Farming with renewable energy

Source: mypoweruk.com

Renewable energy and farming are a winning combination and we’re not talking about solar farms. A costly overhead for British farmers is their energy bills – especially when they are set to increase by 10% in April.

 

Renewable energy and farming are a winning combination and we’re not talking about solar farms. A costly overhead for British farmers is their energy bills – especially when they are set to increase by 10% in April. Farm buildings provide large, uncomplicated roof space which are ideal for a rooftop solar PV and today farmers are able to significantly reduce their energy bills by 67%. This figure is despite the FiT cuts in 2016.

The amount of energy from the sun that reaches Earth each day is enormous – even in the UK! All the energy stored in Earth's reserves of coal, oil, and natural gas is equal to the energy in just 20 days of sunshine. It’s big!

Solar energy can be used in a farming business in a number of ways*, saving money, increasing self-reliance, and reducing environmental impact. Solar energy can cut a farm's electricity spend on lights, and electric fences, milking parlours, refrigeration warehouses, grain stores, dairy units and chicken housing. In remote locations solar power is often less expensive than extending power lines.

*What are other people saying about solar-powered farms?

·         Greenpeace’s opinion on using agricultural solar panels – http://www.greenpeace.org/canada/en/blog/Blogentry/solar-power-yields-big-benefits-for-farmers/blog/57253/

·         Facts, figures and quotes – https://www.mypoweruk.com/agriculture/

·         An in-depth exploration of benefits for farms – http://www.ucsusa.org/clean-energy/increase-renewable-energy/solar-energy-agriculture#.WRMUwlPyv64

Matching the daytime generation from the panels to the electricity demand within the building is the most efficient way to use solar energy as it means that a farm needs to import less energy from the grid which costs three times as much as solar. In a survey conducted by the NFU, the popularity of renewables in the UK agriculture sector has risen from 30% in 2015 to 35% in 2016, despite a predicted slowdown after changes to Government policy.  Speaking at the Energy Now Expo, NFU President Meurig Raymond said that “over one-quarter of all farmers now have solar PV electricity enabling farmers, growers and other businesses to manage their energy costs and enhance their productivity.”

A 50kw installation of solar panels on agricultural buildings, using 75% of the generation on site, can expect a projected first year income and savings in excess of £6,893, giving a first year return on capital of 15.5% before indexation. Any unused energy can be sold back to the National grid.

All farmers like predictability, especially when it comes to purchasing inputs. With solar you can forward buy a significant chunk of your next 25 years’ worth of input, at a fixed price of less than half of what you currently pay, it won’t go up, you have no storage costs, and if you ever decide you don’t need any of it, you get your money back (export to the grid) plus you get a subsidy on top. How many businesses would like to buy all their inputs like this?

Solar PV effectively allows farmers to forward buy their electricity at 4 pence per unit for the next 25 years so farms are not exposed to any energy price rises. This compares with the current grid supplied rate of 10-15p per unit.  Because this is a fixed rate it means business owners can accurately forecast their energy costs and consumption for the next 25 years which will help with financial planning.

There can be additional tax benefits. Solar power is classed as plant and machinery and can be eligible for capital allowances. i.e. for the capital cost to be written off against profits in the first year. In such a case a farming partnership paying 40% tax can often claim back from HMRC 40% of the cost of the solar installation in the next tax returns. This can mean a £50,000 investment effectively costs the business just £30,000 making the first year return on capital significantly higher at around 24%  and the cost of production of the electricity significantly lower at around 2 to 3p / unit.

Retailers are asking more and more of farmers and they often have to prove their suppliers are helping them reduce their carbon footprint. Solar panels can help seriously reduce CO2 emissions and demonstrate a commitment to sustainable policies. Reducing CO2 emissions has helped many businesses win new lucrative contracts as retailers look for more than just cheap prices.

Generating your own energy is the future. Official government figures predict solar will become one of the cheapest forms of electricity in the next decade. By 2025 the Government are planning to close all coal fire power stations. Now is the time to invest in solar. When choosing a solar installer make sure they are MCS (Microgeneration Certification Scheme) and NAPIT registered, trustworthy, open & honest and are able to provide a list of references. They should not be tied to any panel manufacturer and should always provide a breakdown of prediction figures. Look for a company with an in-house installation team who are fully qualified to work on roofs and state clearly what brands of equipment they will be supplying. There is a wide variety of products of varying quality and prices, look carefully and don’t be tempted to buy cheap as it doesn’t pay in the long run and as solar will last for 40 years it is a long term product.

We’d like to thank www.mypoweruk.com for this insight.

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