The Capacity Mechanism pays generators to install and make available back up power generation to the electricity grid.
With the increase in renewable electricity generating technologies being connected to the UK electricity grid there is greater variability of electricity supply.
For the grid to successfully operate it needs to remain in balance both in terms of voltage and frequency.
Therefore to balance the grid there is a demand, under a mechanism known as the Capacity Mechanism, to have backup generator sets which can be turned on to supply electricity to the grid as and when required. Typically these requirements are in the early evening in the winter months.
These generator sets can be fuelled with either diesel or gas and typically require between half an acre and 2 acres depending on the size of the installation and the availability of a grid connection.
Rents for these sites which can be on industrial estates or other commercial land can be attractive and we expect to see a growing requirement for them over the next few years.
These sites are also sometimes known as “strategic operating reserve” sites or “STOR”.
Our Energy Team can advise you on Landlord and Tenant matters around letting a site as well as advising you on the valuation of the freehold should you have a rental income or advise you on the development and operation of this type of site.