Looking to a future beyond the Feed-in Tariff for Landowners
By Paul Spackman – (5 min read)
The government’s Feed-in Tariff scheme has stimulated growth of small-scale renewable energy generation since its launch in 2010, so there is understandable concern among landowners and farmers, about what will happen when the scheme closes to new applicants next March.
Indeed, repeated tariff cuts, combined with other policy changes such as closure of the Renewables Obligation to new projects last year have already dented investor confidence.
This is highlighted in a recent Commons environmental audit committee report that says there has been a “dramatic and worrying collapse” in annual investment in clean energy over the past three years, which last year fell to its lowest level for a decade.
It’s clear many farm-based projects may well have failed to go ahead without FiTs, especially in the early days when technology costs were higher, and despite industry calls for support beyond 2019, it looks likely future projects will have to work without subsidies.
Make it pay
Maximising the onsite use of electricity generation is already essential to the viability of many new farm-based projects and will be even more so in the absence of FiT generation and export payments.
Energy-intensive rural businesses, such as those with indoor poultry or livestock, cold stores, or processing facilities, will have most to gain from generating their own electricity and reducing the amount bought from the grid (at typically 12-15p/kWh), but other opportunities may well arise as technology evolves.
A big driver is the electrification of transport that is already seeing many leading motor manufacturers develop hybrid or electric vehicles.
Agriculture is no exception to this, with several firms already offering battery-powered machines (e.g. the Kramer 5055e loader, and electric ATV companies), and others hoping to bring new designs to market in the near future (e.g. John Deere’s SESAM tractor and the Fendt Vario e100).
This will inevitably create more onsite demand for farm businesses using electric machines and may well improve the economics of installing new, or additional renewable energy generation to meet that need.
Balancing energy supplies with the daily demand profile of farm businesses remains a key hurdle, but there are ways this can be overcome.
Having a mix of energy generating assets, such as wind turbines alongside a solar array, can help provide a more even supply, as can co-located batteries that store surplus energy generated at peak times rather than it being exported to the grid.
There is an increasing choice of both large and small-scale battery systems on the market and although the economics of battery storage may still not quite stack up for many farmers just yet, it is certainly something to consider as technology improves and costs fall.
There may be further financial help for early adopters too. For example, earlier this year the government made grant funding available for farmers and landowners to increase on-farm renewable energy use by improving energy storage and distribution. The RDPE Countryside Productivity Scheme offered capital grants worth up to 40% of eligible costs for a range of items, including battery storage systems.
A further opportunity, perhaps where there is no significant on-site power demand, is the establishment of a private wire supply deal with a nearby business that can utilise the energy, or consider a corporate Power Purchase Agreement.
A recent Smartest Energy report suggests the removal of subsidy support could see more corporate PPAs established between energy generators and large energy users (e.g. firms from retail or banking sectors) who are keen to secure long-term energy supplies and support sustainability goals.
So while we may be waving goodbye to financial support for renewables for now at least, there are some big technological and political drivers that could present future opportunities for farmers and landowners. Building on the success of the FiT will be key if the government is going to meet its legally-binding target to decarbonise by 2050.
Paul Spackman is a freelance writer and former Deputy Business and Renewables Editor at Farmers Weekly.
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