Devon dairy farmer dips into large-scale solar
Small-scale dairy farming is not known for its profitability, so generating renewable energy from grassland is an understandably attractive proposition. And it is one that Devon farmer Richard Buckpitt hopes will secure his future in the industry.
He is about to turn 15ha of his 87-ha family farm into a solar PV park. At 6.2MW it will be one of the largest in the UK, with 28,000 panels producing enough electricity for 2,500 homes. But he is doing it all without any capital investment on his behalf, by leasing the site to TGC Renewables, and securing an annual rent for the next 25 years.
“I milk 60 cows in partnership with my parents at Marley Thatch Farm, South Brent, and we need to invest £150,000-£200,000 in slurry storage and upgrading the parlour, which was installed in 1971,” says Mr Buckpitt. “Unless I’m guaranteed a firm milk price I’m not willing to spend that kind of money. The milk price now is the same as when I left school 25 years ago, and the returns to pay off that kind of investment just haven’t been there. It’s just not financially viable.”
Top tips
- Get your neighbours on side
- Choose a reliable company
- Negotiate your lease carefully
- Consider impact on Inheritance Tax and existing farm business
Instead, the family considered investing in renewable energy, but the risk of shelling out and failing to secure planning permission proved off-putting.
“However, two years ago TGC approached us about the solar farm, so we did the figures and let them run through the whole planning process without any financial risk to us,” says Mr Buckpitt.
Initially, the plans were somewhat smaller in scale, but when the government reduced the Feed-in Tariffs for solar projects, TGC decided to go for a larger array to qualify for Renewable Obligation Certificates (ROC) instead. “We had quite a good farming year last year, so when negotiating the lease I divided the income into an acreage basis, and will earn seven to eight times that in rent,” says Mr Buckpitt. “The return will be far greater than we could get from farming.”
Although TGC handled the planning process, Mr Buckpitt worked hard to get his neighbours on side. “We went to see them to find out how they felt about the project before we even applied for planning permission. The site covers five fields, and we swapped one around as one neighbour wasn’t totally happy with it. We got planning permission in August, with the support of most of our neighbours and only two letters of objection,” he says.
Construction will begin in December and the panels should be operational by April 2013. “We won’t be able to graze the land with cows, but we are going to get some sheep and graze underneath the panels,” says Mr Buckpitt. “As long as the ground is available for agricultural use you can still claim the single payment on it.”
“We went to see [our neighbours] to find out how they felt about the project before we even applied for planning permission. The site covers five fields, and we swapped one around as one neighbour wasn’t totally happy with it. We got planning permission in August, with the support of most of our neighbours and only two letters of objection.”
Richard Buckpitt
However, installing the panels could void any agricultural relief from Inheritance Tax, so he is working with his accountant to maximise any relief available. “It’s a very grey area – if it doesn’t qualify as agricultural land it will be valued at 10 times the annual rent, so we need to make sure we get it right.”
All the equipment remains the property of TGC, who retain responsibility for installing and maintaining it. “They will put a security fence around the perimeter – we just have to keep the hedges trimmed,” says Mr Buckpitt. With a 33kVA power line already crossing the farm, linking up to the National Grid will be relatively easy, and in 25 years time TGC will either negotiate to renew the lease or simply remove the panels from the farm.
“You need to be careful about which firm you deal with,” warns Mr Buckpitt. “Make sure they have a track record of obtaining planning permission and installing the equipment, otherwise you could find the project shelved for years while you’re not getting any rent.”
Negotiating the terms of the lease is also a critical consideration, with rent levels typically index linked and varying according to the site and location. “A 25 year lease is a long time, and there are quite a lot of restrictions. You can’t build or plant trees on land to the South of the site, as it will shade the panels, so make sure it’s not going to affect any development you want to do on the farm.”
With 15ha less pasture, Mr Buckpitt will have to change the way he grazes his cows, but plans to continue milking for the time being, to see how it all fits in. “We still need to invest a lot in slurry storage and the parlour. I don’t want to use the rent to subsidise the cows – I intend to invest it in more land and make hay for horses. I want to use the money to grow the business, not prop it up,” he says.
| Planning considerations |
|---|
| Obtaining planning permission can be one of the most difficult aspects of a large-scale solar project, so it’s essential to choose the right site, says Roy Amner, development and operations director at TGC Renewables. “Only three or four sites in 100 that we see have potential for being developed.” Considerations include existing National Grid connections, access, planning constraints, and the potential impact on the landscape and environment.“Upgrading the grid can be very expensive, so aim to connect with minimal extensions. And make sure your proposal meets the requirements of local development plans and so on, to maximise your chances of success. It’s all about dialogue with planning officers,” he says. Landowners should allow at least eight to 12 months for the planning process, which can cost £16,000-£27,000 in planning fees alone per 0.1ha. “You can expect up front costs to reach about £100,000 – and only once you’ve got planning permission, secured the grid capacity and the land, can you then look at financing the project and getting it under way.” As soon as the project is up and running, the developer can apply for the Feed-in Tariffs or ROC. “With Marley Thatch, our overall budget is £7.5-£8m and we should break even in year 12 or 14. The panels will be viable for 40 years or longer, but planning permission is usually only granted for 25 years. After that you can apply for an extension – and given the longevity of the project it’s important to involve the next generation in any planning discussions.” |
For more information on solar PV and other renewables technologies, visit our dedicated Farm Energy page