With a shortage of suitable land for greenfield development sites in the UK, many developers are looking at their (or their competitors) existing portfolio of aging assets and considering the prospect of Repowering.
Repowering generally involves replacing smaller, less productive turbines with newer, taller and more efficient models. Modern turbines can stand at around 200-250m to tip with a rotor diameter of around 160-175m, and with an installed capacity of upwards of 7MW each, much higher than their historic counterparts.
However, it is not as simple as swapping out the old for the new. Repowering projects require a full redesign, new planning application, EIAs, ornithology assessment, radar mitigation, LVIAs, Habitat Management Plans, and a number of other hurdles imposed by the Local Authority or Energy Consents Unit.
Landowner Benefits
Improved Rents - One of the most compelling benefits of repowering is the opportunity for increased income due to the output of the new turbines being higher. Most agreements we are seeing remain on a Base Rent/ Top Up rental model.
Improved Land Use - As modern wind turbines are far more efficient than their predecessors. Repowering projects commonly involve fewer turbines that reflect equal or improved installed capacity on each site. This reduction in turbine numbers translates to fewer turbine foundations, access roads, and associated infrastructure.
For landowners, the optimised layouts allow for more flexibility in the land use around the turbines. With taller turbines that can stand above tree canopies, replanting in areas of the landholding can be readdressed, or sporting elements on estates can be revived.
Current planning conditions require Habitat Management Plans and an element of Biodiversity Net Gain, which, if well thought out can be implemented on site to diversify farm/estate land use at no cost to the landowner.
Estate Planning - Repowering resets the clock on a wind project. Instead of facing turbine removal and loss of income, landowners can gain long-term stability. This can align well with estate planning.
Out with the Old, in with the New?
Both incumbent developers and their competitors are looking at how best to secure their futures in the renewables industry, and there is no doubt that repowering will be a cornerstone of their strategy.
However, over the course of lease terms we have seen examples of deteriorating relationships, mismanagement, and even litigation and it seems some landowners are looking in a new direction.
The incumbent developers on a site cannot rest on their laurels and expect that landowners will sign a new lease purely on the basis that it will “cause the least disruption”.
Alternative developers are pitching for existing wind farm sites and looking to secure agreements with landowners. It is however important to understand the relationship between the exiting and incoming developers, in relation to decommissioning/ construction requirements, income start/stop dates, insurance provisions and much more.
The Devils in the Detail
Existing agreements will not reflect current market conditions, so from a landowners perspective, repowering negotiations are an opportunity to not only secure longer term, and potentially increased incomes, but to improve how the landholding and the wind farm can work together more harmoniously.
Repowering discussions allow landowners to revisit key terms such as payment levels, landlord & tenant rights and responsibilities, timber compensation and restocking provisions, as well as longer term views on decommissioning/ restoration requirements.
This will a take a considerable amount of time to ensure these are captured accurately in any legal agreements, and adhered to in the construction, operational and decommissioning stages. Don’t be swayed by the promise of higher wind yield reflecting in bigger top up rents, the non-commercial provisions of the lease can be just as important.
