On-farm renewable energy generation: What to consider

Generating energy from solar, wind and biomass sources can significantly reduce a farm’s power costs.

This is particularly the case with providers increasing unit rates on some electricity and gas contracts by 400%.

Small-to-medium-sized roof-mounted photovoltaic (PV) systems can offer a good solution for those who want to use most of the energy generated on site.

See also: How Cornish dairy is turning methane into tractor fuel

This would also present an opportunity to export excess capacity, says Henry Haworth, energy manager at farm consultant Brown & Co.

“Self-generation of energy has the potential to significantly cut a farm’s energy bills and protect against further price volatility,” he says.

Planning permission

Rooftop solar panels of less than 50kW can be installed on commercial property under permitted development rights with no planning consent needed.

For larger installations of up to 1MW, permitted development can also be used, but the planning authority must be notified of the development.

From the date the application is received by the local authority, there is a 56-day statutory period for the authority to respond.

If no response is forthcoming, the developer is within their rights to proceed once the 56 days has passed, Mr Haworth advises.  

The timescale for responses is very variable, depending on the local authority, but most commonly it is four to six weeks, he says.

“A lot of providers take care of this process in-house but, if not, the farm business needs someone on board that knows what is needed.

“Everything needs to be designed and ready to go at this point.”

Most local authority websites include guidance on installing renewables and many have implemented local plans to promote uptake in their areas.

Grid connection

Even if a farm business is not planning to export electricity, if it is already connected to the grid it needs to apply to the grid to confirm any new generation.

Mr Haworth advises early engagement with the National Grid as its response period can be up to three months following submission of a full application.

Carefully consider the size of the project – for instance additional investment now for export opportunities in the future might be a sensible financial decision.

“Consider what is a reasonable size system for the available roof space, and weigh up the investment cost and the returns,” says Mr Haworth.

Some areas are restricted by grid capacity.

“In Lincolnshire, for instance, where there has been a lot of AD and wind turbine projects and where the grid is being upgraded, capacity is constrained,” says Mr Haworth.

“But even when that situation exists, a connection can still be put in if a business is not planning to export, as equipment can be fitted that prevents electricity from going into the grid – for instance with solar, the inverters will cut off at a certain point so that nothing is exported.”

 Contracts

Engage an expert with knowledge of renewable energy contracts to scrutinise the terms set out by the technology supplier.

“We recommend some clients to providers that we know and trust, but we also suggest getting someone to take an independent look at the contract, even if a farmer has the knowledge to be able to look at it and make an educated and informed judgement because, at the end of the day, a provider is a company that wants to sell them something and get the best deal for itself,” says Mr Haworth.

There is the risk a provider will charge a premium because of the short-term situation of high demand.

Mr Haworth says terms to be examined are:

• The energy prices being used in the provider’s financial model and how these are calculated
• How the model prices compare with those the business is presently paying for electricity
• What the likely export income would be if there were to be capacity to export.

“Has the provider factored in the situation changing? At the moment the price is going up, but it could very well go down,” he says.

“Have they accounted for finance and, in the case of solar panels, the efficiency of those panels – for instance shading and whether they are south- or east/west-facing – all of these will influence performance.

“Does the financial model factor in productivity of the system and how efficient it is going to be?”

Lead-in times

Some providers are quoting lead-in times of six months for getting projects up and running.

As a result of high demand, this is longer than has previously been the case. However, Mr Haworth recommends capitalising on the delay.

“Take the time to look at the technology, the planning and the scale of the project,” he says.

“Don’t just consider it from the perspective of it benefiting the business for the next three years of high energy prices because these are 20-25-year projects so they need to be assessed beyond the next three years.”

Consider and compare a few different options, and take time for due diligence.

“You will be investing tens of thousands of pounds, don’t rush into an agreement,” Mr Haworth recommends.

“It will be next summer before the system is installed, so take a step back and make sure what you are doing is being considered for the lifetime of the project and the long-term needs of the business, rather than based on short-term decisions around offsetting carbon or selling energy.”