Our latest Renewables Pipeline Tracker was published on 11 June, and this blog provides a summary of some of the recent developments in our coverage of the pipeline for new build and repowering renewables assets in GB.
What’s new? Seabed leasing rounds, scoping projects and CfD announcements
Since our previous blog on the renewables pipeline published in November 2020 – Renewables Pipeline Tracker: Higher, faster, stronger – the changing nature of offshore wind, we have seen a number of important market developments concerning the renewables project pipeline.
Firstly, the results of The Crown Estate’s Offshore Wind Leasing Round 4 were published on 8 February. This leasing round, along with Crown Estate Scotland’s ScotWind leasing round, are the first of their kind in a decade. While applications for the ScotWind leasing are open until 16 July 2021 after delays following the “option” structure being reviewed, the six projects that secured a tender in The Crown Estate’s leasing round totalled just under 8GW of potential new capacity and demonstrates the step-change in the scope of UK offshore wind projects.
In light of this increased visibility on early-stage projects, our Renewables Pipeline Tracker database now includes projects with a development status of “scoping” (Figure 1). This includes some of the projects that were successful in the latest Crown Estate leasing round, representing sites at a much earlier stage in their development compared to those currently in the pipeline. Information on these sites is sourced from National Grid’s Transmission Entry Capacity (TEC) Register and supplemented with additional research on areas such as project ownership, turbines, and co-location. Alongside established renewables developers securing leasing rights, a new entrant to the UK offshore wind development sector in The Crown Estate’s latest leasing round included BP (in a consortium with EnBW), as oil and gas majors are increasingly making the move into renewables as net zero and ESG targets become the pivotal focus of players across the energy sector.
Due to the larger scale of projects that connect at the transmission network, and with a large proportion of offshore wind capacity in our scoping classification, our pipeline of “scoping” projects represents 50.4% (at 48.9GW) of our total viable pipeline capacity (viable projects are those classified as scoping, application submitted, awaiting construction or under construction). Of this 48.9GW “scoping” total, 38.6GW is from offshore wind, 5.0GW from battery projects, 3.0GW from onshore wind, and 1.5GW from solar PV. While there is no guarantee that all of these projects will ultimately come to fruition, tracking these projects will only become more prudent as we look beyond Allocation Round Four (AR4) of the Contracts for Difference (CfD) scheme.
BEIS confirmed on 7 May that AR4 will open later than first anticipated, now in December 2021. Our Renewables Pipeline Tracker analysis includes a view of a “maximum viable pipeline” of projects that are eligible for AR4. While the early-stage projects that were, or will be, successful in the latest seabed leasing rounds are in their infancy and therefore will not be eligible for AR4, our CfD-eligible pipeline analysis indicates an established group of up to 10GW of offshore wind is likely to compete. Outside of offshore wind, i.e. Pot 1 and Pot 2 technologies, the pipeline of CfD-eligible projects continues to grow.
How are projects progressing through planning stages?
With a growing pipeline that is technology and capacity diverse, there are diverse differences in how long it takes for projects to move through their respective planning processes.
In our 6 May Renewables Pipeline Trends open webinar we presented analysis on how projects across solar PV, onshore wind, offshore wind, and battery technologies are progressing through planning stages. This analysed the advance of projects through submitting an application to the application being approved, then to commencing construction, and ultimately to becoming operational. This analysis also took a locational view, displaying the average number of days for certain planning milestones to be met segmented by technology type and Distribution Network Operator (DNO) region.
The overall picture from this analysis showed that the amount of time between the individual stages has reduced across all technologies. However, this rate of reduction, particularly between submitting a planning application and it being approved has slowed in recent years. The amount of time a project takes to move from “application granted” to “under construction” remains broadly the longest, with 79% of pipeline projects across these four technologies being in pre-construction development stages. This is likely due to the challenges in seeking routes to market arrangements, awaiting subsidy confirmation, and securing finance to enable construction.
This is important because while there is a growing pipeline, the bottleneck of projects at pre-construction planning stages could pose a challenge in the wider scale rate of deployment of renewables. As discussed in a recent Energy Perspective New build renewables – a look at current route to market options, while the CfD scheme enables the securing of finance and therefore development of new build renewables, the relative infrequency of auctions and the exacerbation of the price cannibalisation effect that CfD projects can cause on non-CfD projects could present further barriers to the deployment of new capacity.
Also worth noting, technology types with relatively smaller capacities (i.e. solar PV and battery) generally progress through the planning process faster. This is likely due to the fact that there are fewer planning hurdles for these technologies to overcome, such as securing seabed leasing, TEC, and the Nationally Significant Infrastructure Project (NSIP) or Section 36 (S36) planning process, with sub-50MW applications typically being processed at a local council/ authority level.
Ones to watch
Looking ahead to developments over the next few months, the outcome of the ScotWind leasing round later this summer will be of interest, with the potential for a further 8-10GW of new offshore wind capacity over a total of 8,600km2 of seabed that could be developed. We can also expect to see a number of key publications regarding the CfD including the Draft Budget Notice, setting out budget allocation, capacity caps and administrative strike prices, alongside the indicative timeline for AR4 and the December opening date that will be published “in due course”. As we await these developments, what is already clear is that the GB renewables pipeline remains dynamic as we look ahead to the next CfD auction and beyond, and with a greater number of early-stage projects in the pipeline.
The Renewables Pipeline Tracker is updated quarterly and includes information across over 1,000 prospective renewables sites (including battery storage) in Great Britain through an accessible database. Coverage spans publicly available information on metrics such as site ownership, capacity, co-location and planning, through to confirmed and forecast grid connections and network connection locations. It also includes details on confirmed routes to market, and the subsequent analysis report also provides topical case studies on industry hot topics such as AR4.
Our Renewables Pipeline Tracker Report is available as a subscription service. For more information please contact Lucy Dolton email@example.com