Unlocking the future of solar energy in the UK

Helen Emmerson: Good morning. I'm Helen Emerson, a Partner in our Real Estate team focusing on the energy sector. And I'm joined by Ben Stansfield today, Partner in our Planning team. We're going to have a chat about the key points that each of us have taken from an initial review. Of the UK Solar Roadmap that the Government published at the end of June. And I don't know about you, Ben, but when I was reading through it, the thing that struck me was for years we've been grappling with the energy trilemma - energy security, affordability and environmental sustainability. And solar energy just seems too good to be true. On the face of it, it addresses all three of these, and it strikes me that. It's the obvious next step for the Government to have published the Roadmap on this.

Ben Stansfield: Yes agree with all that and what's really interesting about it is you still go on the GB grid carbon intensity app and it says, right now we've got 25.6% of our energy generation from solar power and 31% from wind. This isn't a nascent technology that needs an injection of policy incentives and what have you to get it going. It's a case of crumbs this is a real success story. How do we do even more of it? And how do we go from 18 gigawatts deployed now to 45 or if we really crossed our fingers and go for it, you know? Instead of 54 to 57, so it's let's double it and let's see if we can triple it. So, I think that's pretty ambitious.

Helen: I think that's right. I mean there's a huge focus isn't there, when you read through it on the untapped potential particularly of things such as commercial rooftops, the Roadmap talks in particular about warehousing, logistics. And I think one of the one of the stats in there is that the top 20% of warehouses alone could host 15 gig of rooftop solar. I mean that's massive, isn't it? And when you think about that opportunity, it's really quite compelling for landlords, tenants, investors to try and collaborate not only to address the rising energy costs, but also the enhancement of ESG that comes with that. The particular point that stood out to me as a transactional lawyer in the real estate space was that the Government comments around developing standardised documentation, particularly for retrofitting solar on leased buildings and I've certainly seen that that's something the industry has really grappled with over the last few years to ensure that the integrity of an investor position across a commercial portfolio is retained, while you have also got a practical cost effective solution that works for the operational side of the business landlord tenant relationship. I think the market is developing. It's certainly developing on the ground mount solar side and we're seeing huge numbers of projects go forwards. The market's developing in terms of that standard market position in documentation. Although that said, we've still got a number of things that are particularly challenging. BNG is a good example actually of something where the unknown financial impact of delivering that because that is still relatively early days, it is proving a challenge actually for the industry still I think.

Ben: And I think I think the Roadmap talks about a number of things, doesn't it? And said look, we can do this on planning. I can talk about some of those things. We can do this for commercial, this for resi, networks is an issue, supply chain. So it's got a whole range of levers they're going to push and ways to promote it, but it isn't addressing every single point and as you say, BNG is new and we're still trying to work out land owners dealing it for the first time. So, a bit like your standardised transaction documents. To me, BNG is one of those topics that is quite tricky and there's lots of different levels of understanding now, but fast forward a few more years and it will become much more certain in everyone's minds as to how to approach it. But talking of rooftops, there's also some stuff in there, isn't there about residential rooftops. So the Government's plan to say, look, we're going to build 1.5 million homes in the course of Parliament and the new, the future home standard coming out in autumn says that every new home has to have solar panels, which is a brilliant way of getting mass deployment really, quickly. But these things are still quite expensive. I know costs have decreased really dramatically, but for big solar race, you're still looking at, five, six, ten plus thousand pounds, which is a lot for individual homeowners to buy. So, I think there's talking about looking to look at finance. We're going to work with ric to see how we can get the valuation sorted, so that when you get your house remortgage or valued. You're taking account of all the savings and stuff like that. So, there's some fine tuning on those things too, which I think should really help, particularly on retrofit for older homes. But one thing that really jumped out at me is that argument you have all the time, particular ground mount which is about land use planning and is this the right thing we need to be doing agricultural fields being taken out of production and what have you. And I saw there's a stat I'm going to test you on golf courses in minute Helen. So, a stat saying if we deploy solar at this rate, we'll use 0.4% of our land use. Do you think golf courses are more or less than that?

Helen: This is a higher all level question, isn't it? I think higher for golf courses, Ben.

Ben: You're absolutely right, it's 0.5%. So, there's a real focus on we mustn't have solar, but people don't seem to worry too much about golf courses. And it's great to have outdoor activities and what have you been getting people out. But solar is, as you say, it's for energy security. Why wouldn't you want that as your neighbour? It's not going to make any noise. It's not impacting soils and biodiversity can go through the roof. Solar is a good thing to have next to you.

Helen: Yeah. I think that's right. And I spotted also that piece around the challenge to look at are we using the right land for solar and avoiding high quality agricultural and we could talk for quite some time that that's quite a controversial topic, isn't it? That's only one part of the piece, though, isn't it? When you're looking at deploying solar and developing out solar projects, grid connectivity has to be the key factor as well when you're assessing the location for development. Particularly if it's a large-scale project - and you'll probably come on Ben to talk about the planning angle on that - but just on that networks connectivity piece, we're aware aren't we, the Government's set up some really quite radical reforms to the connections process to make sure that as a country we are upgrading our infrastructure. It's I think widely acknowledged that there's a lot that needs to be improved in terms of that resilience across the country. And we've seen time and time again projects that haven't been able to progress, whether that's an energy project or indeed you know any other development. Particularly these days we see data centres, huge energy requirements. And the grid isn't there and we've got projects waiting to connect. So, undoubtedly that those in the sector listening to this will be aware of the fun and games that we're all having on gate two as we record this on the 4 July. We're you know, in the midst of getting transactions ready to submit to NESO for the end of the month and undoubtedly whilst that's you know, an attempt to try and smooth the path, unlock more grid capacity. I do think there's still an awful lot more work that needs to be done over and above this Roadmap to streamline that, process and introduce more consistency, particularly across the regional DNOs. And to help speed up that process, because I think it's the speed of delivery of projects which is going to be key to actually whether the aspirations in this Roadmap are really going to come to fruition.

