UK: Concern about energy security ‘sparks rise in interest in developing renewable schemes’
Growing concern about climate change and energy security has sparked the country-wide development of renewable energy facilities and commercial interest from landowners and developers, says surveyors’ organisation RICS.
RICS surveyors in rural areas are seeing “a substantial increase” in demand for due diligence reports from banks who are seeking advice on the viability of using a given site to develop wind or solar power, it says.
Banks are increasingly asking surveyors to advise on the suitability of sites to build wind farms, most commonly prompted by developers, it says. Most importantly, they are seeking advice on the performance of wind turbines, construction and planning issues, and if the site is windy enough to generate sufficiently high energy levels.
The additional revenue and income stream that can be generated for landowners and developers by selling the renewable energy generated – mainly electricity, into the grid has become an increasingly attractive prospect. The UK government has taken a number of steps, including the Feed in Tariff (FiT) to encourage growth in the renewable energy market as it comes under increasing pressure to meet UK and international carbon reduction targets, says RICS.
Surveyors are also seeing a rise in the demand for freehold and leasehold valuations for sites where the value may rise as a result of its potential to generate renewable energy as the market continues to grow.
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James Kavanagh, RICS Director of Land said: “Interest in the financial benefits of generating renewable energy is certainly growing. Landowners and developers in rural communities can create an income stream by selling the energy from renewable energy installations, like wind turbines to the national grid – powering homes with electricity across the country.
“As this market continues to become more sophisticated, surveyors are increasingly being asked to perform more complex assessments, needed by all parties, but especially the lending community who need that extra assurance before handing over finance.”
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RICS renewables specialist for the South of England, Robert Paul, partner at Strutt & Parker said: “Many renewable energy schemes are installed by third party developers who require options and leases for such sites. The terms of those leases are critical to the freehold valuation of sites for renewable energy installations and need to be considered in detail by valuers. Fortunately, RICS also have a Guidance Note on the negotiation of such terms which may assist surveyors either in negotiations or in relation to valuations.
“Lenders will be concerned not only with the performance of the scheme itself, but also in relation to the potential impact of adjacent properties over which they may have a charge. This could prove to be a challenging area for valuers as there is as yet little evidence of the sale of property which may be blighted or enhanced by a renewable energy scheme.”