Understanding the current regime, and how it might change, will be particularly important for rural and agricultural landowners.
WolfBite - the key takeaways:
• The new government has committed to a substantial increase in onshore wind power to accelerate efforts to meet climate targets.
• More onshore wind power means more cabling.
• More cables means that rights over more private land will be needed to move electricity around the network.
• Electricity distributors usually seek to negotiate voluntary wayleave agreements with private landowners to give them access for laying and maintaining cables, only falling back on statutory powers to obtain “necessary wayleaves” or buy land where negotiations fail.
• As a result, the network relies heavily on voluntary arrangements that can be time consuming and expensive to put in place, and which only provide temporary, personal, rights that are inherently precarious.
• The new government has said that changes will be needed in order to increase the speed and reduce the cost of deploying renewable generation capacity.
• The government will be consulting on market reforms and has already indicated that compensation rules will change to ensure that what landowners are paid in return for the use of their land is fair but not excessive.
• It is possible that we may see some reforms similar to those made in the telecommunications industry, with electricity companies being given stronger statutory rights to access land, coupled with procedural changes.
Wind power’s role in getting to net zero
The Labour Party has committed, both in its pre-election manifesto and in the King’s Speech, to achieving zero-carbon electricity by 2030, accelerating to net zero.
The Prime Minister and the new Energy Secretary announced in July a significant partnership with The Crown Estate (which manages around half of the tidal land and seabed around England, Wales and Northern Ireland) that is intended to speed up the roll out of offshore windfarms.
The new government also intends to significantly increase onshore wind capacity, having already revised planning policy so that planning applications for onshore wind will be treated in the same way as other energy development proposals.
More onshore wind projects means that more private land will be needed for the apparatus that generates the electricity and for the cables and lines required to distribute it around the network.
Energy companies will usually buy freehold land or sometimes enter into leases for key above-ground infrastructure such as electricity sub-stations. This gives them exclusive possession of an area of land so that they have unrestricted access as well as control for safety and security reasons.
Securing the rights for the associated cabling, however, presents more of a challenge.
Cables and lines often need to run under or over land for many miles. In order to run cables over such large distances, electricity companies usually need to put individual arrangements in place with multiple private landowners.
How do electricity companies acquire rights for cables and lines?
At the moment, electricity companies usually obtain the rights they need to enter onto private land to install, use and maintain cables and lines in one of the following ways:
Voluntary wayleave agreement
This type of agreement gives a temporary personal permission or licence to run cables on or over land, usually in return for annual payments to the landowner.
A wayleave does not create an interest in land and will not bind future owners. Accordingly, if the land is sold, or the owner dies, the licence will end.
Voluntary agreements are often granted for a fixed number of years and contain provisions for termination on notice.
Given that they are voluntary agreements, the terms, including the amount of the wayleave fee, need to be individually negotiated. However, some electricity companies have agreed advisory rates and model agreements with umbrella organisations such as the Country Land and Business Association and the National Farmers Union.
Grant of an easement
An easement is a right to do something on someone else’s land, such as a right of way or a right of drainage.
An easement is more than a mere personal permission or licence; it creates an interest in land and can bind successive owners.
Whereas wayleave agreements are not registerable at the Land Registry, easements need to be registered.
Easements are more appropriate where the electricity company requires permanent rights on, over or under land, typically for higher-value strategic assets.
Statutory/necessary wayleave
Electricity distribution companies that hold particular licences can apply to the Secretary of State for a “necessary wayleave” (sometimes called a compulsory wayleave) using powers in Schedule 4 of the Electricity Act 1989. A necessary wayleave can either relate to the installation of a new electric line, regularising an undocumented existing line or to the retention of an existing line where the landowner has sought to have it removed.
As with a voluntary wayleave, a necessary wayleave does not create an interest in land and does not need to be registered but, unlike a voluntary agreement, the legislation provides that it will bind successor owners and occupiers.
There is a set procedure that starts with the service of a notice and, if agreement is still not reached within a short timeframe, the licence holder applies to the Secretary of State who will then consider the application and make a decision. The decision is binding and can only be challenged by way of judicial review.
If the necessary wayleave is granted (usually for a 15 year period), compensation is payable and disputes over the amount are determined by the Upper Tribunal (Lands Chamber) under the Land Compensation Act 1961.
