This series of blogs is looking at accelerated options for solar PV and ways in which solar panels can be fitted now without government subsidy while still delivering a strong business case for the local authority.
The first blog looked at use on site, which should always be the best option if it is available. But what if use on site cannot be possible, which is usually the case with solar farms in rural locations. Here the solar panels might have been fitted in a field with nothing around the site. In circumstances like this, the art is to get the electricity generated to a user based somewhere else.
Future blogs will look at use of the grid system to do this, but a better way – if it is available – is to use a private wire. For this, the council needs to identify a user, within a reasonable distance that will be interested in buying power. There are numerous practical hurdles to be surmounted, but these only come into play anyway if a potential user can be identified.
There are several good examples of this situation. One authority in Northern England has a former spoil tip site, which is suitable for a solar farm. Next door to this site is a large glass factory with a 24 hour furnace. This will be a huge user of electricity on an annual basis. Another Scottish authority has land which is adjoined by a cement factory, again a huge user of power.
On a practical level, the sites are adjacent, with the factory near to its own boundary. This means that the private wire will be short – and therefore less expensive – and untroubled by ransom strips or interfering ownerships.
Having identified a potential user, the deal on offer and how it is presented will be key. It may well be that the user will take some persuading that the Council is 1) serious and 2) able to deliver on this promise.
Having met those tests, the deal should share the benefits of the connection, by offering the user a payment mechanism that is unhinged from normal energy price inflation, whilst continuing to increase the amount paid to the Council as prices rise. This will be highly attractive to any business.
There are a number of reasons why such an arrangement is also beneficial to the authority. Firstly, private wire arrangements are not regulated, and so a deal can simply be negotiated. Secondly, there is no use of the grid and so no ‘use of network’ charges are applicable. Thirdly, such a deal can underpin the business case for the lifetime of the solar park and finally, deals can agreed and contracts signed up before the park is even built. This means that the Council will have no risk whatsoever in the construction of the asset.
It is for this reason that any authority that has land that can be used as a solar farm, and where there is a user within a reasonable distance that could be connected by private wire, should proceed now, without any regard for the removal of ROCs or FITs. Business cases in such circumstances will offer returns of at least 8% on current solar prices.
This form of solution is referred to as a ‘behind the meter’ arrangement. The next blog will look at ‘in front of the meter’ solutions, such as sleeving, where the network is used to transport the power to the user.
