negotiations regarding land are increasingly lengthy, time-­consuming, costly and potentially confrontational. Inflated compensation payments are draining budgets for developments with wild financial expectations at higher ends of pay scales, and developers often forced into paying significant premiums for projects to be delivered on time.

I also believe that current statutory powers are failing to help the situation. The current Schedule 4 of the Electricity Act 1989 is frankly not fit for purpose, resulting in the pushing through of developments being even more problematic.

Why is this happening? Privatisation and lack of trust are two major factors which jump out.

Attitudes towards utility companies changed since privatisation. Previously, the sector was perceived as a public service doing “public good”. Post-privatisation, a step change occurred and we witnessed co-operation disappear. This also happened with the rail industry.

A lack of public trust, perceived high prices and lack of transparency has also contributed towards a poor perception of the industry. This inevitably has a knock-on effect regarding landowners’ willingness to negotiate – suspicious of change and unlikely to want to be involved.

So how can utilities rebalance the relationship with landowners? Acting both as property consultancy and property broker, Bruton Knowles knows the value of a trusted working relationship between utilities and landowners. An important first step is to conduct face-to-face meetings to explain what’s happening and when, highlighting the indirect benefits of the scheme, along with discussions surrounding impacts to land.

Often, landowners see large infrastructure projects as being of no benefit to themselves because they have no need of network reinforcement. Benefits such as greener energy, environmental impact or a stronger economy, for example, are important points to demonstrate. Time is imperative. Generally, the earlier negotiations commence with landowners and their agents, the fairer the outcome for both parties.

Major stumbling block

A major stumbling block for all involved is the Electricity Act 1989. The act provided for the privatisation of the electricity supply industry yet is based on out-of-date principles dating back to late 19th century. Powers are old and designed for the wdifferent needs.

As a result, we’re often unable to implement powers in the time required and costs are prohibitive. If network operators are required to use statutory powers to avoid paying excessive premiums, time scales are extended significantly. Under the current act, consent by the secretary of state is required in all cases where a voluntary agreement cannot be reached. This can push projects time scales back by at least a year. Furthermore, costs to invoke such powers are high, taking into account legal costs and staff time to prepare proofs of evidence. Consequently, network operators will often take a commercial view and pay significant premiums to avoid the even greater implicated costs of using powers.

A much faster process is urgently required. The new code powers available to telecoms operators to develop 5G networks are an example of how new legislation can enable progress of this type. I see similarities between efficient telecoms networks and efficient electricity networks in this regard. Powers available to electricity network operators need the same attention to deliver major changes and upgrades to meet net zero.

Net zero is a reality, but at its core is the relationship between landowners and utility companies. This needs to be improved dramatically. But the government must also play its part by bringing in effective powers to deliver change. We have to turn to the government to move on this if we are to meet net zero. Without the right foundations, targets won’t be met.