Country Land and Business Association (CLA)              OSE0065

Written evidence submitted by the Country Land and Business Association (CLA)

The Country Land and Business Association (CLA)

The CLA is the membership organisation for owners of land, property and businesses in rural England and Wales. We help safeguard the interests of landowners, and those with an economic, social and environmental interest in rural land. Our 27,000 members own or manage around half the rural land in England and Wales and more than 250 different types of businesses. Many of our members are involved in renewable electricity generation at various scales, from operating or leasing land for ground mounted solar to micro ‘property level’ deployment of solar power.

What are the current barriers (regulatory, technological or otherwise) to expanding the number of small and large-scale solar installations in the UK?

• At the small individual building level, barriers include:

• Restrictive permitted development (PD) rules: Ground mounted solar under PD is limited to 9m2. Anything bigger has to go through the full planning process. With appropriate limitations, allowing ground mounted solar up to the micro-generation limit of 50kw through PD - which would be c.0.1ha or 1,000m2 in area – would be more appropriate and boost deployment. PD effectively blocks the installation of solar on listed properties altogether, meaning it has to go through the listed buildings or planning process, where consent is often refused on grounds of harm to building character. However, solar can sometimes be easily deployed unseen in roof valleys or on nearby ground. PD should allow this up to the expanded limits proposed above.
• The consultations on permitted development rights and planning rules for solar promised in the British Energy Security Strategy (BESS) should be published without further delay
• An interim extension of PD for ground mounted solar up to 1,000m2 should be implemented immediately.

• Costs of domestic systems with battery storage: Costs of solar PV which include batteries remain too high for many to afford. A typical 4kw PV system would cost c.£5-6K. While this reduces long-term reliance on purchased power, much of the solar power is often unused because people are not in during daylight hours. Smart Export Guarantee rates are so low (c.5p/kwh) that they are little incentive. To make PV investment worthwhile, batteries are increasingly needed so unused power can be stored for later use. But a battery could easily take total capital cost to around £10K - prohibitive for many.
• Small grants or low interest loans would boost deployment.
• The 0% VAT on solar and batteries installed together helps, but the 0% VAT rate should also apply to batteries added to existing systems.

• At the larger scale, the key barrier is lack of grid capacity and prohibitively high connection and reinforcement costs. This is explained in relation to later questions. However the other key barriers are policy uncertainty and skills and parts shortages:

• Policy uncertainty on solar: Recent mixed signals from Government has affected confidence in solar investment. A pipeline of larger projects had been building – CLA contacts estimate c.40GW of solar either before planners or approaching submission, representing c.£17bn of committed investment. This was on the back of the Net Zero commitment, the 2020 Energy White Paper, Contracts for Difference support and the British Energy Security Strategy commitment to a five-fold increase in solar by 2035.

• This has been undermined by subsequent negativity towards solar on farm land from former Prime Minister Liz Truss and the  proposal to rule-out solar from grade 3b farm land. Planning policy directs solar towards grade 3b land - a policy to block this is a major problem. The uncertainty remains and needs resolving swiftly. It introduces further uncertainty into the decision making process at a time when the planning system is in stasis and government plans for its reform keep being altered. The net result is to limit the expansion of solar.

• Skills and parts shortages: CLA members involved in the solar sector tell us there are growing shortages of properly trained staff, particularly high voltage electricians who can correctly connect solar to transmission networks. There are also shortages of parts such as panels, inverters and mounting fixings becoming apparent. One CLA member energy consultant is advising clients now that installation by trusted and retained installers will not be before summer 2023.

To what extent is the contribution of solar technologies to the UK’s renewable energy mix limited by storage and distribution capacity?

