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Utility Week 14 03 14

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26 | 14th - 20th March 2014 | UtILItY WEEK Operations & Assets Market view L and has been used to power industry for thousands of years. From the clas- sic generation model of hay for horses to plough the fields through to modern solar farms, wind turbines or anaerobic digestion plants, the rural economy has been vital for the creation of the power that produces almost everything we consume. The government's establishment of a £10 million urban community energy fund to kick-start community energy generation comes at a time when opportunities to deve- lope renewables are becoming more preva- lent. UK renewable electricity increased by 19 per cent in 2012 compared with the previ- ous year and accounted for 11.3 per cent of total generation, up from 9.4 per cent in 2011 (Department of Energy and Climate Change Digest of the UK Energy Statistics 2013 report). Renewable energy has the potential to fundamentally transform the profitability of business in the rural sector. Historically, many landowners strengthened their busi- ness by spreading risk and developing multi- faceted income streams. Renewable energy can be viewed in the same way. It offers landowners the opportunity to diversify their portfolios and generate an additional source of income, and can also be used for specific uses such as biomass heating to drive a grain dryer. It also has the virtue of letting landowners use the label of "sustainability" when they are negotiating contracts with big retail chains. Rising prices, dramatic weather and sup- ply and demand fluctuations are all adding to volatility in profits. The country is tak- ing coal-fired generation offline in the years ahead, to the extent that some observers are warning of a generation gap. While many businesses have installed backup genera- tion over the past few years, many more have not. Managed correctly, these factors come together to offer opportunities for land and property owners. Land is a key asset in the generation of energy, so the rural economy is crucial. Over the years, the rural economy has financially benefited from receiving rental payments from developers, thereby receiving a finan- cial reward without having to take on the development risk. Changes in planning have also delivered a positive step change, with greater focus on consultation with local com- munities and the introduction of community benefit payments. Rural renewable energy projects, whether backup power for business or a community generation scheme, are able to offer strong benefits to all parties. There are a number of options for com- munities to benefit directly from commercial renewable energy developments, taking the energy model beyond community benefit payments and other forms of compensation. These models include: • community interest companies – busi- nesses with primarily social objectives whose surpluses are principally rein- vested for that purpose in the community, rather than being driven by the need to maximise profit for shareholders; • co-operatives – community/developer joint ventures formed from members of the community, alongside the developer, to create a company that will own and operate the installation; • shared ownership – a process of negotia- tion to allow investment into a scheme by groups or individuals. While the government is looking at ways in which landowners and community stake- holders can further benefit from the energy produced, as detailed in the Community Energy Strategy, there is still an issue of grid connection, as well as the development of battery technology for energy storage to sup- port embedded generation. It has been widely reported that renew- able energy projects are putting parts of both national and local networks under strain and, without expensive investment, it may be difficult to take any more power in certain parts of the UK. In other parts of the country there is a complete block in terms of capacity on connections to the grid, causing signifi- cant delays or in some cases preventing any new development. Perhaps the biggest obstacle to the full exploitation of renewable energy sources is storage. If the power is not needed straight away, how can a landowner make the most of, for example, a wind turbine on a windy day? With the help of energy storage systems, the excess renewable energy can be retained when power demand is low and used to compensate the high power demands when necessary. Moreover, the regenerated power from stored energy is stable and continuous, obviating the requirement for traditional power stations to maintain grid stability. According to the most recent Savills Estate Benchmarking survey, 70 per cent of landowners who responded had assessed the renewable energy potential of their estate recently, with another 12 per cent planning to do so within a 12 month period. The industry is seeing an increase in embedded or distrib- uted generation. There are many types and size of distributed generation, which sees an electricity generating plant connected to a distribution rather than transmission net- work. However, for this to really work at a sustained level, the storage question needs to be answered. Speaking at an event at the House of Lords in January, Sir David King, the for- mer UK chief scientific adviser, called for a campaign to secure international renewable energy storage funding, citing the need for an "Apollo-style" push akin to the space mis- sion to kick-start the deployment of renewa- ble energy storage technology. Such funding would help the UK move to a low-carbon economy, drive growth and get ahead in the global race. Ultimately, the integration of suitable energy storage systems with embedded or backup renewable generation plant could bring significant benefits to landowners, developers and the wider community. It is necessary to continue to develop evolving power generation, distribution and stor- age models in order to allow consumers of energy to take more control over its produc- tion. While the rural sector is seeing a return of sorts to backup power generation, this is a new era which requires significantly more investment and expertise than the tradi- tional backup generators of old. Philip Gready, head of Savills Energy Green land Renewables are a natural fit for rural landowners, says Philip Gready, and rural communities should be acknowledged as an important part of power generation rather than at odds with it.

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