Farmers and landowners who are interested in energy generation or storage projects should act quickly to avoid potentially steep fees. From 6 April network operators in England, Wales and Scotland will be able to charge up-front fees for grid connection offers, which could run into thousands of pounds.
Hugh Taylor, chief executive of independent power consultant Roadnight Taylor, recently surveyed a range of network operators to ascertain their plans. “Every one of the five operators surveyed said they intend to introduce fees, at varying levels up to £7,880+VAT,” he explains. “This does differ according to the market segment, with higher voltage works likely to encounter the greatest fees and lower voltage schemes facing no or modest charges.”
Network operators have always been able to charge assessment and design fees to cover their work in modelling the electricity network, designing the connection and undertaking surveys, site visits, drawing plans, etc. However, until now those fees have been charged upon acceptance of the connection offer. To avoid the risk of bad debt, Ofgem is also proposing to allow operators to withhold any connection offer until the fee had been paid.
“One issue is that network operators have been inundated with highly speculative applications from developers, often to connect to inappropriate parts of the network,” says Mr Taylor. “In one case, an operator received 250 applications from a single applicant in a two-week period – the cost of which ran to some £250,000 for the operator – yet very few of the offers were taken up.
“Another disturbing cause is in unreputable ‘experts’ leading landowners to believe they have a suitable site and charging large sums to submit inappropriate applications which stand no chance of success,” he adds.
As operators are legally required to produce a connection offer for every application, they have faced huge amounts of work, while acceptance rates for offers have dropped as low as 6%. “It therefore makes sense that these fees are brought up front – the issue is that it affects genuine, well-considered applications as well as those who adopt a scattergun approach.”
Mr Taylor sits on the steering group of five of the nation’s six network operators, and says some are also planning to introduce fees for informal budget estimates. “Some are concerned that, while there will be fewer formal applications, there will be a proliferation of budget estimate requests, so there are plans to charge up to £620+VAT for these.”
To maximise their chances of success it’s vital that landowners take professional advice, he explains. “Energy generation projects must meet planning and site conditions, but it is the grid connection that is the lynchpin, so it’s vital to get that right.”
To counter the issue of high up-front fees, Roadnight Taylor has launched a ‘Stop-Go’ study, whereby landowners pay from £350+VAT for a professional evaluation of whether a site has true potential. “If we recommend proceeding with an application we do it on a no-win, no-fee basis,” explains Mr Taylor. “We will also pay up to 100% of the connection offer fees charged by network operators – any professional should be prepared to stand by their advice in this way.”