Step-by-step guide on how to become a renewable energy producer

Anyone can become a renewable energy producer and/or supplier, subject to obtaining the necessary consents. In short you need to:

• Obtain consents (including planning and regulatory)
• Construct the project and;
• Deliver the energy

Step 1: Decide how involved you want to be

An important consideration will be the extent to which you wish to be actively involved in the development of the renewable energy project.

You can choose to:

• Obtain the consents and construct, own and operate the project yourself (and sell the electricity you generate) or
• Lease the relevant piece of land to a third party, and contract for them to obtain the consents and construct, own and operate the project (and they will then sell the electricity generated).

Obviously there are then a number of options between these two extremes. You could own the project through the consenting process and construction and then sell it to a third party; the project could even be developed by a joint venture between yourselves and a specialist renewable projects developer.

Even where you are undertaking tasks, you are likely to want to outsource particular aspects of the development.

At Wragge & Co our experts can assist in this decision process by identifying the benefits of each option and advising which course of action is most likely to achieve your particular objectives.

Step 2: Decide on the most appropriate technology

The decision as to which type of renewable energy plant you wish to build will be affected by a number of factors, including the:

• Aesthetics of the development
• Likely success of obtaining planning permission
• Local availability of fuel (wind, biomass, sun, water)
• Likely demand for energy at the development
• Cost to procure, operate and maintain the plant
• Income that is likely to be generated by the plant

You need to consider all the different renewable energy options and reach a conclusion on the one which is most viable and appropriate for your development. Wind turbines tend to be the most economically viable, but will not be suitable for every site.

With our broad understanding of your project requirements and our knowledge of the legal processes that have to be completed we are best placed to provide helpful assistance and guidance on which renewable energy option is going to be best for your development.

Step 3: Obtain planning permission

It is going to be increasingly more likely in the future that one of the conditions to the granting of planning permission will be for the applicant to commit to providing renewable energy as part of the development. Usually you also need to seek planning permission for the renewable energy project, although the Government is taking steps to remove this requirement for the installation of wind turbines and other microgenerators.

Despite the recent introduction of qualified permitted development rights for PV systems and other forms of microgeneration on domestic properties, there still remains a degree of uncertainty as to whether planning permission is required for certain equipment, such as photovoltaic systems. In addition planning authorities interpret the planning system in different ways and have different policy requirements. As applications are currently considered on a case-by-case basis it leads to uncertainty and extra cost.

A new technical guide to the Code for Sustainable Homes, issued by the Government, clarifies that the renewable energy component for zero carbon homes should be generated on site, rather than simply being sourced from a renewable energy provider.

In the case of large generating plants (over 50 megawatts) the normal planning process is replaced by an application to the Secretary of State for Business, Enterprise and Regulatory Reform. This is unlikely to be the case for the kind of on site renewable energy development discussed in this guide.

Wragge & Co's Planning team, led by Andrew Thomas, can advise you on whether or not planning permission is required for your proposed renewable energy source and has experience of ensuring that all legal aspects of the planning application have been effectively covered.

Step 4: Obtain other consents

In addition to obtaining the planning permission, you must also consider the need for:

• A connection to the national grid
• Emissions/environmental permits (only in the case of biomass projects)
• Water abstraction consents (hydro)
• An electricity generation licence (only for larger plants)
• Electricity distribution and supply licences (generally only where the development includes domestics)

Wragge & Co's Energy and Regulated Industries team, led by partner Derek Goodban, is experienced in all matters regulatory. The team has expertise in advising, negotiating, drafting and obtaining all the necessary consents and ensuring full compliance with all regulatory matters.

Step 5: Construct the renewable energy plant

Once planning permission is granted you need to procure the building of the renewable energy plant. Preliminary negotiations are likely to have taken place before planning is obtained, and you may even have entered into agreements that are conditional on planning.

You may choose to enter into an engineering procurement and construction contract (EPC contract), or to adopt a multi-contract strategy. In either case, the contractor is likely to deal on standard terms and conditions, but you will need to ensure that these are suitable for your purposes and requirements.

In the case of wind turbine developments, the wait time on turbine orders can be significant.

Wragge & Co's Construction team has expertise in drafting not only the contract documentation required to build the renewable energy resource but if required all construction documentation required for the development.

Step 6: Operating and maintaining the renewable energy plant

In order to ensure that the plant is operated safely, you will need to put in place adequate inspection and maintenance procedures. It is common to contract with the construction contractor for the provision of operation and maintenance services. Alternatively, you can put in place your own procedures for inspecting and maintaining the facility.

In either case you will need to consider how these arrangements interact with the warranties that will have been provided by the manufacturers and construction contractors.

In the case of biomass projects, you will also need to contract for the purchase and delivery of the fuel. The availability of appropriate fuel and the logistics of delivering large quantities of fuel are common barriers to successful biomass project development.

Wragge & Co's Construction team is experienced in ensuring all documentation required for the effective operation and maintenance of the renewable energy plant, including warranties, are in place.

Step 7: Sale of renewable output

Where a renewable energy project is constructed as part of a larger development, the other occupiers of the development site are the obvious customers for the electricity generated.

However:

• The energy generated is unlikely to be sufficient to meet all the needs of these customers all of the time, and they will still, therefore, need contracts with an electricity supplier.
• Supply of electricity sometimes requires a licence (always in the case of supply to domestic customers).
• The renewable electricity will only qualify for the full benefit of the Government support mechanisms if it is sold to a licensed electricity supplier.

Thought therefore needs to be given to the exact structure of the arrangements by which the output of the renewable energy plant is sold. The most advantageous structure is likely to involve the sale of the output to a licensed electricity supplier, who then contracts to sell the output (along with other electricity) to the other occupiers at the site.

Wragge & Co's Energy and Regulated Industries team advises clients on the most advantageous structure for them, whether that be the sale of the energy generated or, the eventual sale of the renewable energy plant. The team drafts all of the required documentation.

How can we help?

We have experience of assisting clients in achieving and obtaining their renewable energy objectives from step 1 to step 7.

Whatever your requirements, expertise or knowledge in relation to the provision of your renewable energy resource, Wragge & Co can provide advice, assistance and guidance. Although that may involve a number of different Wragge & Co teams, each project is managed by just one main point of contact.