Energy support cuts: Farmers reveal dilemma over tariff losses

A raft of changes to renewable energy support, including planned cuts to Feed-in Tariffs (Fits), ending pre-accreditation, and early closure of the Renewables Obligation (RO), has shocked the industry.

The Solar Trade Association estimates up to 27,000 solar energy jobs are at risk if proposed Fits cuts go through. With many racing to complete projects, Finlay Colville of analyst Solar Intelligence, says 300-400 5MW-scale solar farms could be built over the next six months.

But he thinks little will happen after next April, when RO support for rooftop and solar up to 5MW is set to be axed.

See also: Farm renewables support rates slashed – solar down 87%, wind down 58%

Those with less well advanced projects face a dilemma: spend more on a scheme where returns are lower and less predictable, or cut their losses and walk away.

Farmers Weekly talks to four farmers about the effect on their business.

Mari Jones, Denbighshire

Mari Jones had hoped that renting out a site for a single 225kW Endurance turbine would have provided much-needed income to secure the future for the small 52ha Denbighshire beef farm her partner took over four years ago.

But the company behind the project, Earthmill, put it on hold following Decc’s proposed Fits cuts, which threaten to make the turbine financially unviable if implemented.

Miss Jones says the income from the turbine – roughly £12,000/year, plus discounted electricity supply, was a vital part of the business plan for the farm, which requires significant investment in buildings and stock.

“It’s only a small hill farm and we both work full-time alongside running it, so need alternative income to help fund the work needed. It was never going to be a massive amount of money, but it would have meant a lot to the business.”

Plans were submitted to Denbighshire County Council over a year ago and although it was initially rejected, Miss Jones hoped to appeal the decision.

“The process has been very frustrating; it should never have taken so long to get to this point. If the tariff does go down as proposed there’s no way it can go ahead. We’re not sure where to go from here.”

Miss Jones’ frustration has been compounded by the approval of RWE’s £100m Clocaenog Forest wind farm on land neighbouring the farm.

“It seems so unfair that a large project of 32 2.3MW turbines has been supported, yet our single, much smaller turbine gets turned down due to the ‘cumulative noise’ impact.”

While the project has cost time and stress, she is relieved no money has been spent on the turbine rental scheme. However her father, Malcom Jones (below), has not been so fortunate.

Malcom Jones, Denbighshire

Malcom Jones, whose 66ha farm also backs on to the Clocaenog Forest has so far spent £25,000-£30,000 on planning fees and risk assessments for a proposed 500kW Windflow two-blade turbine, but is now unsure of the project’s future.

The proposal, which he is developing with his brother Wil, is due to go in front of county planners on 14 October, but “combined noise impact” has again been cited as a concern.

“We’re 800m from our nearest neighbour and brought the turbine off the brow of the hill to minimise any impact,” says Malcom. “We’ve invested a lot of time and money on this and it feels as though the stool has been kicked out from under us.”

The project was made more expensive when a neighbour refused to allow electric cables to be buried across his land, so cabling had to be re-routed.

With such a lot invested already, Wil feels they have no option but to continue, in the hope that planners approve the project and they can secure the additional £1.1m borrowing required.

They know this will be increasingly difficult, with the cut-off for pre-accreditation now passed and tariffs likely to fall further.

“We were originally expecting a payback of five to six years and the bank was ready to back us.

“But Feed-in Tariffs are coming down all the time and if it’s not going to be viable we will struggle to go ahead with it. We can only hope the cuts aren’t as bad as proposed.”

The brothers want the turbine’s long-term income to help their son continue farming the land and also pay for legal fees of a long-running court case, which is not associated with the energy project.

“If it doesn’t go ahead I’m not sure what we’ll do – there’s no plan B at this stage,” says Malcom.

Michael Owens, Herefordshire

The past few weeks have been stressful and frustrating for Herefordshire arable farmer Michael Owens, who plans to build a 1MW solar array at the 133ha Green Farm, Allensmore.

The business has invested heavily in renewable energy generation, with two 50kW rooftop solar arrays fitted to the 2,500t potato cold store in 2013 and 2014, together with a 90kW woodchip biomass boiler supplying heat to the farmhouse, offices and other buildings.

