Project Nutcracker: Make NSIP thresholds flexible if you want growth

This article is the fourth in my Project Nutcracker series which examines ways to speed up the consenting of UK infrastructure.

Here I make the case for giving developers some discretion over whether to seek a DCO or planning permission for their projects.

The Government said in its recent consultation: "It is vital developers use the most efficient planning route to consent their energy projects so that we can make the UK a clean energy superpower"^[1]. I agree.

But why fix an absolute threshold by statute, on what can only ever be a fairly arbitrary basis? Let developers decide which regime is most appropriate (within certain minimum and maximum thresholds if you wish).

The need (or not) for compulsory purchase powers is likely to be the deciding factor in most cases, and there's nothing wrong with that. Both the NSIP and TCPA regimes are fair and robust ways to consent projects.

If the Government wants growth quickly, this would be an easy win.

1. Thresholds are a live issue

The Government recently consulted on whether to change the thresholds at which solar and onshore wind proposals must be decided by the Secretary of State for Energy & Net Zero as "nationally significant infrastructure projects" ("NSIPs") rather than obtaining an ordinary planning permission from the local council.

The Planning Act 2008 sets thresholds above which different types of energy and infrastructure projects constitute NSIPs and must therefore seek a "development consent order" (DCO). For power stations of any sort (except onshore wind), the current threshold is a power output of 50MW and above. Onshore wind sits outside the NSIP regime entirely, having been excluded from the Planning Act in 2016, but the Government plans to reverse this.

The Government's proposal is to set bespoke thresholds of 100MW for onshore wind, and 150MW for solar projects, above which projects must use the NSIP regime (see here).

The justification given for the proposed changes is that:

"The original intention behind the categorisation of certain projects as 'nationally significant' under the Planning Act 2008 was to identify the largest and most important projects and put them through the NSIP system rather than the local Town and Country Planning system. With the changes in technology that have taken place since, many small or medium-size projects now exceed the existing 'nationally significant' threshold. This can be a barrier to the accelerated and streamlined deployment of these two cheap electricity generating technologies at scales below what most people would consider to be nationally significant."

The consultation correctly notes that most solar developers are deciding either to size their projects at 50MW (the maximum output while avoiding the NSIP regime), or to ensure they are above 150MW in order to make the extra cost of going through the NSIP regime worthwhile. There is a recognition in the Government's consultation that the TCPA regime can "result in faster consenting, at lower cost." I agree with this comment, but it's a damning inditement of a regime which, afterall, was brought in to make the consenting of nationally significant infrastructure projects faster and cheaper.

2. When is the NSIP regime worth the extra time and cost?

Hazel Blears, the then Secretary of State for Communities and Local Government, said in 2008: "This new regime will cut the time it takes to get planning consent for major projects, reducing costs and delays." It might achieve that aim for a handful of the largest and most controversial projects (a super sewer, a third runway at Heathrow, or a new nuclear power station), but for most other projects the NSIP regime is now a much lengthier and more expensive process than seeking an ordinary planning permission. Even if your planning application is turned down locally and you have to appeal (with the inevitable planning inquiry), you're still likely to get your consent faster and more cheaply than if you went through the NSIP regime.

One of the alleged benefits of the NSIP regime is its ability to wrap in other consents (the "one-stop-shop" principle).  But with the exception of compulsory purchase powers (see next paragraph) this benefit is usually marginal, and certainly doesn't merit the extra time and cost of the NSIP process. Yes, DCOs can avoid the developer having to get things like stopping up orders and traffic regulation orders separately. And if you're going through the long, painful and expensive NSIP process, you may as well wrap in other consents. But for most projects there are relatively few additional consents required. Those which are, are either: (i) easy to obtain outside the NSIP regime; or (ii) consents that would require details of construction methodology etc that the developer won't have until after the DCO is granted, when a construction contractor has been appointed.

This is not to say that the NSIP regime has no advantages compared with local planning. The ultimate decision-maker for an NSIP is the Secretary of State rather than (as for a planning appeal against a local authority refusal) a PINS Inspector^[1]. Generally, the Secretary of State seems more willing than Inspectors to grant consents in the face of some adverse local impacts. So the NSIP regime provides this extra level of comfort.

However, for the majority of projects, there is one primary factor which tips the balance in favour of the NSIP regime over TCPA: compulsory purchase powers. Where such powers are not needed, you'd generally be better off in the TCPA regime. Where they are needed, the efficiency of being able to seek them under the single DCO process, alongside the planning powers, is better than having to get a compulsory purchase order separately. In some cases there is, in any event, no other legal regime through which a developer could seek compulsory purchase powers^[2].

3. The logic behind making thresholds flexible

So here is my logic.

