Friday, October 20, 2017

Farmers plug into renewable energy generation

October 4, 2017 by  
Filed under News & Business

SolarPVlandscape

Farmers and landowners are taking a fresh look at renewable energy in a bid to maximise returns from available assets.

Low-carbon renewable energy schemes, such as solar electricity, biomass generators or wind turbines, have seen significant uptake in recent times and continues to be an attractive choice for generating additional income.

Promising figures

Renewable energy is the second-most popular form of diversification, according to Defra’s most recent Farm Business Survey, with 23%  of businesses generating green energy. And this trend is expected to continue.

Defra’s survey revealed that around half of livestock farms (49%) planned to carry out a major change to the business in the next two years.  For those planning a change, the most common reason given was to increase profitability (67%).

And diversification is proving to be a crucial crutch in trying times.  Total income from diversified activities in 2015/16 was £580 million, a 9% increase from the previous year (£530m).

Those farms generating renewable energy generated 9% of their total income (£60m of £650m) from these activities, compared to 6% in the previous year.

On average, renewable energy generated £13,700 per farm in 2015/16.

Regional trends

“Diversification is very much sought by farmers to try and de-risk from just producing arable crops or livestock,” says Shrewsbury-based Rob Matthews, from farm energy insurance specialists Lycetts.

“Renewable energy is a popular choice for farmers to branch out for several reasons. Originally the government incentive sparked interest but it also offers a separate income source.  We have seen a substantial increase in solar energy on farms in the Midlands, either as stand-alone arrays or on buildings.

“Poultry is a thriving sector of agriculture in the region and it is quite common for smaller farmer, or a farmer looking for an additional source of income, say to support a son coming to the business, to branch out into solar power.”

Many new poultry sheds are now built with PV panels and some farmers have gone the extra step of also installing an AD plant to digest the litter at the end of the growing cycle – so they make money from the chickens, the solar, and the heat and electricity from the AD plant.

Popular

“Biomass has proven very popular, especially with farmers who have a large supply, whether it be from their own timber supplies or buying matter to feed the biomass. We have also seen wind turbines being built in the region but there have been issues around the planning, making it a more difficult option for the average farmer.”

Mr Matthews warned that diversification into farm energy does have its challenges, particularly in the conception stage. “Each scheme is different but on the whole, planning authorities or the local community objecting to planning proposals is the biggest challenge faced by farmers.

“There is also the amount of Capital Expenditure required to set the scheme up.  It depends on the farmer’s attitude to borrowing, or indeed, the level of borrowings they already have, which might preclude them from further investment.”

But Mr Matthews says that for farmers who are interested in diversification, now is a good time to explore their options. “In the long term, renewable energy is an effective way for farmers to boost or supplement their income,” he says.

“Solar PV cells are getting cheaper and more efficient by the day and they are also comparatively easy to install. Those farmers with a transformer on their land will be best placed to exploit future storage and release opportunities.”

So, what does the future hold for renewable energy in the region?

“A future area for growth is battery storage plants,” says Mr Matthews.  “The renewable energy that is produced on-farm is stored in large batteries for later use.  When the National Grid wants extra supply for a short term, the grid will be able to access the energy in the battery for a few seconds, paying the farmer for the energy or electricity taken.

“There is also a growing trend for installing anaerobic digesters.  But the very high capital expenditure and ongoing maintenance and feeding of the digester means it is not the right choice for every farmer.”

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