Ben: Yeah, I agree. And when developers putting projects in third party hands is on as you talked about is getting planning and I'm sure everyone has got a million 49.9 MW solar farms that they've been that they've been working on because under 50 megawatts, you can go through town and country planning, which isn't always straightforward. But if you're over 50 megawatts, you're in nationally strategic infrastructure projects, which is great if you're building new airports and nuclear power stations. But if you're building a 60 megawatts solar park, it's sledgehammer to crack in that and it can be quite a long process, albeit quite certain that you're going to get a good result most of the time. So, one of the things the Government is doing is pushing that threshold up for solar. So, it's going to go from the end of this year it's going to go up to 100 megawatts. So, if you're under 100 megawatts, you can go through town and country planning and that's great because it means that you're removing the artificial bar. You know, you've got a really great site. You could do 70 megawatts, but I better do 49.9 because and we're just missing out on maximising sites. So, I think that's going to be positive and then the Planning Infrastructure Bill which is going through Parliament at the moment, there's talk about some end sets of strategic infrastructure project amendments there, whereby you might on a site by site basis persuade the Secretary of State to increase the threshold… sorry to take your project out of Inzip territory, so it might be that you know, if you had a brilliant site that you could do 105 megawatts, you could in future potentially even ask the Secretary of State; look, notwithstanding, we're over the threshold, could we come into the town and country planning regime? So, that's quite good. And then the Government is committing to reviewing these policies, the, national policy statements by which they assess big infrastructure that's going to be a more regular cycle too. So every five years, Government's going to be much more agile and looking at policy and energy's really struggled hasn't it with that. You know, these original policies were adopted some years ago and you know, battery storage wasn't even mentioned in national policy for quite some time, and that was quite a frustration. How do you deal with co-located sites?

Helen: Yeah, I think I think that's right. And those challenges aren't going our way anytime soon, are they? Another point that caught my eye when I was looking through the Roadmap was the mandatory community benefit funds that we'll start to see linking to your point on the planning side of things, so there's a consultation that was introduced that was launched a couple of months ago and that's going to progress and a big emphasis is going to come to the fore around that early transparent engagement with local communities. You mentioned earlier, Ben, didn't you? Who doesn't want to live next to a solar farm in that? It's very quiet. It's very unobtrusive. That early community engagement though it is something that you know developers are doing already, but that is going to become even more important. And certainly the industry funders, when you're looking at the cost of deploying large scale projects, you know that's going to be a very real consideration to bring into the mix. And I think you know for all of the aspirations in the Roadmap which we go back to that trilemma piece it feels a bit a no brainer, doesn't it? It's a huge opportunity but it is not without its challenges is it?

Ben: And actually one point, I was quite impressed and thought it was quite well written in the Roadmap was around the supply chain issues and often these Government policy documents get not quite salesy, but they're quite high isn't it's brilliant. And we can do this, and we can do that and the world's going to be really cool. And the bit about supply chain was quite a different style and it's acknowledging there is an issue with solar grade polysilicon and due diligence in your supply chain for modern slavery and forced labour is difficult. What the Roadmap does is first of all, it acknowledges the issue and says look we've got to think about this as Government and as a sector. It talks about the Procurement Act from 2023, which says public sector bodies now need to start thinking about this and can terminate contracts or refuse to accept certain tenders, and it describes how the Government was engaging, excuse me with the Solar Stewardship initiative. Which has got two standards on manufacturing sites, but also supply chain traceability standards. So it isn't a problem or an issue that's going to be solved in a policy document, but it's saying we're alive to it. We've got to start thinking about it and we've got to do more on it.

From an ESG perspective, I was pleased to see that this isn't just about ripping up green planning regulations or sorting out grid and telling land owners to you know to accept standard documents, it was how the UK fits into a global issue.

Helen: That said, though, Ben and I agree with all of that there was the odd eye-catching retail offer in there, wasn't there, I saw the potential for the introduction of balcony solar panels for flats and rental homes that you're just going to plug into a standard socket, that's got the potential to be, you know, a bit of a quick win for everyone, hasn't it, tempted to dip into the domestic solar generation space as well?

Ben: Yeah. No, it's great. So Helen, instead of the $64 million question, I'm going to ask you the 64 gigawatt question: is the Solar Roadmap going to move the dial? Is this going to make a difference to how much solar we deploy?

Helen: Yes, I think it is. I think if the actions are taken forwards, there is absolutely the will there to do it. I think it's a really investable proposition, absolutely it will. What do you think?

Ben: I agree. Yeah. No, I mean, there's loads of good stuff in there around planning, making it similar, making projects bigger. So yeah, I'm excited by it. I think it's an industry that's already doing really well and this puts it into top gear.

Helen: Great. Thanks Ben.

Ben: Perfect. Thanks, Helen.