Real Estate Challenges Over Hybrid Renewable Energy Projects | Husch Blackwell LLP



Sharing energy storage with solar and wind energy projects has become a popular trend in renewable energy. Many ISOs have reported an increase in the number of hybrid resource projects in their interconnection queues in recent years. For example, CAISO (California’s independent system operator) reported hybrid projects account for two-thirds of all solar projects in its interconnection queue.

From a developer perspective, the benefits of combining energy storage with wind or photovoltaic systems include: (1) the availability of investment tax incentives not otherwise available for off-grid energy storage projects (although there has been some movement in the US lately. tax incentives for such projects); (2) savings in upfront costs from total permitting, placement, equipment, interconnection, transmission and transaction costs; (3) improving the reliability and efficiency of renewable energy through storage capacity to help reduce peak loads and recover otherwise lost power generation.

When considering modifying existing or potential solar or wind projects to be included in the energy storage component, or vice versa, developers should revise their siting agreements to determine the impact the hybrid project will have on real estate conditions. Here are a few things to consider:

  1. Project real estate: With a smaller footprint, energy storage can be located anywhere, including dense urban areas where energy is in high demand and where there may be the greatest benefits from grid connectivity, while wind and solar projects should be located where the applicable resource is strong and there is a lot of land. However, we note that given its vast and fluid geography, Texas is the best location for hybrid projects.
  2. Type of acquired rights to real estate: The smaller footprint of energy storage affects not only the project area required to operate the project, but also the type of real estate interest that needs to be generated. If unbundling requirements are not initiated or are not an issue for other reasons, the land needed for off-grid energy storage projects can be purchased for a fee, while taking into account the hundreds if not thousands of acres required for solar or wind projects. project rights are most significant. often obtained as a result of leases or easements. We note that before concluding a sale and purchase agreement, it is necessary to consider the specific requirements for the territorial division of the district; however, pursuant to Texas Local Government Code Section 232.0015 (Fee Exceptions), the purchaser (in this case, the developer) is not required to obtain the subdivision platform if the paid purchase path (s) and other path (s) are more than ten (10) acres. It is worth noting, however, that a reward purchase requires an upfront investment and a developer can often get stuck unloading a property after the project expires or if the developer was unable to develop the project due to permission or connection issues.
  3. Removal from service: Texas has specific legal requirements for the decommissioning of solar and wind projects. Pursuant to the Texas Utilities Code, Title 6, Chapter 301, which affects all wind turbine leases entered into on or after September 1, 2019, the wind power developer is responsible for removing wind power structures from a landowner’s property at or before the expiration date. termination of an agreement. The Texas Legislature also recently passed Senate Act 760, which imposes similar requirements on solar energy developers and which takes effect September 1, 2021. Both Chapter 301 and the newly created Chapter 302, under Senate Act 760, include in their definitions “wind facility” and “solar power plant” – a plant or equipment (including a battery), “used to support the operation” of a wind generator or solar energy. In this way, the storage facilities “used to support” a wind or solar project will be subject to statutory requirements for the decommissioning of wind and solar energy. However, there are currently no similar requirements for stand-alone battery designs operating independently of wind or solar power plants.
  4. Auxiliary services: Most, if not all, renewable energy projects require access and / or easements for transmission, which are either included in the core agreement or are separate easements. However, solar and wind projects also require additional easements, some of which burden the adjacent property of the landowner if applicable, such as an easement for the free and unhindered illumination of solar energy across the entire horizontal space and the entire vertical. space above and across the property and any adjacent property owned by the landowner for solar projects or easements to capture, use and transform unobstructed wind resources above and across the property and any adjacent property owned by the landowner for wind projects. Wind projects also require overhang easements if a turbine blade intrudes on an adjacent landowner’s property.

While hybrid projects are on the rise, before embarking on such projects, developers should consider the real estate implications of their current agreements, as well as the necessary changes and considerations necessary to make them applicable to the selected hybrid resources.

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