• Rural landowners can provide the land to expand solar - but they face significant challenges due to the lack of capacity on the distribution and transmission grids and the prohibitively high costs and long timescales faced by projects for connection and reinforcement. Projects are often quoted exorbitant sums and lengthy timescales for connection by network operators, which often compromise project viability. Our members consistently tell us lack of grid capacity and high connection quotes are the number one limitation to renewables. One north-east member was recently given a grid connection date of 2031 for a solar farm due to transmission network reinforcement needed before then to accommodate large-scale offshore wind generation.

• The networks were not designed to accept the level of distributed generation now being proposed. A key issue is the number of proposals for solar going into network operators - often chasing the same limited capacity - and the lack of an effective mechanism for network operators to strategically manage this project pipeline. Network operators are obliged to provide quotes to all who seek them – but they should be required to work in a more facilitative way with projects to work out optimum connection solutions. Currently many projects receive ‘arms-length’ quotes for the connection requested (which may not be the best solution) and the necessary reinforcement. Many projects may therefore be quoted for the same reinforcement works. This means everyone receives high quotes and many projects do not proceed. A more workable process is needed to strategically manage the pipeline of proposals and to share reinforcement costs between these projects and ‘ahead of need’ investment by the network operators.

• Things may improve from April 2023 because Ofgem have decided following their ‘Access and forward looking charges review’ that costs of necessary reinforcement will no longer be borne by those connecting to the grid but instead will be shared between bill payers in the area. Smaller scale renewables, which generally connect to the 11kV network, will not have to bear any upgrade costs beyond this. Having said this, the costs of 11kV grid upgrades are still significant for those a long way from three-phase in particular. Grid upgrades for 11kV range from £100,000 - £300,000/km for 3-phase upgrades.

What needs to be done to facilitate solar farm access to grid connection, to enable wider distributed energy generation from solar installations?

• A combination of measures is required. As stated above, a more strategic process is needed to better manage the pipeline of projects and share grid reinforcement costs between connecting projects and ‘ahead of need’ investment by the network operators. Greater promotion of ‘flexible connections’ coupled with a more facilitatory and less arms-length approach by network operators to those wishing to connect to the grid, would also help.

• ‘Flexible connections’, negotiated with projects to control the profile of generation, can reduce the grid strengthening works needed, reducing connection costs and enabling more ‘active network management’ by the network operator. The current connection process for projects is too opaque, ‘arms-length’ and uncertain. Network operators should be required to be more open and adopt a more facilitative role - working with the most ‘proceed-able’ projects to identify the optimum connection design and location based on what is feasible given the local network constraints and possibilities.

• ‘Local grid’ models where a local renewable energy development can supply local consumers with power should also be developed. Ofgem should work with DNO’s with a view to enabling electricity to flow freely around localised ‘mini-grids’ with a solar farm supplying the local area with renewable power with no or minimised distribution network charges. With appropriate safeguards – principally other power retailers as ‘balancing partners’ to ensure power availability to consumers ‘24/7’ all year round – such arrangements could take significant pressure off the existing networks.

Are government support schemes sufficient to encourage small-scale solar technology deployment by consumers? What role does the pricing of energy under these schemes play in the uptake of solar technology by domestic and commercial properties?

• Government support schemes are insufficient to encourage deployment by consumers. At the domestic scale, Smart Export Guarantee (SEG) rates – typically 5p/kwh - are currently set too low to incentivise deployment, when set against the initial capital costs involved. With generation limited to daytime when often people are not around to use the power generated, domestic solar for many has to include batteries to store power for later use instead of buying grid supplied power which is typically 7-8 times the SEG rate for exporting. Those installing solar and batteries will register for the SEG because at least they set some income but at the current rates it is almost irrelevant.

• Similar issues apply in commercial properties. Solar installations will be geared to the demand and usage pattern within the building. At the SEG rates currently offered, the main benefit and return on investment will be from avoided high cost of bought in power – through optimum numbers of panels and batteries - rather than export income.

