Renewable energy: How did we get here?

In recent years, climate change has become a far more pressing global issue than ever before. To tackle this new reality, the UK government set new targets around renewable energy.

Targets were initially set to ensure that 10% of the UK’s electricity came from renewables in 2010 and beyond. However, the government is now aiming for 100% of the UK’s electricity will come from renewable sources by 2050. This is an impressive leap and it’s interesting to see how we’ve come to rely so heavily on the power of renewables.

If you’re a landowner and are wondering exactly how we got here with renewables, we’ve got you covered. Throughout this comprehensive article, we'll explore how the UK's approach to renewable energy has changed over the years and what this means for landowners. Covering everything from the privatisation factor to the impact of subsidies, you should be able to connect the dots and look to the future in a positive way.

After all, there’s nothing like looking at reams of historical data to map future projections.

The UK’s energy sector was privatised in 1989. This led to several new subsidies being created, designed to encourage the growth of renewables. The UK commissioned its first onshore windfarm in 1991, and plenty of other renewable energy projects have followed in the decades since.

Landowners were pivotal to this shift, providing the land on which the renewable projects have been built. In return, they were compensated with (on average) between a 1%-2.5% share of the total income generated by wind farms during the 1990s.?

Similarly, landowners of landfill sites could expect to receive around 15% of the income received from the same landfill gas during this period. In the intervening years, renewables have rapidly grown.?

In 2020, they represented 41% of the electricity produced in the UK, up from 2% in 1990 and 15% in 2013.?

According to energy regulator Ofgem, there are currently 37,982 renewable energy projects throughout the nation, producing enough electricity to power all the households in the UK for 8.5 months in 2020!?

The impact of subsidies

Of the total renewable electricity produced each year, off-shore and on-shore wind projects account for the greatest share (40% and 26% respectively) as shown in the graph below:?

Yet the withdrawal of government subsidies for new renewable projects, in addition to increasing planning permission hurdles, has dramatically halted the development of new on-shore wind and solar projects across the UK over the last five years.?

Overcoming new challenges

From the infancy of the renewable energy sector, pioneering landowners have had to overcome many challenges. Getting projects off the ground can be incredibly difficult. From endless meetings and contract negotiations to securing planning permission and all the uncertainty surrounding it, these tasks are never easy!?

Even professional advisors and site operators have steep learning curves when accounting for and communicating these projects. The energy sector, particularly renewables, is fast-moving.?

We never could have imagined how important these projects would become, and today, sustainability modules are introduced into the core syllabus of chartered accountancy courses!?

I believe that landowners and site operators require easily accessible and simplified information to make these projects more understandable and help all parties reach mutually beneficial arrangements.?We ensure that landowners have access to simplified relevant knowledge and impartial advice, they will be able to make informed decisions to maximise the returns on their projects whilst reducing climate change.?

We sincerely believe that together, we can build a better energy future!?

There are still many challenges for landowners once projects are up and running. These can include:?

• Late payments
• Poor access to information?
• Disputes with neighbours
• Planning permission issues?

Unfortunately, there’s no manual for learning the language of renewable energy and navigating the numerous challenges that come along.?

A positive look ahead

We have seen many positives over the last few years. Better technology, leading to increased energy generation, new renewable energy projects are being commissioned and gradual progress towards addressing the global climate crisis we face.

We’ve learned new lessons and gained crucial insights, using them to move us and our client’s projects forward. When negotiating projects, we take the lessons of the past (and data associated with them) and use them to empower real, positive change.?

As we look forward to the future, many are asking questions such as:

• How much do wind farms and solar projects get paid?
• Will subsidies return??
• Will the renewable project on my land fulfil its potential??
• Is the outlook still bright for renewables?

Recently, we are seeing landowners of various types of renewable energy projects receive a share of up to 50% of the total income generated by the project, particularly where the?project has been operational for a number of years and the original equipment has been paid off.??

Sites with a grid connection have become scarce and highly valuable, giving landowners more options when their projects come to an end. As wind farms likewise reach the end of their life, site operators often opt to replace the original turbines with fewer, more powerful models.

Many site operators are looking for new ways to offset their income losses, caused by the withdrawal of government subsidies from 2027. One option is peer-to-peer or corporate power purchase agreements (CPPAs), that would enable electricity to be generated and sold directly to end consumers.?

This relaxation of electricity supply licensing rules (applicable to certain projects) has presented new ways to make the most of the opportunities on the horizon.?

The takeaway

Landowners should be proactive and work closely with their site operators to establish solid, positive future plans. This will ensure they don’t lose out financially, whilst continuing to support renewable energy projects.?

With the right help, landowners can approach their projects with greater insights and information than ever before. They can harness their newfound visibility and improve their contracts, making better long-term decisions about the renewable projects on their land.?

For more insights into renewable energy projects check out our ultimate guide to renewable energy project lease negotiations blog.