A developer of solar and wind projects would like to sell its surplus biodiversity net gain (BNG) units to a large developer in need of off-site units under England’s new legislation.

Low Carbon expects to generate thousands of surplus BNG units, from improving biodiversity on sites in England by allowing them to naturally rewild, that it would like to sell on to a large developer who needs them, said Harriet Parker, ESG and sustainability director at the renewable energy developer.

England’s BNG market requires new development projects to achieve a net biodiversity improvement of at least 10% as of Feb. 12, 2024, with nature restoration ventures popping up to serve the market.

Low Carbon is required to meet the biodiversity uplift requirement in order to receive planning permission but expects to easily meet the threshold, with estimated 80-150% biodiversity uplift across its portfolio of sites so far.

“We’ve started to do the calculations on a few of the planning applications over the last few years as part of best practice, and we’re typically seeing an 80-150% increase in biodiversity from the way that we construct and operate the sites,” Parker told Carbon Pulse.

The developer expects to generate about 2,000 BNG units from 10 of its upcoming projects, most of which will start operating this year, with the team so far quoted in the region of £25,000-35,000 a unit.

Some regions, such as the east of England, are already seeing higher prices for BNG units due to high levels of development, said Parker.

These units could be sold via brokers or marketplace listings, or ideally, in large batches directly to a large developer looking to fill a deficit of units on its own site, she added.

REWILDING LAND

Low Carbon allows the land surrounding its wind and solar projects to naturally rewild, while it enhances the hedgerows and vegetation to boost biodiversity and sometimes introduces grazing sheep or reptile habitats.

The land it buys is typically low-quality arable farmland, deplete of biodiversity due to the use of herbicides, pesticides, and monocrop plantations. By installing minimal renewable energy infrastructure, and taking a hands-off approach, Low Carbon aims to allow the land to naturally regenerate and attract wildlife, Parker explained.

“For a solar farm only a small proportion of land needs to be taken up by infrastructure, this means that the remaining area on each site can be set aside for grassland and wildflower meadows to provide habitats for pollinators, birds, and other wildlife for the lifetime of the project,” said Parker.

Solar project plans in Oxfordshire from a German company recently sparked criticism on their potential nature impacts, with an environmental organisation claiming the plant would severely threaten wildlife.

The impact of renewables on biodiversity has long been debated. A study published by the think tank REN21 last month stated that the benefits of clean energy outweigh any potential adverse effects.

The 2011-founded company Low Carbon has solar, wind, and energy storage projects in development across the UK, Netherlands, Germany, Poland, and the US, and is looking to expand further globally.

It has 14 operational sites currently, which have generated about 1 GW so far, and expects about 700 megawatts of capacity to enter construction over 2023-24. By 2030, Low Carbon aims to have generated 20 GW of renewable energy in total.

Last July, the company raised £400 million, from its 49% shareholder Massachusetts Mutual Life Insurance Company, to expand its pipeline until 2025.

A few months earlier, it raised £310 mln from a multi-bank debt facility with ABN AMRO, ING, the Commonwealth Bank of Australia, and Intesa Sanpaolo for the construction of an additional 448 MW of solar capacity in the UK and the Netherlands.

Since 2022, the 220-strong team has raised about £1 billion of total investment, Carbon Pulse was told.

England’s new BNG legislation is a landmark moment globally for biodiversity.

Observers are keenly watching the progression of the law as it could set a global standard for government nature requirements, while creating a market for statutory biodiversity credits that developers have to buy off-site as a ‘last resort’.

Success for the ambitious first-of-its-kind policy could reap dividends for nature, with developers working much more harmoniously with the environment, while failure could result in greenwashing on a vast scale.

An unintended consequence of the new regulation could see smaller developers in England incur unnecessary costs as they fail to take full account of the scheme’s implications.

Sheep grazing alongside a solar panel on a Low Carbon project site. Source: Low Carbon

EYEING THE OPPORTUNITY

For Low Carbon, the prospect of generating additional revenue from selling surplus BNG units presents an attractive opportunity.

For local authorities (LAs) with really high demand for BNG, due to high levels of development such as in the southeast, Low Carbon may even look to enhance the site for biodiversity further in order to generate more units, said Parker.

The BNG legislation requires developers to buy their off-site units in the same LA where they wish to develop, meaning that certain areas of England could see significant demand and a shortage of available units to buy.

Availability of grid connections remains the most limiting factor as to where Low Carbon places its projects, however, so the team is unlikely to target a site simply for its biodiversity considerations at this stage, said Parker.

“This is a critical period to see whether people are able to meet the requirements within their own development or whether there will be a big demand for off-site units,” she explained.

As the legislation entered into force this month, the market is very early stage and people are still working things out, she pointed out.

“It may be that it evolves and becomes cheaper to work on your design so that you meet the requirements yourself or perhaps for some developments, it is just impossible to meet and they will have to always rely on off-site units, such as for housing developments where the commercial viability of the development is critical and losing space to a wildflower meadow may not be viable,” she said.

Some LAs have also set their BNG targets at more than 10% biodiversity increase in order to encourage greater biodiversity in their area, though these changes now need to be justified under a recent adjustment to the legislation.

Around 20 LAs have set BNG targets for developments at over 10% across England, with two authorities in London – Kingston-upon-Thames and Tower Hamlets – setting policies of 30% BNG, a report published by charity coalition Wildlife and Countryside Link (WCL) found earlier this month.

There are lots of complexities to get to grips with under the legislation, and some local authorities are more advanced than others in preparing for the change, said Parker.

The government could support LAs with more information on how BNG relates to planning permission on developments that have already been granted, as that would help speed up the process, she said.

Indeed, the Green Finance Institute has called on the UK government to better resources LAs to help them better implement the BNG policy, with concerns around limited capacity and resources to assess developers’ plans to meet the requirements.

The government has pledged £10.6 mln of funding to help local authorities expand their ecologist teams.

Low Carbon has not yet experienced any issues with accessing ecologists for surveys, though Parker said that could change if demand for BNG grows and there are a lack of specialists to audit and implement habitat plans.

The company may consider hiring an in-house ecologist depending on how its BNG business grows, but for now is tackling the legislation with sustainability and planning experts.

Biodiversity uplift on Low Carbon sites is assessed using the UK Department for Environment, Food and Environmental Affair’s metric for BNG to assess biodiversity increase, using a third-party ecologist.

The pressing challenge of how to measure biodiversity increase is a hot topic in the scientific community, with the European Commission calling for robust methodologies to do so.

By Bryony Collins – bryony@carbon-pulse.com