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Riding the Renewables Rollercoaster – a Retrospective

If renewable energy had a “coalface” (dare we use the term) then that’s where you’d find Murrell Associates. From the pioneering “gold rush” days, to when the industry took a good kicking from government policy and nearly disappeared, to the latest renewables resurgence, we’ve been right there working alongside renewable energy developers.

In this retrospective, renewable team members Jenny Harbord and Caroline Daly look back on over a decade of success in the renewables sector from the early days in 2010 to the present day.

The pioneer days 2010 – 2011

The creation of the Feed-In-Tariff (FiT) in April 2010 led to an explosion of renewable energy  development in the UK, with Cornwall at the epicentre. The FiT was designed to increase the uptake of small-scale sub-5MW low carbon energy generation technologies. It was certainly a success, proving more popular with developers than the then existing Renewables Obligation (RO) scheme. Solar photovoltaic and wind turbine developers rushed to Cornwall for the longer daylight hours and the Atlantic winds. And as to Cornwall’s other famous weather feature, rain, it is not bad for solar panels and actually keeps them clean. On the planning side, Cornwall Council was welcoming and sympathetic to renewables.  There was also plenty of grid connection capacity down here at the start.

You could say we were in the right place at the right time and uniquely placed to take advantage. At that time we were a team of only four solicitors: but out of those four one had previous corporate experience with renewables, a particular longstanding client being an experienced wind turbine developer; and one had already been working on some renewable property precedents when acting for landowners. We were therefore well placed to hit the ground running when developers started approaching us”.

Jenny Harbord

One enterprising German renewable energy company founded in 2009 came to us in April 2010. These days they are an international powerhouse working in more than nine countries, but back then they were small, determined, and in our experience one of the first off the mark in the UK. Our first instruction from them was to acquire the land options for a large ground mounted solar farm in Cornwall, which became one of the first ever solar farms to be built in the whole UK.

These furiously focused entrepreneurs were determined to keep their first mover advantage. We worked flat out with them, we had instructions on twelve sites by the end of 2010 and it just kept coming after that. Their first four sites were in Cornwall but even in 2010 they were already exploring sites elsewhere in the country, eg Isle of Wight and Kent. We have worked on over 100 projects with this client over the years; and they are still a major client of ours. In their own words: “It was really an adventure and still feels like it”.

We remember when it was all new and we spent a lot of time explaining to landowners’ solicitors (often agricultural specialists) why certain Option and Lease terms needed to be drafted as they were. From those early days we’ve counted that at least eleven new clients joined us in 2010 alone, wanting to instruct Murrell Associates on their renewable energy projects. Word of mouth spread and even more renewables clients were clamouring at our door. Heady days.

Client business models were all different, some wanted roof top leases on domestic and commercial premises for their photovoltaic panels projects, some wanted land options in order to site wind turbines and ground mounted solar panels. Some wanted options to build car ports and agricultural buildings for landowners to keep – as long as the developer could take a lease of the solar panels placed on them. Some wanted leases allowing them to build electricity generating water turbines and bywashes, What they did all have in common was that they kept us very busy in the early years, it was a manic time.

It was also in this period that the UK government began a series of cuts to the subsidies supporting the renewables market. In July 2011, it was announced that the RO scheme would close to all new generating capacity on 31 March 2017, and in 2012 there were a series of cuts to the amount payable to generators under the FiT. These cuts were however offset by the falling costs of materials for solar panel modules, which led to larger solar projects as developers sought to scale up to maximise profitability. The cuts also saw developers of large-scale solar developments switch mainly to the RO subsidy scheme, as the FiT regime became less viable for them.

The boom years 2012 – 2015

The renewables market in the UK went from strength to strength in this period with the UK becoming one of Europe’s most rapidly expanding solar markets. The capacity of large-scale solar projects that we were dealing with began increasing in this period above the 5MW capacity favoured under the FiT regime. Memorable larger scale projects on which firm acted in this period included solar development sites in in Cornwall and Hampshire with capacities of 41MW and 50MW respectively.

In 2012, our first German developer client, then kindly recommended the firm to another German renewable energy developer. This developer was at that time already one of the leading worldwide companies focusing on photovoltaic factory engineering and project management. They became the second largest solar developer operating in the UK from 2012 to 2017. This recommendation began our long period of collaboration on large scale solar projects with this client. In addition to finding its own viable sites, securing them under option and obtaining planning permission, this client increasingly acquired the Options over sites that already had planning consent from other developers. Sometimes this involved joint ventures with other developers, who also became our clients.

