Low carbon agriculture show 2022
|Author: Travis Benn||Read time: 10 mins|
|Client type: Independent landowners||Technology: Anaerobic digestion|
The Low Carbon Agriculture show is a new business event for progressive landowners, land agents and other industry experts. Exploring how to address climate change through the use of renewable energy, the show is focused on how we can deliver the UK’s commitment to achieving net-zero greenhouse gas emissions by 2050.
The agricultural sector is uniquely placed to be part of the solution and it’s always such a great insight to hear from other experts in the industry. We attended several presentations and wanted to highlight a few of those that stood out to us at Lumify Energy.
Opportunities and challenges in anaerobic digestion and biogas
David Kinnersley from Fisher German, a UK based firm of Chartered Surveyors and Property Consultants spoke about some of the current opportunities and challenges affecting AD and biogas projects across the UK.
Some of the key opportunities in the industry include the ability to reduced exposure to high fertilizer costs and commodity prices as well as the generation of electricity for on-site use and the ability to reduce our carbon footprint.
But with opportunity comes the challenge. It’s wise to be cautious as the logistics are not quite the same to manage as wind and solar.
David also touched upon the challenges of high capital requirements. Larger scale projects with a value of up to £14 million can present particular difficulties in the planning process and project funding stages.
When it came to the lease agreements, David discussed some of the things that we at Lumify Energy are all too familiar with –lease terms.
When it comes to the renewal of your lease agreement, it’s important to note that these leases are in place for a very long time. Some can be as long as 40 years and if they are not negotiated well, they can have unexpected or unintended consequences on landowner obligations and more.
As difficult as it may be, landowners must seek to be forward-thinking and to as much of an extent as possible, try to anticipate future changes including those relating to:
· Subsidy changes
· Farming income
· Family plans
Many would agree that the best predictor of the future is the past, therefore, landowners must carefully review what has happened to landowners at other sites in the past, which will help them to anticipate and safeguard against various future events.
Life is busy but landowners must be forward-thinking in their approach. Take advice early (we at Lumify Energy recommend doing so at least 24 months before the end of your lease). Getting ahead gives you sufficient time to fully consider your options and to put everything into place as things will generally tend to take longer than expected.
Acting on past insight at the start of a new project is better than hindsight after signing a new lease.
Renewable energy project re-negotiations
I also spoke at the event. My presentation focused on giving landowners advice on things to do when coming to the end of their lease.
I touched on how to maximise the outcome of their lease renegotiations and the great opportunities renegotiations can present for landowners. The three main areas he highlighted were: -
1. Scanning the market – knowing what is being offered to comparable sites and using this insight as leverage during negotiations. Not pitching too high, not pitching too low but knowing exactly where an individual project sits within the current market, following diligent research.
2. Understanding the different payment types – I discussed the different payment types available to landowners. By knowing what the different payment types are, landowners can decide which is more appropriate for their situation to enable them to maximise the income from their renewable energy project
3. Preparation – I also stressed the importance of good preparation and not waiting for site operators to initiate lease renegotiations. He recommended that landowners should do their research and start preparing early
You can watch the video here read more about this in our blog: The ultimate guide to renewable project negotiations where we explore this in greater detail.
Tax accounting implications of transitioning to low-carbon farming
Peter Harker from Saffery Champness, one of the UK’s first accounting firms gave a great talk with some real golden nuggets for landowners.
Peter highlighted the decreased government support for rural landowners, which in light of the UK’s commitment to net-zero carbon emissions is frustrating.
On a positive note, new opportunities are coming up, such as those relating to woodland carbon credits.
Peter noted that rewilding and biodiversity are evolving areas with promising potential. However, he cautioned landowners to seek advice on tax considerations, since changing agricultural land use can have an impact on CGT and/or business property relief.
Peter is proactive and passionate about his work in the rural community. He is active in lobbying HMRC for clarification on tax matters concerning the rural community, as guidance is currently lacking from HMRC on many of the new rural schemes.
Peter was highly knowledgeable in the area of farming income diversification. At Lumify Energy, we get asked a lot of questions about the tax implications of the renewable energy projects that we oversee. Peter’s talk gave us insights into other areas that landowners should be aware of which we will be sharing with you during future blog series.
Data and automation lead
Eliot Dixon from Agiepicentre spoke about taking the needs of farmers directly to developers. Using a data-driven, systematic approach in developing technological solutions for farmers - an approach that we favour greatly at Lumify Energy.
Eliot also noted that the uptake in agritech is greatly improved when farmers are involved in the build process, and his team are actively looking for farmers to join their farm network.
Their Paraguay project, reduced fertilizer use by 23%, which would translate to huge savings in the current market!
We liked the approach that Agriepicentre take in their development of agritech solutions, it’s an approach that we also take with our landowner solution development.
Tips for choosing a renewable project developer
As with all aspects of your renewable energy project, it is important to carefully consider your options. When it comes to choosing a developer to work with on your project, Bill Rees from Centrica advised landowners to:
· Choose their developer carefully
· Keep their local community on side
· Ensure there is a good grid connection, as 70-80% of projects face significant grid challenges
· Make sure that their investment case is well balanced and takes a long-term view of the market
· Act quickly because grid connections can go quickly (and do not be deterred by the current waiting list for a new grid connection)
Wind Farm Development and the rise of Solar
We enjoyed the talk from Alexis Tysler at Pegasus. Alexis talked about how the restrictions on wind farm development that came into effect in 2015 are still being felt by onshore wind farm developers today.
However, in an attempt to reverse some of the planning restrictions, there is currently an onshore wind bill that’s going through the House of Lords. We will be watching closely to see what the outcome of this is.
Although onshore wind farm development has slowed down in England, it was encouraging to see the growth potential of solar.
There were many wonderful speakers, all of which highlighted such important subjects in the use of renewable energy,
Some of the other speakers we enjoyed were Dr Kiara Zennaro from the REA who gave us insights into the latest developments in government policy to support the transition to net-zero.
We will be keeping our ear to the ground regarding government changes to renewable energy projects and all things related, so watch this space.
We very much enjoyed the show and look forward to attending again next year.