Electricity is one of a dairy farmer’s largest outgoings, and it is a cost that is only likely to increase. Combined with consumer pressure to reduce greenhouse gas emissions, many producers are looking at greener alternatives.
Milk processors are increasingly demanding carbon footprint audits as part of the industry’s commitment to cut its environmental impact, says DairyCo extension officer, Chris Coxon.
“By opting for renewable energy sources farmers have a truly win-win situation – they can cut costs, create a new income stream, and reduce greenhouse gas emissions.”
Sarah Wells at 7Y Energy says many farmers are considering installing solar photovoltaic panels on building roofs, but choosing the right location is critical.
“Buildings need to be roughly south facing, but the pitch of the roof isn’t critical. However they do need to be in good condition, capable of lasting 30 years or more with a large weight load on the roof, so get a structural survey done.”
Electricity supply at the site may also dictate the size of the project; single-phase electricity will only support a 10kW array – typically costing £30,000 to install. Three-phase will cope with about 50kW, usually requiring an investment of about £125,000.
Surplus electricity can be sold to the National Grid at about 3.1p/unit, compared to buying it in at about 10p/unit. From April, farmers will receive up to 37.8p/unit in the form of a Government Feed-In Tariff (FiT) for projects under 50kW. Larger projects are currently under review, with tariffs potentially dropping as low as 8.5p/unit for up to 5mW systems. This is guaranteed for 25 years and is index linked, but is subject to income tax for businesses.
Maintenance costs are low, but the inverter is likely to need replacing after about 12 years, at a cost of 10-15% of the total project.
“Choose an installer with experience of farm buildings, and consider tax implications – the panels are eligible for capital allowances, and can be a very good tax mechanism,” says Ms Wells.
With considerable interest in this new industry, a wide range of agreements are available from developers, including ground rent and free installation, so shop around to find the most suitable arrangement for your farm.
Case study: Setting up solar panels
Somerset dairy producer, Mark Hill is planning to install solar photovoltaic panels on his farm buildings at Stockland Lovell Manor, Bridgwater, this summer.
Initially, he had hoped to team with a developer, who would cover the cost of the project and provide free electricity in exchange for the Feed-In Tariff (FiT). However, following the government’s review, the developer proved less enthusiastic, so Mr Hill decided to take it on himself.
“We need to get everything up and running by 1 August to ensure we receive the higher tariff, so I want to be firmly in control.”
Working with Mole Valley Renewables, Mr Hill plans to install 192kW of roof-mounted arrays on his cattle sheds and stables, at a cost of about £598,000 +VAT, including maintenance costs. He also wants to convert from single-phase electricity to three-phase, at a cost of about £33,000 +VAT, and must install a 500kva transformer, costing £40,000 +VAT, to cope with the electric load.
The panels should produce about 180,200 units of electricity a year – enough to shave £18,750 off Mr Hill’s £25,000 electric bill. However, the electricity cannot be stored, so with the farm milking 250 cows twice a day, and running an equestrian centre, extra electricity will be required. “Whatever electricity we can’t use during the day, we will export to the National Grid.”
With the additional 30.7p/kWh FiT, guaranteed over 25 years, the project should pay for itself within 10.5 years, excluding finance costs. “With milk prices where they have been farmers have to find ways to claw back as much as we can. If we can make our business more viable for the future, while reducing our carbon footprint, it will be brilliant.”
Mark Hill’s Top Tips
• Make sure you can live with the panels for 25 years.
• Budget for upgrades to the transformer and grid early on.
• Consult with your lawyer, accountant, and farm renewable energy experts.
• If investing your own money, speak to the bank early on.
Renewable energy resources
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For up to date information on all farm renewable energy options, including solar panels, biogas plants, and wind power, visit our Renewables section at www.fwi.co.uk/farmenergy