In a widely signaled move, the UK Government has announced a significant change to the permitting regime for battery storage projects in England and Wales (Scotland has a separate regime). In theory, the change should encourage the scaling up of storage projects and also unlock the potential for storage co-located with renewable generation.
The planning system in the UK typically devolves much of the review and approval process for new developments to the relevant local authority. The local authority will consider an application for development and decide whether to approve or reject that application consistent with the development policies of the relevant authority. There is a well established appeals process through which a developer can challenge any such decision.
However, a separate centralised regime has historically applied to what are termed Nationally Significant Infrastructure Projects (NSIPSs). In the context of electricity storage projects, this required specific consents under both the 1989 Electricity Act and the 2008 Planning Act for any project that had a capacity of 50MW or greater. This consent process was generally regarded as burdensome and added significantly to development costs. As a result, almost all developers made the decision to limit the capacity of their storage projects. A feature of the UK market is that many projects either in operation or under development have a capacity of 49.9MW.
Industry players have long argued that placing electricity storage in the NSIP regime has limited the growth of the sector. Developers argue that they are not incentivized to scale up and transaction costs are a challenge when projects are relatively small. In addition, they argue that storage projects are not as environmentally intrusive as large scale generation (whether conventional or renewable) and should therefore be treated differently.
Following a consultation, the Government has announced that electricity storage in England and Wales will no longer fall within the NSIP regime irrespective of capacity. Instead, any decisions on developments will be devolved to local authorities. Note that pumped hydro storage will remain within the NSIP regime.
While the move has been welcomed by most developers, some observers are concerned that ‘localising’ the approval process may actually be a hindrance to development, as local authorities inevitably face more pressure from residents than from the central government. As a result, there is a risk developers will have less input into the review and approval process than might otherwise be the case.
The Government’s decision is consistent with its objective for the UK to be ‘net zero’ in greenhouse gas emissions by 2050. It will be interesting to see whether developers scale up projects and, in particular, look to co-locate storage with large scale renewable generation.
The London office of Baker Botts has advised on the acquisition, development and financing of several battery storage projects in the UK.
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