“There's definitely significant competition in the space at the moment,” Ross Grier, UK managing director of NextEnergy Capital, told Solar Power Portal – a statement that will come as no surprise to anyone currently navigating the trials and tribulations of developing PV in Great Britain.
There’s a reason the fabled Solarcoaster got its name (whether you like it or not), and it appears that while it’s full speed ahead for most, there are certainly a few bumps in the track.
Reports have come in across the sector of challenges surrounding grid connections, in particular lengthy connection timelines. Grier said that NextEnergy is seeing offers of 2028 and beyond for some new projects in the sector.
“It's not just difficult to find an appropriate grid connection, which means a costed grid connection at the right sort of economics for your project and right scale for your project, it's also difficult to get a sensible connection timeframe,” he said.
He added that with the level of competition currently in the market, developers need to be really well attuned to how they’re selecting their plots of land, which feeds into everything from whether it’s the right parcel of land to be successful through the planning process to whether it’s well selected from a best and most valuable land perspective and the Environmental Impact Assessment etc.
On the grid side of things, NextEnergy is also seeing it be quite challenging to get clarity on statements of work – so how the different distribution network operators (DNOs) interface with each other.
“We're also seeing it difficult to get that clarity at an early enough stage in the project,” he said.
And while that can be a problem for the well-established, larger players in the market such as NextEnergy itself, it can be even more so for the newer entrants.
“What we see from a development perspective is that being very painful for smaller scale developers to weather that storm,” he said.
Indeed, this is an issue felt by social enterprise Energy4All, with development manager Paul Phare getting right to the point: “Grid is a problem.
“That's a challenge we all face, whether you're commercial or community. But because community organisations are constrained by their geography, they don't have as many options as a commercial developer,” he explained.
Indeed, a commercial developer has much more flexibility in siting its projects compared to a community energy organisation, which by its very nature must site its projects close to its community.
Phare said that community energy organisations don’t necessarily have enough resources due to them being run by volunteers, whereas commercial developers have a lot more resources, money and time.
“It's not a level playing field. It really has to be proactive communities that either get lucky or they have some sort of relationship with local landowners that gives them an in that perhaps they wouldn't get,” Phare said.
“From our perspective, it requires that closer working relationship with asset owners and with the financiers, because actually, we've got to collectively weather the storm and that's only part of the jigsaw we've got to balance, because alongside that you've also got exceptional pressure in the supply chain,” Grier said.
The supply chain challenges facing the solar sector have been well documented, with significant module pricing increase that isn’t abating alongside other pressures.
DNO solutions
DNO UK Power Networks (UKPN) told Solar Power Portal that it is continuing to see increasing levels of applications to connect solar to its network – having connected 3,176MW of solar and 266MW of energy storage to its networks.
“We work closely with the developers of new generation sites across our regions to understand their future needs. We work hard to ensure that we can connect customers as quickly and cheaply as possible while running an efficient network keeping bills low for everyone," a spokesperson said.
The spokesperson pointed to UKPN’s online tools to help developers when they are looking for potential sites, with this frequently followed up with personalised ‘surgeries’ where UKPN can look at sites in more detail and recommend the best solution.
This is then complemented by group meetings and forums where the DNO discusses ways in which it can connect more generation to the network as quickly and cheaply as possible.
“It is important that we engage early with developers so that they understand the costs and timescales associated with their proposed project when they develop their investment case. This enables developers to identify the right locations for the right projects,” the spokesperson said.
Meanwhile, Phare said that an area DNOs can be helpful is with communities, for instance in providing workshops with communities to build knowledge.
Landowner dynamics
On the land side, NextEnergy is seeing what Grier described as "some interesting dynamics emerge with landowners at the moment around the price point they're seeing for cropping and therefore how that's impacting the rent conversation".
He explained that landowners are seeing "super high" margins forecasted for this coming year, as well as having their input costs rise exponentially in this planting season.
"So that's not necessarily a long term sustained picture of increased margin; that doesn't necessarily filter through as we go into into the conversations in negotiations around rents. So we are seeing some tension there," he said.
Additionally, as developers continue to shoot for larger projects - which Grier said is one of the ways they can access projects that don't necessarily have the same timeline issues - the arguments of whether solar is taking agricultural land away from food production will continue.
"We do need to be really hot as an industry, ensuring we are doing everything we can to be clear on the biodiversity net gain."