My first premise

Both the NSIP and the TCPA regimes are robust, procedurally fair, tried and tested ways of consenting infrastructure. Some people may tell you that the NSIP regime is (or should be) used to consent larger and more complex projects than the TCPA regime. I don't agree this "should" always be the case, and it certainly isn't universally true now. One of my clients has recently had to go through the lengthy NSIP process to get consent to change a valve in a power station to allow it to generate 65MW rather than its current 50MW (!). Conversely, onshore oil and gas applications of all scales fall within the TCPA regime, as do many airport expansions, solar and energy from waste power stations below 50MW, not to mention major housing developments. Such TCPA projects can have more complex planning issues, and be more controversial locally, than others which count as NSIPs.

My second premise

If the Government's aim is to facilitate the rapid roll out of onshore wind and solar (and other UK infrastructure in fact) the aim should be to set the threshold between NSIP and non-NSIP (TCPA) projects in a way which works best for the maximum number of projects. By best, I mean efficient and cost-effective. Encouraging developers to invest.

My third premise

The Government is seeking to make a best guess at what this threshold should be by suggesting 100MW (onshore wind) and 150MW (solar) in its recent consultation. It is consulting in order to get developers views. But views will differ. One size will never fit all. This is especially true given that the need (or not) for compulsory purchase powers will be a key factor.

My conclusion

If you want growth as fast as possible, it makes sense to offer a degree of flexibility to developers as to whether they use the NSIP regime or TCPA regime.

4. Different options for achieving flexible thresholds

Here are some suggestions as to how developer-led flexibility could be achieved. My examples relate to power stations, but the same principles might be applied to other classes of infrastructure caught by the Planning Act 2008:

Option 1 - Let each developer choose the most appropriate regime for their project on a case-by-case basis

The most radical option but one that makes complete sense to me. You wouldn't have to specify any minimum threshold – it would usually be madness of very small projects to decide to use the NSIP regime (due to the cost) but I don't see any reason to ban them from doing so. Avoiding setting any minimum threshold would enable smaller projects that need compulsory purchase powers to use the NSIP regime to obtain them (eg a 30MW wind farm which needs to get land rights); or

Option 2 - Let developers choose which consent route to take if they are within certain maximum and minimum thresholds

For example: between 30MW and 200MW they get to choose. Below this they must use TCPA, and above it they must use NSIP. This way, for example, a proposed solar farm which is 190MW but does not need compulsory purchase powers could choose to get consent relatively quickly and cheaply from the local council (if they are a supportive council), or worst case seek consent via a planning appeal. This would still be faster and cheaper than the NSIP route, as long as they don't need compulsory purchase powers. Equally, a 35MW wind farm that needs powers of compulsory purchase could use the NSIP regime to get those powers; or

Option 3 - Set a threshold above which the NSIP regime must be used, but specify that if compulsory purchase powers are needed then a project of a smaller scale may use the NSIP regime

The "must-use-NSIP-threshold" would be set high (perhaps 200MW) but the developer of a 30MW wind farm would have the comfort that they could nevertheless use the NSIP regime if they need compulsory purchase powers; or

Option 4 - Keep the thresholds as they are currently (50MW for power stations of any type) but let developers apply to the Secretary of State to opt out of having to use the NSIP regime

This would mirror the ability currently to apply to the Secretary of State with a request to opt-into the NSIP regime (under section 35 of the Planning Act 2008). The criteria for being given permission to opt-out would need to be given careful thought. The reason most developers are likely to want to opt out is because they don't need powers of compulsory purchase (and perhaps also have a supportive council), and therefore think that getting consent via the TCPA route will be quicker and cheaper. It doesn't make a lot of sense for developers to have to apply to the Secretary of State for consent to opt-out on these grounds every time, but it is a possible approach.

The NPPF consultation considers changing the threshold for water resources infrastructure, as well as solar and onshore wind. But perhaps they should be considering how to apply some developer-led flexibility over choice of consenting route to all classes of infrastructure currently mandated to use the NSIP regime? To pick just one other example, the 2km threshold for overhead electric line NSIPs seems to me an unhelpfully low bar. It could be raised to a greater length, but why not allow the promoter some flexibility instead of picking another length?

5. Ideological objections to flexibility

I have seen some legal commentators objecting to the idea that if the Government implements its proposals there will be three different thresholds for "national significance" of power station projects as defined by the Planning Act 2008: (i) 100MW for onshore wind; (ii) 150MW for solar; and (iii) 50MW for all other power stations. The objection seems to be that it shouldn't matter what the technology is, there should be a single measure of "national significance" requiring use of the NSIP regime, and that measure should be based on power output alone.

I don't agree with this, and I don't understand why anyone feels the need to get hung up about it. There's certainly no legal problem with an Act specifying different thresholds for projects having to use a particular consent regime (or being allowed to).

