Earlier this year the UK Government announced that onshore wind would be eligible to compete in the fourth Contracts for Difference (CfD) allocation round in 2021, a welcome outcome which will help ensure onshore developments will play a prominent role in the ‘green recovery.’
The CfD announcement is a positive step forward and should only be viewed as the beginning of enhanced Government support for UK renewables which has an opportunity to become an economic powerhouse. According to Thrive Renewables, a key renewable energy investor, with increased governmental support 45,000 new jobs could be created in renewables, with the potential to inject £28.9bn into the UK economy by 2035.
With this promising future in mind, coupled with the fact that onshore wind margins have become increasingly squeezed through declining levels of Government support in recent years, many renewables developers and investors will now be considering the viability of repowering on existing sites.
Repowering involves either extending the life of the existing turbines on operational wind farm sites or, more commonly, removing existing turbines and replacing them with entirely new machinery. In weighing up whether either of these options is viable, developers must consider a number of important factors including costs, planning, land, public perception, environmental impact and technical requirements.
While capital expenditure is vastly reduced for life extensions, detailed analysis will need to be undertaken on the operation and maintenance (O&M) costs required to keep existing turbines operating over their expected lifespan. Safety is another concern for aging turbines with enhanced condition monitoring becoming an increasingly essential requirement.
Repowering projects involving new, technologically improved turbines on existing sites will incur increased capital expenditure and decommissioning costs but this can be offset by significantly increased capacity and energy yield. Using new turbines with higher tip heights can, however, impact the visual amenity of a project and potentially create opposition from local communities or other anti-wind farm groups.
In extending the life of an existing wind farm, the cost of updated planning permission alongside further O&M expenses need to be considered against potential returns of a five to 10 year extension.
If repowering with new turbines, new planning consent will be required. While there is strong support for repowering within current Scottish Government policy, it cannot be presumed it will be granted for what is effectively a new renewables development.
The common approach for developers is to request a completely new set of land documents when repowering, building on what is hopefully a positive relationship between all involved parties.
Landowners may see repowering as an opportunity to renegotiate the commercial terms, although many are well aware the decline in Government support has impacted the financial returns of onshore wind farms.
For developers, detailed examination of the original lease, negotiated in an era with much less scrutiny, is essential as it may not meet current investor or market requirements and could require significant amendments.
Where a repowered scheme is looking to utilise modern turbines including those with higher tip heights or larger rotor diameters, off-site land rights will also need to be considered as entirely new access routes may be required. The higher yield that comes from larger turbines may also necessitate changes to the site layout and entirely new leased areas may be required.
Among the advantages of repowered schemes is the opportunity to co-locate other renewables technologies, including solar PV and battery storage. Factoring this in from the onset as part of a repowering site plan presents developers, investors and operators with the opportunity to maximise their investment.
As many first-generational onshore wind farms in Scotland near the end of their operational life, it is clear that repowering has a vital role to play because if those existing projects are allowed to be decommissioned, Scotland would lose half its existing installed capacity by 2040.
But this requires support through government policy. To meet its ambitious ‘net zero’ emissions targets by 2045, the Scottish Government has a proactive role to play by ensuring that the presumption in favour of ‘sustainable development’ will not be removed from Scottish Planning Policy.
National Planning Framework 4 therefore presents an opportunity which must be taken by the Scottish Government to underpin its commitment to delivering those targets by providing a planning framework which supports repowering and life extensions. Planning policy should also be updated to reflect the considerable advances in wind turbine technology making it easier for targets to be met.
While this approach will help support the renewables sector: developers, investors and operators can also do their part by effectively managing the key considerations around the repowering of existing sites. This will ensure they are able to maximise their investments and contribute to an effective green recovery which benefits the wider economy during these highly challenging times.
Steven McAllister, Associate and renewable energy sector specialist at law firm Davidson Chalmers Stewart LLP