It is more and more common for investors in solar and wind assets to assume a 30, 35 or even in some cases 40-year life for their investments, and in developing them, to ensure that the project’s legal agreements and permits reflect this. This was not always the case, with solar and wind assets built in the early to mid-2010s, to have been constructed on the basis that they would last only 25 years.
Since then, performance data has increasingly pointed to the possibility of longer lifespans for solar and wind plants and owners of these slightly older assets are increasingly considering contracting asset life extension services to get the maximum value out of their investments. For several reasons, now might just be the perfect time for them to do this.
The UK government has aligned itself with increasingly popular worldwide opinion and governmental policies centred around the need to achieve carbon neutrality to avoid catastrophic climate change. This has seen the UK set itself the ambitious goal of becoming a ‘net zero’ emitter of greenhouse gases by 2050. This policy, and the general discourse around the need for a green economic recovery from the fallout caused by the coronavirus pandemic, means that both central and local government policy is very much in favour of renewable energy.
This is reflected in the National Planning Policy Framework in the United Kingdom, which states that "plans and decisions should apply a presumption in favour of sustainable development", and that, "decision-makers at every level should seek to approve applications for sustainable development where possible".
This means that applications to increase the term of planning permissions granted for renewable assets are now much more likely to be successful.
It is not only local planning authorities that are more inclined to look favourably on granting planning permission extensions. Local residents, whose views must be taken into consideration during the planning process, are now less likely to object to renewable energy-related applications due to increasing awareness around the need to cut emissions. These more favourable views on renewables serve to make planning permission extensions for renewables assets much more likely to be successful.
Planning aside, the other crucial step in extending a renewable asset’s life is the extension of the lease agreements. This step secures the land on which the solar or wind plant sits, and therefore is a key piece in the process. These assets often sit on land that may otherwise be used for farming - given the phasing out of the Basic Single Payment scheme starting in 2021, farmers will be keen to diversify their income by allowing their land to be used for renewable projects or extending their existing lease agreements.
Renewable energy assets are seen as a safe investment and one with a return that can safely guarantee a long-term indexed income, providing farmers and other landowners with some financial security.
Asset life extensions are one of the simplest and most cost-effective ways of increasing the value of renewable assets. Quintas Advisory is an expert in undertaking these so if you’re interested in learning more, contact us today and we would love to talk you through your options.
If you want to get further information about Asset Life Extension services, you can contact our team.