A Cornish based roof top solar developer, as well as its over one hundred instructions to the firm relating to roof-top leases on domestic and commercial leases, in 2013 began to move into wind turbine development. We acted for them on over forty wind turbine Option sites, some of which involved corporate joint venture arrangements with the landowners. By 2015 they were looking into larger ground mounted solar projects and we even created a precedent biomass lease for them! Like all renewable energy developers, they were bold and diverse in exploring all the opportunities of the boom years. Their success story continues to this day and they remain a passionate and committed advocate of the importance of renewable energy to the world.

To give a flavour of working for the renewable industry at that time, in 2013 alone we advised our renewable energy clients on securing over forty potential sites for multi-million-pound renewable energy (both solar and wind) developments; securing bank funding of c.€36.4m; and acquiring or selling their interests in seventeen large scale multi-million-pound renewable energy (both solar and wind) projects.

 “By 2017 we were the chosen external legal counsel of two out of the top five solar developers then operating in the UK; and we continued to build on our successful track record and profile within the industry.

Caroline Daly

A changing market: 2016 – 2019

We had several active wind turbine developer clients during the boom years. They were pleasant, busy clients, great to work for. However, the UK’s burgeoning wind turbine industry was unpopular with the government, planning restrictions that were brought in in 2015 meant that one objector (and there’s always one…) to a planning application could effectively block any new turbine from being built onshore.

According to Friends of the Earth, this “de facto ban” on new onshore wind projects resulted in only 16 new turbines being granted planning permission between 2016 and 2020 across England, representing a 96% reduction compared to the 435 turbines permitted for construction on 108 different sites between 2011 and 2015.

Certainly in our experience by 2016 ALL our many onshore wind turbine developer clients packed up and either sold their entire portfolios or left for pastures new, sometimes Scotland – where sadly there is a different legal system so we couldn’t continue to help them”.

Jenny Harbord

The solar industry was also in the government’s sights. From 1 April 2016, the government closed the RO scheme to new solar PV capacity at 5MW and below; and removed the “grandfathering” policy (which guaranteed the same level of RO subsidy for the duration of the project) for any projects that were not accredited by 22nd July 2015.

The government did implement a grace period for developers who had obtained preliminary accreditation for the RO scheme by 22nd July 2015, or who had made significant financial commitments to projects before this date, or who had experienced grid connection delays beyond their control. This “grace period” extended until 31st March 2017, giving RO scheme projects that were then in the pipeline time to complete. These “grace period” developments were also exempt from the removal of grandfathering. The grace period resulted in a race to build out eligible projects before the 31st March 2017 deadline.

 “It felt like racing towards a cliff-edge, everyone knew what was coming but, slightly surreally, we were busier than ever, chasing to meet the subsidy deadlines for our clients”.

Caroline Daly

Without the RO scheme what was available to solar developers? The Contracts for Difference (CfD) scheme had first been introduced in 2014 as a more open market supported alternative to the earlier renewable subsidy schemes. However, it proved difficult for large scale solar to succeed in the first allocation round. In 2015 the government confirmed that large scale solar (and any onshore wind projects who might still be limping on despite the planning landscape) would be excluded from future allocation rounds, in favour of supporting less established low-carbon technologies.

This period saw many solar developers look outside of the Uk to find new sites, with very few planning consents for the development of new projects being obtained in the UK. However the market of buying and selling existing operational sites continued to thrive in this period. We were fortunate in that our two major German developer clients stayed active in England until about April 2018.

 “One memorable deal between January 2017 and April 2018 involved a client buying and then selling the shares of three separate SPVs, which each held Options over three separate consented solar sites in Dorset. Unusually, although each SPV held a separate project that had to be capable of “standing alone”, all three projects shared sections of vital export cabling and access routes, so the land rights needed were very complex.

The client successfully built out the three projects and then promptly sold the shares; and we again acted for them on the property due diligence side (this time selling). Our property due diligence on the purchase was thus immediately tested – and not found wanting! I found that deal one of the most personally challenging and satisfying that I have worked on.”

Jenny Harbord

However even we found that during the latter part of 2018 and throughout 2019 there was hardly any renewable energy work for us to do, so we had to focus on other types of work whilst we watched and waited. To mix a few metaphors, the renewables rollercoaster ride had hit the bottom and the spark of renewable energy seemed almost extinguished!

