Tucked away on an ex-WWII airfield in a quiet and largely rural corner of Leicestershire, in central England, stands the UK’s largest operating solar photovoltaic (PV) project. At 34 MWp of installed capacity, the project was developed by Lark Energy and began operating in March 2013.
Comprising some 130,000 PV modules and covering an area of around 150 acres (60 Ha), as Jonathan Selwyn, managing director of Lark Energy, explained to ReFocus: “At the time this was by some distance the largest solar farm in the UK and it was not without its challenges, both technicaland weather related.”
Nonetheless, Lark – working with main EPC contractor S.A.G. Solarstrom and many UK sub-contractors – completed the construction phase in just less than eight weeks.
Lark Energy, part of the Larkfleet Group of companies, is a privately-owned construction and development group based in the East Midlands. Including Wymeswold, to date Lark has developed some 240 MW of solar capacity in the UK since its launch in May 2011 and has a further 100 MWp of projects in the pipeline. In addition, Lark is the operations and maintenance (O&M) contractor for 114 MW of solar PV projects in the UK and has installed more than 750 roof-mounted solar projects, too. Today Lark is still responsible for the operations and maintenance of the Wymeswold installation on behalf of current owners Foresight Solar Fund Ltd.
Finding finance
Lark Energy developed the Wymeswold project in 2012 and sold the project rights to Hazel Capital shortly before planning was achieved, according to Selwyn. Once it got planning in November 2012 that’s when it picked up pace. Hazel chose S.A.G, a German company, as the lead EPC given their track record in such projects. S.A.G then sub-contracted various parts of the build back to us to utilise our on the ground expertise in the development process and UK construction.
“We would have liked to have been the lead EPC, but at that time we didn’t have the track record in such large projects or the balance sheet the funders were looking for,” Selwyn explained.
Hazel Capital financed the initial construction of the £35 million (US$56 million) project. Established in 2007, specialist investment fund manager Hazel and the funds it manages has financed more than 110 MW of ground-mounted solar PV projects since 2011 and since 2010 the company has been overwhelmingly focused on renewable energy, with the majority of capital being deployed in solar PV. As Ben Guest, managing partner of Hazel Capital, observed: “We believe that larger industrial sites make great locations for solar projects going forward in the UK.”
However, in November 2013 the company subsequently divested the project to Foresight Solar Fund Ltd, for a net consideration of £43.7 million (US$70 million) — excluding cash and accrued revenues of £1.3 million (US$2 million).
Commenting on the announcement, Ricardo Pineiro, senior investment manager at Foresight, said: “Completing the acquisition of the Wymeswold solar power plant, the biggest operational plant in the UK, means that 30% of the [October 2013 Initial Public Offering] IPO proceeds are now generating cash flow for the company. The promising outlook for the UK solar sector and the quality of the underlying assets and Foresight’s solar track record provide investors with an attractive opportunity to secure an increasing yield and the potential for capital growth.”
As the plant was connected to the grid ahead of the changes to the UKs Renewable Obligation Certificate (ROC) support regime – which took effect at the end of March 2013 — it received ROC Accreditation at the rate of 2.0 ROCs/MWh and generates ROC income at that rate.
Selwyn explained the strategy: “Hazel’s intention was always to sell it as an operational project so even from the date that it started being built they were negotiating deal terms, and that went through a long process. Building the solar farm tends to be the quickest part of the overall development and funding process. The funding was always going to be complex because a solar project on this scale had never been attempted before in the UK”
Building the biggest
Beyond the challenges associated with financing such a project, the engineering obstacles also proved to be considerable — in particular those associated with site conditions. Positioned on land between the WWII runways, one of which is used as an advanced driving centre and raceway, landowners the Prestwold Estate control some 1000 Ha of farm and parkland in Leicestershire — of which the Wymeswold Airfield forms a part.
Selwyn highlights site conditions as a particular issue during the construction phase: “The [site access] road wasn’t such an issue; we had appalling weather [in the Spring of 2013] and it was a swamp. The second issue relating to the road was the raceway, where they do their track days, because the central parcel [of PV panels] was requiring us to cross the track. Mud and Lamborghinis don’t go to well together, so health and safety access to the middle parcel and maintaining track conditions for the cars going round was tough. You had so many contractors on site at any one time, it was difficult to control that whole aspect of maintaining existing uses of the airfield and what we were trying to do very quickly.”
Edward Packe-Drury-Lowe, estate manager for Prestwold, explains the company’s position on the solar development and the diverse uses such a site enjoys, saying: “The solar park will add another diversification to the Prestwold Estate with energy joining food production and leisure”. Indeed, the site is now also home to a flock of sheep, which apparently benefit from the improved growth of grass under the shade of the panels.
