The power to charge more: the proliferation of battery storage facilities on agricultural land
Hailed as the Holy Grail for the energy sector, battery storage solutions could help make the supply of energy, and in particular renewable energy, become a more efficient and less polluting method for powering the UK.
What are battery storage facilities?
A battery storage facility is usually either an industrial building or container, housing batteries capable of conserving power that can be used to supply power to the National Grid (NG) at times of peak demand.
In the context of renewables, this invention is an incredibly resourceful way to harness an energy source that cannot be turned on and off at will. During windy and sunny spells an abundance of energy may be harnessed but any excess goes to waste. Battery storage facilities are therefore employed to accumulate the excess energy that is generated during these periods and then supply this energy to the National Grid when demand for energy necessitates.
Whilst this technology has been extant for a number of years it has only in recent times been developed and utilised on a scale that makes it commercially viable as it was previously hindered by high upfront costs and technical setbacks.
Who is looking to create these facilities?
The result of NG's first Enhanced Frequency Response (EFR) tender has brought forward investment in 8 battery storage facilities in the UK. The year-long, highly competitive auction process secured 201 MW of capacity which will provide NG with greater control over frequency deviations, resulting in potential cost savings of £200 million. In a technology neutral auction, storage technologies were the clear winner securing all 201 MW of capacity:
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The key considerations for landowners
If, as a landowner, you are approached by a developer who wishes to use your land for a battery storage site there are a number of issues to consider before entering into an agreement:
- There will be both legal and land agent fees involved in not only entering into an option for the lease of your land, but potentially for other documents that may require representation such as planning agreements, easements and wayleave agreements.
- Whether the rent being offered is on a square footage or capacity basis. It should be the latter as the profitability of these battery facilities are measured on the price at which the stored energy is sold. Annual rents tend to be between £2,000 - £4,000 per MW of storage capacity.
- The security being offered by the developer to cover the cost of reinstatement at the end of the term is set aside in a protected account or an insurance-backed bond offered from the outset.
- Some developers offer the option to house the batteries in a new barn which the developer constructs at their expense and which you can keep for your own use at the end of the term of the lease once the batteries have been removed, as oppose to keeping them in containers which are removed at the end of the term.
- If you are asked to sign an exclusivity agreement with the developer, which stops you from entering into talks with other developers for a specified period, you should consider asking for extra payment for this exclusivity.
- Although entering into an option for lease may be indicative to the contrary, it is important to bear in mind that there is no guarantee that the project will go ahead.
With starting rents of up to £50,000 per annum it is clear to see why landowners are considering offering their land to developers as an alternative to the conventional uses of agricultural land. Putting out to tender only 200 MW of EFR capacity, NG's auction has left almost 1.2 GW of construction ready storage technology disappointed. However, the results indicate a keenness throughout the market for future growth of battery storage in the UK market.