Existing solar panels, which power electric irrigation, cold stores, grain drying, potato grading lines and two Nissan Leaf electric cars, have cut the farm’s electric bill by about 25%.

See also: The Farm Power project

Mr Owens hopes the new array, on poor Grade 3 land close to the farm buildings, will provide a regular income to improve the sustainability of the family business for future generations.

“Making money from farming is difficult, so we need to do something that helps make a living. We’re keen on renewables and solar in particular is a good technology.

“A 1MW system is much more than the farm needs, but we hope the development of battery storage technology over the next few years will present other opportunities.”

Decc’s decision to end pre-accreditation from 1 October and drastically cut Feed-in Tariffs (Fits) had threatened to derail these plans.

The project, being developed with installer Caplor Energy, has already cost Mr Owens more than £16,000.

See also: Calls for government to pull back on drastic renewables cuts

On top of this he has spent hundreds of hours researching the technology, attending council meetings and arranging grid connection. A pre-planning application was submitted in January and a grid connection offer from Western Power is in place for 12 months.

“The rules have changed so rapidly in the past three months with no warning and the planning process has been so slow.

“We did as much as we could in advance but had to wait anxiously for planning permission to be agreed before the cut-off date for pre-accreditation [30 September].”

Fortunately, planning permission was granted in time and Mr Owens registered for pre-accreditation with Ofgem on the last possible day.

“Without pre-accreditation the project was unlikely to stack up financially, so we’d have had to cut our losses and walk away.”

But there is still a lot of uncertainty. “Pre-accreditation is only valid for six months rather than 12 and those six months will be through the winter. It is a worry how the weather will affect construction work.”

Mr Owens also fears the rush to complete solar projects in the next few months could lead to supplier and equipment shortages, making installation costs unpredictable.

“We estimate total cost will be around £1m, which we’re financing through our own capital and bank borrowing.

“It is worrying banks appear less keen on renewables, so to make the project viable we have to keep costs as low as possible.”

Mr Owens would look at a similar solar project again in the future without support, but only if return was at least 10-12%.

“In theory we can borrow money at 4-5% interest, but any return has to be well above that to make a reasonable margin over and above capital repayments and other costs including management time.

“Farmers cannot afford to invest in renewables just for the love of producing green energy.”

Gareth Williams, Herefordshire

Caplor Energy’s managing director Gareth Williams, who has a family-run farming business in Fownhope, Herefordshire, is witnessing both sides of the turmoil across the renewables sector.

He has had to compromise his own plans to install a solar array so the project can be completed in time to qualify for the higher Feed-in Tariffs (Fits) before planned cuts of up to 87% kick in next January.

A 60kW system is being fitted to an existing barn roof as a larger ground-mounted system would have required planning permission and therefore taken longer to develop.

“The roof is east-west facing which isn’t ideal and we’d have liked the time to re-roof the shed first and trim trees,” he says.

Other clients are in similar situations, looking to scale back plans to complete projects in time to qualify for higher support, he adds.

“There’s a lot of dissatisfaction out there and a feeling we’ve been led down the renewable energy route, yet within weeks of being re-elected the government seems to be completely back-tracking on pre-election promises.”

Once the rush to get existing schemes built is over, Mr Williams fears support cuts will lead to severe rationalisation among installation businesses, with many likely to cease or pull out of the UK, losing all the knowledge and skill built up over the past few years.

Longer-term, he believes the sector may be able to reduce costs, though acknowledges much depends on global supply and demand.

“[Solar panel] prices have come down a lot in the past few years, but I don’t think we’ll see a massive redressing of UK prices very soon, especially as the EU import levy on Chinese solar panels is still in place and global trade is so strong.”

---

The Farm Power project aims to bring about a step change in the uptake of sustainable farm-based energy across the UK.

Farm Power was founded by Forum for the Future, Farmers Weekly and Nottingham Trent University, and is guided by a steering committee made up of National Grid, United Utilities, NFU, Business in the Community, The Farm Energy Project, Lely, Thompson Farms, Lightsource Renewable Energy, Endurance Wind Power, and additionally funded by The Ashden Trust and the Esmeé Fairburn Foundation.

See the Farm Power project page