• At the low rates currently offered through the SEG, export income has little influence on uptake of solar at the individual property level. At much higher rates it could do, but with prices for bought in energy so high, levels of uptake of solar could be boosted far more by lowering the overall capital costs of a solar/battery installation, through small grants, low cost loans or tax incentives such as capital allowances.

Does Government policy and current planning guidance adequately address the issues raised by proposals to install solar farms on land with high agricultural or ecological value?

• Yes - the National Planning Policy Framework (NPPF) and Planning Practice Guidance (PPG) provide ample help to decide these issues.

• The NPPF provides policy on effective use of land and encouraging multiple benefits from rural land. Chapter 14 encourages use of renewable energy. NPPF Chapter 15 requires planning policy to contribute to and enhance the environment by protecting and enhancing valued landscapes, biodiversity, soils etc. It recognises the benefits from natural capital including economic and other benefits of best and most versatile agricultural land (BMV). There is strong protection for protected landscapes, protected areas (SSSI’s etc) and natural capital including all soil types.

• PPG has an entire section on the natural environment, providing guidance on how policies and decisions should take account of the economic and other benefits of BMV land. Natural England BMV guidance (here) requires NE to be consulted on development proposals likely to cause loss, including cumulative loss, of 20ha or more of BMV land and where not according with an approved development plan.

• It is the job of the planning system to weigh material considerations and decide on development proposals. It has adequate policy and guidance with which to do this in relation to land based solar.

• DEFRA is considering redefining BMV as a mechanism for preventing solar on grade 3b land to further food security. This will frustrate the achievement of Government solar targets and have the unintended consequence of limiting rural growth and productivity. It will do little for food security because 3b land is generally of moderate, not good, quality. Solar Energy UK estimate the level of solar farm deployment consistent with delivering the Energy Security Strategy five-fold increase in solar generation would account for c.0.3% of UK land.

• Grid capacity already restricts where solar at scale can go. Planning policy guides it towards brownfield and lower quality land and away from grades 1, 2 and 3a. Blocking solar from 3b land will severely limit deployment and compromise the five-fold increase in solar by 2035 target. Solar is also a valuable diversification and cost reducing land use for farms - helping to shield exposure to volatile agricultural markets.

• Including 3b land within BMV would also mean the NPPF definition of BMV would need to altered. Consequently, all rural development proposals (not just solar) on 3b land - new farm buildings, diversifications, new homes – would then have to be referred to Natural England. Planning applications for all rural development would be more costly and protracted for applicants and authorities.

• The CLA will resist widening the definition of BMV beyond grades 1, 2 and 3a. Including grade 3b land within BMV would further undermine rural productivity (the subject of a recent APPG report: “Rural Productivity”) and attempts to level up rural areas (Rural Proofing report “Delivering for rural England” September 2022). If Defra is still considering it, a full consultation should take place to ensure they are aware of the consequences before decisions are taken.

Are there opportunities for solar energy generated abroad (e.g. in the Sahara desert) to be delivered to the UK via interconnectors?

• There are opportunities for this – indeed one such project (X-Links Morocco-UK Power project) is in the pipeline to bring 3.6GW (8% of Britain’s annual electricity demand) from North Africa to the UK coming ashore on the Devon coast. Such projects offer part of the solution to our energy supplies in a ‘diversified portfolio’ approach to energy security. However, these interconnectors have to make landfall, then link into the onshore transmission network and come across privately owned land to get the power to where it is most needed.

• There is significant additional transmission network infrastructure going to be required across the UK in the coming decades. Government has indicated in their Electricity Networks Strategic Framework that they wish to speed up the planning, consenting and delivery of this infrastructure. However, it is important to ensure that siting/routing of infrastructure, and the regulatory regime around it, provides opportunities for affected landowners to make meaningful representation to the authorities in respect of the impact of new infrastructure on their property and businesses. It is after all, the landowner who has to continue to manage a land based business around the new infrastructure. Appropriate and fair compensation arrangements have to be built in.

December 2022