Out-Law / Your Daily Need-To-Know

Energy storage planning regime needs higher threshold

Out-Law News | 16 Jan 2019 | 2:09 pm | 3 min. read

The government should change the threshold to allow for energy storage projects in England to be dealt with via local planning rules, rather than through the Nationally Significant Infrastructure Projects (NSIP) planning regime, an expert has said.

A new consultation on changes to the planning rules aimed at composite projects offers an opportunity for developers to lobby the government to have the threshold raised, according to energy projects expert Gareth Phillips of Pinsent Masons, the law firm behind Out-Law.com. The government has proposed retaining the 50MW threshold at which standalone storage projects move to the NSIP regime as part of the same consultation, but developers should not take this proposal as a "fait accompli", he said.

Phillips said that the changes, particularly those proposing a new NSIP capacity threshold for composite projects, were "a step in the right direction". However, the government's proposals did not go far enough, he said.

"In order to stimulate and facilitate the energy storage market, the corresponding threshold at which such a project should be treated as a NSIP under the 2008 Planning Act should be increased to above 50MW," he said.

"The costs associated with obtaining a development consent order (DCO) are significantly greater than those associated with obtaining planning permission, and a DCO takes up to two years to achieve, rather than a few months for planning permission. If the 50MW threshold remains, we can reasonably expect energy storage projects to be capped below 50MW to avoid the delay, costs and resource implications of the NSIP regime."

"That would stifle the energy storage market, whereas if the threshold was lifted to, say, 100-200MW, then that would make the promotion of projects up to that level more cost effective, and so stimulate the market," he said.

Created by the 2008 Planning Act, the NSIP regime is a bespoke planning regime designed to consider applications for a range of types of infrastructure project in England deemed 'nationally significant'. Applications for development consent under the NSIP regime are administered by the Planning Inspectorate and examined by an independent examining authority which makes recommendations to the relevant secretary of state, rather than being overseen by local planning authorities. For energy infrastructure projects, the business secretary is the relevant decision-maker.

Compared to planning applications made to a local planning authority, an application for a DCO does not need to demonstrate the need for a project where a national policy statement has effect. A DCO can also include many of the consents needed to operate a project and can include compulsory acquisition of land where appropriate. However, the DCO process can be lengthy, with a statutory time limit to deliver a decision within one year of independent examination.

It is the government's view that the 50MW capacity threshold triggering the need for a proposal to be brought into the NSIP regime "does not in itself distort storage developers' sizing and investment decisions to a significant degree", according to the consultation. Instead, developers are more likely to be influenced by other factors, including network connection costs, upfront capital costs and available revenue streams.

"On this basis, our analysis indicates that reforming the capacity threshold for standalone storage projects would be disproportionate relative to the benefits of such reform," the government said. "Instead, our stakeholder engagement suggests that it may be more effective to focus efforts on ensuring that the planning system is fit for purpose now and in the future by addressing uncertainties over the treatment of composite projects consisting of storage and another form of generation."

In response, Phillips said: "The position taken by government has been based on a small amount of consultation last year, which according to BEIS did include some developers, but in my view those consulted may not have practical experience of the cost, time and resource implications of the NSIP regime. Feedback from clients, consultants and intermediaries I work with is clear – those implications are prohibitive in the context of an emerging technology and market, with uncertain viability".

In relation to composite projects, the government proposes that only those with total capacity excluding electricity storage of more than 50MW, or including any electricity storage capacity of more than 50MW, should fall within the NSIP regime. This means that combination projects of more than 50MW capacity would fall within the local planning regime where both the storage and non-storage elements of the project were both under the 50MW threshold.

The consultation closes on 24 March 2019.