What is the future of the feed-in tariff?
|Author: Travis Benn||Read time: 5 mins|
|Client type: Independent landowners||Technology: Onshore wind|
The government’s feed-in tariff scheme has stimulated small-scale renewable energy growth since its launch in 2010, so there’s understandable concern among landowners and farmers about what will happen when the plan closes to new applicants next March.
Repeated tariff cuts combined with other policy changes, such as the closure of the Renewables Obligation to new projects last year, have already dented investor confidence.
A recent House of Commons environmental audit committee report highlighted that there had been a “dramatic and worrying collapse” in annual investment in clean energy over the past three years, which last year fell to its lowest level for a decade.
Many farm-based projects may well have failed to go ahead without FiTs, especially in the early days when technology costs were higher. So, despite industry calls for support beyond 2019, it looks likely future projects will have to work without subsidies.
Make it pay
Maximising the onsite use of electricity generation is already essential to the viability of many new farm-based projects, even more so in the absence of FiT generation and export payments.
Those with livestock, cold stores, and processing facilities—practically all energy-intensive businesses—will have most to gain from generating their electricity and reducing the amount bought from the grid (at typically 12-15p/kWh). Throw technological advancements into the mix, and future opportunities may well present themselves.
A big driver of said opportunities lies in the electrification of transport, with many leading motor manufacturers develop hybrid or electric vehicles.
Agriculture is no exception
Several firms already offering battery-powered machines (e.g. the Kramer 5055e loader and electric ATV companies), and others are hoping to bring new designs to market soon (e.g. John Deere’s SESAM tractor and the Fendt Vario e100).
As a result, this will inevitably create more onsite demand for farm businesses using electric machines and might even improve the economics of installing new or additional renewable energy generation to meet that need.
Spreading your energy assets
Balancing energy supplies with the daily demand profile of farm businesses remains a key hurdle, but there are ways to overcome this.
Having a mix of energy generating assets, such as wind turbines alongside a solar array, can help provide a more even supply—as can co-located batteries that store surplus energy generated at peak times rather than exported to the grid.
There’s an increasing choice of both large and small-scale battery systems on the market. And although the economics of battery storage may still not quite stack up for many farmers just yet, it’s certainly something to consider as technology improves and costs fall.
Financial help you can tap into as an early adopter
Earlier this year, the government made grant funding available for farmers and landowners to increase on-farm renewable energy use by improving energy storage and distribution.
In addition, the RDPE Countryside Productivity Scheme offered capital grants worth up to 40% of eligible costs for a range of items, including battery storage systems.
A further opportunity, perhaps where there is no significant on-site power demand, is establishing a private wire supply deal with a nearby business that can utilise the energy or consider a corporate Power Purchase Agreement.
A recent Smartest Energy report suggests removing subsidy support could see more corporate PPAs established between energy generators and large energy users. For instance, firms from the retail or banking sectors are keen to secure long-term energy supplies and support sustainability goals.
So while we may be waving goodbye to financial support for renewables (for now), there are some serious technological and political drivers that could present future opportunities for farmers and landowners. And building on the success of the FiT will be critical if the government is to meet its legally binding target to decarbonise by 2050.