Compulsory purchase of land
It is less common for cables, but, rather than seeking rights over someone else’s land, electricity distribution companies with relevant licences can exercise statutory rights to actually buy land outright, either by way of compulsory purchase order made under Schedule 3 of the Electricity Act 1989 or within a development consent order under the Planning Act 2008.
Historically, electricity companies have generally preferred to enter into voluntary wayleave agreements with landowners due to the relative simplicity when compared to buying or leasing land, negotiating easements or exercising statutory rights of acquisition.
It remains the case that electricity companies will usually seek a voluntary agreement with private landowners, and only look to rely on their statutory rights if negotiations fail.
This means that much of the electricity network relies on voluntary wayleave agreements.
What are the problems with the current system
There are various problems with the current system for landowners, electricity distribution companies and generally for the efficient operation of the electricity network.
For landowners, there are often a variety of matters they need to consider when an electricity company asks to run cables and lines over their land. They will, for example, need to identify precisely where the cables will go, how disruptive the initial installation works will be and what provisions to include relating to access for future maintenance, repairs and upgrades. They will also need to consider how long the wayleave agreement will last, what level of wayleave fee to ask for and, crucially, what effect the existence of the cables will have on the value of the land and the ability to let, develop or sell in the future.
Particular issues can arise when landowners want to terminate wayleave agreements, commonly when they wish to develop their land.
Terminating wayleave agreements and requesting the removal of cables and lines invariably results in electricity companies contesting termination notices and starting the statutory process to obtain a necessary wayleave or compulsorily purchase the land.
For electricity companies, individually negotiating wayleave agreements with multiple landowners along the whole route the cables are to run is often time consuming and expensive. The temporary, personal, rights they receive in return are inherently precarious. Exercising statutory rights when landowners refuse to sign up voluntarily just adds to the delay and cost.
The “bigger picture” problem is that we all need a system that can work quickly and efficiently to support the urgent transition to net zero. The current system, relying as it does on individually negotiated voluntary agreements, is unsatisfactory for an infrastructure network of such vital importance.
Potential reform of the law
The government considers that there will need to be at least a doubling of current onshore wind capacity, and a three to fourfold increase in offshore wind and solar capacity, in order to meet climate targets.
It said in the King’s Speech that it is highly unlikely that the scale and pace of investment that is required to achieve this can be delivered by the private sector alone within the current institutional and policy landscape.
The government intends to introduce a Great British Energy Bill that will create a new public energy company (Great British Energy) that will own, manage and operate clean power projects.
There will also be additional market reforms aimed at increasing the speed and reducing the cost of deploying renewable generation capacity.
In parallel, the government will introduce a Planning and Infrastructure Bill that will, amongst other things, reform compulsory purchase compensation rules with the aim of ensuring that compensation paid to landowners is fair but not excessive where important social and physical infrastructure are being delivered.
We do not yet know what reforms will be made, but we can see the clear direction of travel.
The previous Conservative government issued a call for evidence on land rights for electricity network infrastructure in 2022, and its response was expected at around the time the general election was announced. The focus of that consultation was on whether current processes are fit for purpose or act as a barrier to the building of electricity network infrastructure.
In a founding statement introducing Great British Energy, the Labour government stated that it will now undertake a programme of “stakeholder engagement” to further develop its policy approach. It seems likely that part of this will continue to look at if, or more likely how, the current system of acquiring land rights for the electricity network can be improved.
Interestingly, the last government’s call for evidence included a comparison with the alternative approaches to the acquisition of rights over land in the telecommunications and water industries, noting that providers in those sectors have stronger rights to access land than electricity companies.
Given the significant reforms made in the world of telecommunications in recent years, it seems possible that the new government may borrow from the approach taken with electronic communications when reforming the landscape for electricity network providers.
We might, for example, see electricity companies being given the ability to apply to the tribunal, rather than the Secretary of State, to acquire necessary rights over private land if new agreements cannot be reached, or existing arrangements varied, by negotiation.
Changes are on their way that rural and agricultural landowners in particular will need to keep an eye out for.
Our Agricultural Land team, who deal with disputes involving wayleave agreements and other land rights, will provide further updates as matters develop. If you have any concerns related to this article, please contact us at hello@hagenwolf.co.uk.
