Mark Newton FRICS. Fisher German LLP.

Transcription

1 ENERGY NOW EXPO 9 th February 2017 A Practical Guide for Farmers and Landowners on the opportunities, the risks and rewards for Battery Storage and STOR Energy Mark Newton FRICS Fisher German LLP

2 The Technologies The New Market Old power stations are being closed down, and we are now having a Smart Grid, picking up peak power requirements. Battery Storage Electricity is bought in from the grid when it is cheap, or stored from a renewable project, and sold back into the grid at times of peak prices. STOR (Short Term Operating Reserve) sites These were originally diesel gen-sets, now mains gas, which produce and then sell electricity at peak prices.

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4 The First Approach The first time that most farmers think of battery storage or STOR energy is when they are approached by a developer. They are asked to sign a letter so the developer can apply to the local electricity company for a grid connection.

5 The First Approach (cont d) Once that grid connection is in the developer s name then you cannot deal with anyone else, normally most developers only deal with battery storage or STOR energy. Big, BIG MISTAKE!!

6 Why is it such a BIG MISTAKE? If you deal with the first developer there may be the following problems: They do not have experience in developing battery sites, or STOR energy. They financially do not have the funds behind them. You cannot get the maximum rental as you can only deal with one company, and one technology.

7 Why is it such a BIG MISTAKE? (cont d) You are missing out on other opportunities for battery storage or STOR Energy sites. A lot of developers are just looking to tie farmers up with an option, on poor terms and then sell it.

8 Costs for battery storage Costs are 500,000-1million per MW/hr to develop a battery 50-5MW store. A 10MW battery store will cost about 7-10 million depending on grid costs, with returns of 8-12%. So most farmers are only looking to rent sites and not develop it themselves.

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10 Be Proactive Do not wait for a developer to approach you. Get your farm plan looked at by an independent specialist Chartered Surveyor or grid consultant. They will then look at all opportunities for battery storage or STOR Energy. The project can then be put out for tender to get the best terms and maximum rental.

11 Site Requirements for a battery store Located near a 11kv, 33kv or 132kv line or near a substation, and with suitable access. Ideally located near farm buildings and not in the middle of a field. The land should not be designated eg National Park, SSSI etc 30-50m away from residential dwellings due to noise of fans for invertors. Site area of compound acres. Compound will be bunded with soil and inside there will be 40ft shipping containers containing lithium-ion batteries.

12 How do they work Battery or STOR energy sites are typically MWs. They need import and export capacity from the grid for battery storage and export only capacity for STOR energy. Battery stores purchase electricity when it is cheap in the middle of the day, or night, and sell at peak times e.g. after 5.30pm, when they receive the highest price. STOR energy sites produce and export electricity at peak demand periods.

13 Grid Issues On average only 1:30 sites has suitable grid capacity. Available grid capacity is the biggest issue for any energy development. Must use experienced and independent grid consultants, who look at both electricity and gas opportunities.

14 Legal and Commercial issues Critically important to get independent specialist chartered surveyor to draw up detailed Heads of Terms, then solicitors instructed. Developer will want an option agreement signed while he tries to get planning permission. Once he has got planning permission he will want a lease signing. Rents will be dependent on cost of developing the site, particularly grid costs. They should be based per MW and not based on site area.

15 STOR (Short Term Operating Reserve) Sites 50% of all grid electricity connections may be suitable for STOR Energy sites, because there is gas nearby. 25% of sites may be suitable for both battery storage and STOR energy. Originally diesel, now all gas gen-sets

16 STOR site requirements Need medium pressure gas main connection. Need to be m away from residential dwellings, due to noise of engines, but depends on background noise. Compound areas and rentals similar to battery storage.

17 Summary Be PROACTIVE, do not wait to be approached by a battery or STOR Energy developer. Get your farm plans looked at by an independent specialist chartered surveyor and grid consultant. Maximise both your battery storage and STOR energy opportunities.

18 Mark Newton FRICS Partner, Fisher German LLP website: