The average barn roof could generate as much as £5000 of income a year. Photo: Centre of Excellence for UK Farming
An increasing number of British farmers are embracing renewable energy schemes with a potential return on investment of more than 10 per cent, according to UK renewables developer Eco Environments.
With income for farmers dropping as commodity prices have plummeted, the farming community has been forced to look for new ways to make money. There has been a massive surge in interest among the UK’s farmers since the Government introduced new subsidies – known as feed-in tariffs (FiTs) – in April last year, the company says.
Even changes brought in earlier this year have made little impact on farmers as most of the schemes under consideration are small- and medium-sized and well below the 50kW mark identified by the London government for proposed cuts in tariffs available.
With returns of 10 per cent or more on investment, installing some form of renewable energy generation – most commonly solar panels or wind turbines – is seen as a secure investment by the farming community. Across the UK, more than a third of farmers are believed to be considering investing in renewable energy schemes. Eco Environments says interest from farmers has “gone through the roof” in the past six months.
David Hunt, a director with Eco Environments, said: “The interest from the farming community in the past six months has been phenomenal. “We are currently speaking to dozens of farmers in England and Wales who have either given the go ahead to a renewable energy project or are seriously considering one. Renewable energy for farms is one of the fastest growing areas of our business.”
Farmers flocking to diversify into renewables
Tom Hind, Head of Economics at the National Farmers Union (NFU), said in an interview earlier this year: “Investment in renewables and developing new income streams from land and buildings is part of the defence against volatile commodity prices.”
Meanwhile, Jonathan Scurlock, the NFU’s chief adviser on renewable energy, commented: “Farmers are extremely interested in diversifying and this is completely compatible with the traditional business of a farm.”
The FiT system has quite simply transformed the renewable energy industry in the UK. Customers are paid for every kilowatt-hour of electricity their system produces irrespective of whether they use it or not as well as being paid for electricity sold back to the grid.
David Hunt, whose company has a network of offices across the UK, added: “There is considerable interest among farmers in the potential benefits of harnessing renewable energy on their farms. It provides them with a strong and ongoing income at a time when commodity prices are falling; it allows them to make the best use of their land; it fits with the farming culture of business diversification; and, it allows them to generate their own electricity and become increasingly self-sustainable.
“We are currently working with farmers across the UK with schemes either completed or in the planning stages in Cumbria, the North East, Lancashire, Merseyside and North Wales.” The FiT scheme offers guaranteed cash back for the next 25 years on every unit of electricity generated by a solar panel or 20 years for a wind turbine.
Handsome returns on offer
The system is designed to offer a return of over 10 per cent on all scales of project, making it more attractive for investors than a bank account and more reliable than the stock market. The average barn roof could generate as much as £5000 (€5703) of income a year if electricity-generating solar panels are installed. Larger field-based projects of 50 kWp have the potential to generate income/savings of more than £15,000 a year.
Drive around Europe, particularly Germany, Spain and Italy, and you will readily see how farmers on the Continent have been actively installing renewable energy schemes to help bring them new income streams. David Hunt added: “Most people, including farmers, do not like taking risks. A guaranteed annual return on investment of over 10 per cent is very attractive at any time, but even more so at a time when the wider economy remains in such a state of flux. On many schemes, the return on investment is considerably greater.”
A North Wales farmer is one of a growing number of farmers in the UK to install solar panels on their farm buildings. Edwin Hughes, of Cornist Ganol Farm in Flint, brought in Eco Environments to handle the project which saw a 19.62 kWp solar PV system – consisting of 90 Hyundai SF218 panels – installed at the farm.
It is estimated that Mr Hughes’ system will produce around 15,692 kWh of electricity a year which will earn him more than £5162 a year in FiT payments. He will also save around £1330 a year generating his own electricity and £97 by exporting any excess power generated. The total income/saving of £6590 a year gives the farm a 22.69 per cent return on investment annually and within seven years, the system will have paid for itself.