Another significant obstacle to the project’s successful development was its connection to the grid, vital in any large-scale power generation project. Selwyn explains the role the distribution network operator (DNO) – Western Power Distribution – and Modus Utilities, the independent connection provider (ICP), played in enabling the project to be connected to the electricity network: “We needed to connect by the end of March and in January we found out we couldn’t use the original connection route. It turns out there was a listed bridge crossing the river [Soar] and it didn’t have sufficient space in the bridge for the services that we needed to put in — such as the cabling. At that point we thought the project was scuppered.”
The ICP was contracted to provide the link to the Western Power Distribution connection point demanded from the DNO under existing statutory requirements. The complex installation entailed taking the cable from one side of the field, under a river, up the other side into a pole. This required a significant directional drill.
“Because they saw the problem that we had — and they could see a solution — we were able to get on and connect, despite only having an extremely limited timeframe,” Selwyn recalled. “This was a challenge, because not only did we have the River Soar to cross but also the field we were going to go across was flooded at the time. [In the end] we had to do a much longer directional drill than would have been the case if it had been in the summer months.”
To further complicate matters, ICP also had to get consent from the Environment Agency to drill under the river — a process that, under normal conditions, could take up to six months. “We needed to do it in a month, so they had to work hard to get quick consent,” Selwyn stated.
In the meantime, Lark had to come up with an entirely different connection route. Fortunately, for Selwyn, the property owner owned a lot of the land in the connection route as well, so that made it easier. Lark came up with an entirely new connection route and got the consents in about six weeks — which is unheard of because the installation entailed about 4 km of connection route.
“It was a massive challenge,” Selwyn noted. “But from the beginning we had a very cooperative land owner who saw the opportunity in solar farming and helped us deliver it.”
Lark Energy also credited Western Power, which it says was instrumental in making it work doing the non-contestable work. “It was a great team effort,” Selwyn said.
A new business model
Lark Energy, having bolstered its reputation as a developer with the successful conclusion of the Wymeswold installation, has seen its business model evolve. AS Selwyn explains it, the model has changed in the company has now built a lot of projects as full EPC, not just as subcontractor, so it will build all sizes of projects — something the company was not able to do previously.
According to Selwyn, Lark Energy has been building a track record with one particular funder, Armstrong Energy. “It was always our intention to cover all three elements of solar [developer, EPC and O&M contractor], but obviously you have to start somewhere and it takes a little bit of time to get your track record up and have a sufficient balance sheet to satisfy the funding [requirements].”
Selwyn has also observed a new breed of project funders emerge into the UK’s solar sector over recent years. “I think in general in the sector there is a fairly mature market for solar assets, whether it’s ready-to-build project rights or operational projects — there are lot of people in the market there’s all sorts of different ways this is being funded,” he explained. “In the early days, much of it was funded through things like Enterprise Investment Schemes (EIS) and Venture Capital (VCT) funds.” (Selwyn believes the perception of solar has shifted to that of an asset base which would give a steady guaranteed return over 20 or 25 years.)
Although changes in policy have seen these early stage investors decline in importance, others have taken their place. “There are a lot of other types of investors in the market — there’s high net-worth individuals, family offices, specialist funds which are raised on the stock market, IPOs, etc,” Selwyn explained. “It is a market that has become quite mature.”
Specifically, Selwyn cites pension funds and even banking groups such as Santander taking the unusual step of holding equity in solar projects in the UK. “There are all sorts of people in the market,” he noted. “I’m approached by people wanting to buy solar assets at the different stages of development, and there are different ways to fund it.”
Selwyn summed up the key to successful project development: “The right site, in the right location.” Scale generally doesn’t matter, although Selwyn concedes that, generally speaking, smaller projects are easier to get through planning because people baulk at the scale of some of the bigger projects.
“There is no doubt it’s easier to get a 5 MW project through planning than it is generally to get a 34 MW project through planning,” he noted. “Certainly the government is not keen on big green field solar projects — which is quite odd as there is very little opposition to them. In fact, all the evidence from government surveys and our own public consultations indicate that the public very much supports solar, whether on land or buildings.”
However, Selwyn agrees that there are some “badly sited projects” which generate quite a lot of opposition (something that can be said for virtually any development of any sort). But he also noted there are plenty of Lark Energy projects out there that have not generated any opposition.
In the case of the Wymeswold project in particular, Charnwood Borough Council, the local parish councils and the local community supported the proposal and the project received planning permission at a council planning committee in November 2012 — without a single objection, according to Selwyn.
It could be that Wymeswold is among the last of the giants as far as the UK is concerned; it remains one of the country’s largest ever such developments. Selwyn told REFocus that Lark Energy is committed to developing a large portfolio of solar projects in the UK over the coming years, be it on land or roofs. “We see a bright future for this growing industry.”