The future and new challenges: 2020 – today

Pleasingly, 2020 saw our renewable energy clients becoming more active again.

One memorable project during 2020 – 21 was for a client who took overriding leases of two existing wind turbine project leases (covering seven turbines) in County Durham; securing the rental income from such turbines for themselves; whilst entering into options with their new landlord to build seven new wind turbine leases. The amount of turbines involved (both existing and new) made this a satisfyingly complex deal.

In June 2020 we welcomed our first German developer client back into the UK market and we continue to work with them on very large (eg one covered 260 acres) ground mounted solar projects involving significant site assembly requirements. Our second German developer client also returned to us, this time working as part of a new joint venture with a UK company securing the land options for a battery energy storage site and a large ground mounted solar project.

In November 2020 a new UK client joined us, kindly recommended by an existing contact. The business model for their large scale solar projects includes the delivery of renewable energy to an end user with high energy requirements, via a private wire connection. We are also currently working with them on an Option for building out a phased solar development. Their work is complex and interesting, with site assembly requirements that involve multiple landowners.

In a hark back to the original pioneering spirit of the industry, some of our new clients during this period have been very entrepreneurial. Special mention goes to the client who instructed us in 2020 on a renewable energy development combining two new wind turbines and a new solar panel to generate electricity, which would then be used to produce bottled hydrogen via an onsite electrolyser. Another such example was our client who in 2021 obtained outline planning permission for the first ever geothermal rum distillery and geothermal cask maturation facility, directly connected to the UK’s first deep geothermal power plant.

During this period we have continued to act as company secretary for a number of portfolios of project SPVs, other new clients have instructed us on various share sales of project SPVs holding solar, wind and battery energy storage sites, we have carried out property due diligence on a new battery energy storage site for a specialist clean energy financial services firm, and in a remarkable circularity, we were instructed by the owner of the SPV holding the first ever solar project on which we were instructed back in 2010, to finally sell its shares – which they had held onto all that time.  

Signs of a changing political attitude towards large scale solar and onshore wind have also emerged, with these types of projects again becoming eligible to compete in the CfD allocation rounds taking place in 2021.  The government has also indicated that it is preparing to relax the planning regime somewhat for onshore wind turbine planning applications, although the impact of this change is yet to be seen.

However, the rollercoaster ride continues and the greatest challenge for renewable energy projects at the moment is undoubtedly grid capacity. First, the UK’s aging national grid infrastructure needs to be upgraded to handle new generation capacity. Secondly, there has been a “first come, first served” grid capacity allocation system, that lets projects with no prospect of proceeding sit in the connections queue ahead of more viable projects. These two factors have meant that many projects have been offered grid connection dates that are up to fifteen years in the future, which is stalling development.

National Grid is working to reform the grid connection process, having this year completed an amnesty exercise which allowed non-viable projects to voluntarily leave the connections queue without financial penalty. National Grid is also working to reform the “first come, first served” system into a more dynamic system. Ofgem has very recently approved new rules which will require projects to meet development milestones to stay in the connections queue.

The new queue management milestones will be implemented from 27 November 2023 and will be introduced to both existing and future grid connection agreements. This will terminate stalled projects that are blocking the queue for high-voltage transmission lines and means ready-to-go generation and storage can be fast-tracked.

In 2012 the share of the UK’s electricity generated by renewables (not nuclear) was 11.3%. By 2022 that percentage had risen to 41.5%.

As of November 2023 energy projects which could generate almost 400GW of electricity – well in excess of what is needed to power the entire British energy system – are queued up for connection to the grid.

Despite all the ups and downs on the way we are proud to be part of this success story. We look forward to working alongside our renewables clients during the next eventful decade!

Murrell Associates LLP is a law firm delivering advisory and transactional support to corporates, investors and organisations. 

For more information on our service lines and sector specialisms please visit www.murrellassociates.co.uk

Key contacts

Caroline Daly

Associate

Caroline Daly

Associate

Caroline has been with us since 2009 and is a safe pair of hands on all commercial property matters involving industrial units, retail premises and development sites.

More About Caroline

Jenny Harbord

Partner

Jenny Harbord

Partner

Described as “the go-to counsel” for domestic and international energy clients by the Legal 500, Jenny is a highly skilled commercial property lawyer with a specialism in renewable energy.

More About Jenny