Both the TCPA regime and the NSIP regime are robust ways of testing and consenting projects. The NSIP regime was brought in to facilitate the consenting of infrastructure. All the Government is concerning itself with (rightly) is deciding when it is appropriate for different regimes to be used. It is right that the Government sets criteria which takes account of the urgent need for infrastructure to be developed, and the economic realities for developers of using each regime. To ignore differences risks unnecessarily hindering developments being brought forward, or skewing the scale of their design.

The Planning Act uses the label "nationally significant infrastructure project" to connote all projects required to use the NSIP regime. But we mustn't let that label get in the way of the over-arching goal (as described above). If people are tying themselves in knots thinking there must be the same power output threshold for all power stations to use the NSIP regime then let's ditch the label "nationally significant infrastructure projects" altogether and replace it with "DCO projects" or some other neutral label. My point is, don't let the tail wag the dog. Don't let the "nationally significant infrastructure" term used in the Act drive an approach to thresholds which is less than helpful to developers and to UK growth.

I labour this point because I presume those commentators who dislike the idea of multiple NSIP thresholds for powers stations will be even more uncomfortable with my suggestion of developer-led flexibility over choice of regime.

My ideas for flexibility could lead to a smaller power station project going through the NSIP regime, and a bigger one going through the TCPA regime. There is nothing wrong with this legally or intellectually. We must do what achieves the over-arching goal – making consenting of UK infrastructure faster and cheaper. That was the goal of the Government in bringing in the Planning Act 2008. It hasn't worked out quite like that, but developers are in the best position to judge which route is most efficient, so trust them to choose and you will get more consents and faster growth.

6. Counter to the idea that developers can opt-in under Section 35 even if below the Planning Act threshold

Some commentators have suggested that regardless of what the NSIP threshold is for onshore wind, developers below that threshold who wish to use the regime can simply apply to the Secretary of State to opt-in under section 35 of the Planning Act.

In reality, the Secretary of State would find it very difficult to grant such a request and let the developer of a 30MW onshore wind power station (for example) opt into the NSIP regime if the threshold for power station NSIPs is set in the Planning Act 2008 at 50MW (or lifted to 100MW for onshore wind).

To opt into the NSIP regime under section 35 you must explain to the Secretary of State why you think your particular project is "nationally significant". There have been a handful of projects to have opted in in this way, but they have been projects of types not contemplated by the Planning Act 2008 (for example, interconnectors or lithium mines^[1]). In the case of an onshore wind farm of say 30MW, I don't see how the argument could be made that despite Parliament having expressly turned its mind to what constitutes a level of project which is "nationally significant" and setting that out for power stations in section 15 of the Act, a particular project below that threshold is nevertheless nationally significant.

Certainly, if such a section 35 application were to be granted it would in effect redefine the threshold for onshore wind NSIPs at 30MW thereafter. It seems better to legislate if we want to build in this flexibility, using one of the mechanisms I suggest.

7. Call-ins and recovery will be needed to set precedents for TCPA decisions

Left to their own devices, Planning Inspectors appear more reluctant to grant TCPA permissions for solar projects (on appeal) than the Secretary of State does when deciding solar NSIPs. The TCPA regime is generally cheaper and quicker than the DCO regime, but developers need to be assured that its outcome is equally likely to be positive.

To ensure pro-development consistency in decision-making across NSIPs and TCPA applications for solar and onshore wind, it will be important that the Secretary of State uses her "call-in" and "recovery powers" as soon as possible to set a series of positive precedents. Inspectors will then be required to follow these in subsequent TCPA decisions. What is needed is in effect the opposite of what Eric Pickles did to kill off onshore wind a decade ago. Pickles took over a number of planning applications and appeals for his own determination and turned them down by weighing adverse landscape and other local impacts more heavily than the national benefits. Through specific decisions, Angela Raynor needs to educate Inspectors about how strongly to interpret Government planning policy to weigh need over impacts.

In theory, local authority planning committees should also follow such Secretary of State precedent but local politics will always, sadly, be hard to overcome.

8. At 100MW all English onshore wind projects will be decided locally

The Government consultation said: "The Chancellor’s announcement on Monday 8 July included a commitment to consult on bringing onshore wind back into the NSIP regime. To fulfil this commitment, this consultation therefore proposes that onshore wind is re-integrated into the NSIP regime." Does the Government realise that by suggesting a threshold of 100MW, almost all wind farms coming forward in England will be consented locally under the TCPA regime? From what I hear, most English wind farms will be around 30MW or less due to various constraints. In contrast, many solar farms coming forward will be above the mooted 150MW solar threshold and therefore be consented via the NSIP regime. I'm not saying this is right or wrong, but Government should be aware that if they want more onshore wind consented via the NSIP regime the threshold must be much lower (or flexible, as I am suggesting in this article).

9. What about co-location of solar and wind?

I understand that solar and onshore wind may be co-located by some developers. How will that work with the technology-specific threshold being suggested in the Government consultation?

Further discussion

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