Water-Value

Following the Government’s recent proposal to change Feed-in Tariff levels for non solar photovoltaic (PV) installations on 1st October 2012, the stage is set for a rush to install renewable projects before this cut off date. Small and medium scale wind projects are likely to be most affected by this announcement as tariff rate cuts are most significant (8.7% and 25% dependant on size) compared to those for anaerobic digestion (AD), hydro and micro-CHP.

The announcement has created a 33 week ‘window of opportunity’ for developers wishing to take advantage of the FITs at current rates.

Joel Turner, gfw-Renewables, suggests a proactive but cautionary approach. He says: “Whilst the prospect of locking into existing FIT rates is indeed excellent and achievable in many cases, it is crucial that people are aware of the various pitfalls which can lead to lengthy project holdups.”

As news of these changes gradually filters through the renewables industry, it is likely that there will be a marked increase in the marketing and sales of renewables schemes and it is crucial that potential developers are armed with a realistic view of what a project might involve.

For projects that require planning permission, as is the case for wind, anaerobic digestion (AD) and hydro, this can be onerous and is best undertaken by professional, qualified planners with personal experience of dealing with both the technology and the Local Planning Authorities (LPA). Although the planning period is often quoted as eight weeks, this can be significantly extended if the LPA requires additional input during consultations or the application is recommended for hearing at Planning Committee. 

In order to connect a renewables project to the grid network, the Distribution Network Operator (DNO) must be consulted. The DNO has a maximum of 60 calendar days within which to respond to a new application and, subject to the complexity of the connection, may schedule the necessary works over several months following their response.

Technology lead times are also an important factor in project timescales, especially during periods of high uptake. As an example, medium scale wind turbine manufacturers routinely quote between three to nine months from payment of deposit to installation. In order to avoid unnecessary risk, it can be preferable to achieve a planning consent prior to payment of a deposit.

Realistic financial budgeting is essential and should be confirmed early in the project, especially when loan finance is required. Budgets should take into account up-to-date technology costs but also full installation costs, loan repayments, tax on profits (if appropriate) and annual maintenance and insurance. A robust initial budget will remove risk when seeking finance later in a project.

At gfw-Renewables we are acutely aware of the pitfalls of the ‘too good to be true’ selling pitch. We offer independent, expert advice and project management of renewable energy schemes and can assist in selecting the most suitable, rewarding renewable investment.