Friday, December 15, 2017

Opportunities still exist for some on-farm renewable energy projects

May 15, 2017 by  
Filed under News & Business

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Renewable energy is still worth considering on-farm – despite changes in government support, says Cath Anthony.

Subsidies have reduced for almost all the available renewable energy technologies in recent years. But the price has come down for those technologies too, so it can still add up, in certain locations. Tariffs for solar, for example, have reduced but so too has the cost of installing the technology.

This means roof-top solar voltaic panels could still make sense on some farms. We will probably still see some largescale projects too, although grid connection can be an issue for solar sites because much of the capacity has already been secured by previous schemes.

The main opportunities are for farms that have a high energy requirement – or a near neighbour who is a high energy user – because renewable energy can help displace existing costs, reducing the need to rely on government incentives.

There are still opportunities for biomass too. The Renewable Heat Incentive (RHI) is still at a reasonable level and provides opportunities for those with a high heat requirement, for example poultry units.

Tariffs

The RHI is due to change in the coming weeks – although at the moment it is unclear exactly how the general election will affect the timing of the legislation.

There will no longer be separate tier bands for different capacities – so a scheme of one megawatt plus will receive the same tariff as a smaller scheme.

While the tariffs for small/medium scale systems are reducing, if you are requiring the heat for a higher proportion of the time the new scheme might actually be more beneficial. In the current system, you get one tariff for 15% of the load factor, with a lower tariff for the remainder.

The aim was to discourage people from producing heat for the sake of it. The percentage for the tied tariff is increasing from 15% to 35% so it will be more viable for people who require a lot of heat for a larger proportion of the time.

Unfortunately, the feed-in tariff (and the fact the ROC Scheme has now closed) for anaerobic digestion means we are unlikely to see many more electricity plants going forward because only 5MW can be accredited to the feed-in tariff system every quarter – and that includes pre-accreditation.

Capacity

The ‘queuing’ system means there is no more capacity for new schemes until 2018 and every time the threshold is met, a 10% degression occurs, so the tariffs are rapidly reducing.

The feed-in tariff for all technologies is due to end in 2019.Overall, we are very much hoping there will be a replacement scheme to encourage small-scale and on-farm renewables. We may see policy refocusing on cutting carbon rather than energy production.

We have been doing lots of lobbying work to encourage on-farm anaerobic digestion. It is not just about energy creation– it is also highlighting to policymakers the benefits of methane capture, nutrient recycling and a diversified income, which could be even more important post Brexit.

Farmers interested in renewables should consider what resources they have on the farm – including the energy requirement, and examine whether a project could help reduce existing energy costs.

Access to the electricity and gas grid is essential if you need to export but capacity has been taken up in many areas.

Equally, access to allow-cost feedstock or displacing disposal costs for wastes can help a project add up. If you have biomass or an area of forestry that you want to improve, or waste that could be utilised by anaerobic digestion, it might work – especially if you have access to a gas grid nearby.

The RHI is still at a level to encourage biomethane injection plants, although these are likely to be a much larger scale. There is also opportunities for battery storage, or gas to grid sites. But again it is the larger schemes that are going to be making to most money so there is likely to be a developer involved and it is very important to ensure you take advice on the terms being offered by developers.

We are doing a lot of due diligence and valuation work for banks refinancing existing projects. A few years ago, some projects were seen as too risky for mainstream lenders, but those schemes that have been operating for some time have a proven track record and farmers can often refinance at a much lower cost.

Cath Anthony is a specialist in renewable energy and anaerobic digestion at Bidwells. For details, call 01223 559509 or visit www.bidwells.co.uk.

 

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