With feed-in tariffs for generating your own electricity now a reality, what are the options for poultry producers, and do they stack up financially? Ken Randall reports


In April this year, the first feed-in tariffs became available under the government’s scheme to encourage electricity generation from renewable sources.

The tariffs provide a payment for each unit (KwH) of electricity produced on-farm, guaranteed for the life of the contract and index-linked to inflation.

Despite its name, the feed-in tariff is not a payment for feeding electricity into the grid, but is paid in full even if you use all the electricity yourself.

For most smaller-scale solar cell (photo voltaic) installations, it amounts to 36.1p/unit, and as much as 41.3p/unit for retrofits to existing sheds. So if a producer is using the electricity on his own unit, and normally pays around 10p/unit to the power supplier, the effective value of the electricity generated could be as high as 51.3p/unit.

But for any surplus electricity that is exported to the grid, only a nominal additional payment is made of around 3p/unit.

According to consultant Mike Tyers of specialist firm 7Y Energy, under these tariffs the pay-back time for solar cells and wind turbines should be in the region of seven to nine years (see table).

At a recent NFU meeting for West Midlands poultry producers, Mr Tyers gave an overview of all the technologies available for generating your own electricity and their relative merits.

“Feed-in tariffs have presented a real opportunity for farmers of all types, but in some cases particularly for poultry producers, to generate their own electricity.

“Poultry farmers are blessed with roofs on which to put solar panels, and are mainly in rural locations, so wind for turbines is not normally a problem.”

Mr Tyers pointed out that different tariff rates and length of contracts were applicable for each type of energy that was generated. PV panels carried 25-year contracts, while wind turbines were subject to 20 year terms.

“Economies of scale apply to larger outputs, so tariff payments are lower, and it is expected that tariff rates will fall for new contracts in years to come, as technology improves.”


CASE STUDIES: Photo Voltaic

PV units are rated according to anticipated peak output in ideal sunlight conditions, as kilowatts peak (KwP).

Each array of 1 KwP could be expected to produce 800KwH annually, so a typical installation of 20 KwP could generate a total annual output of 16,000 KwH. This would yield an annual income of £5024 at a tariff rate of 31.4p/unit.

If you put that back through your own electricity supply, it also saves the equivalent amount of the electricity you are buying.

“The surplus units you can sell back to the grid, but they are not worth an awful lot,” said Mr Tyers. “It’s more advantageous to use as much of your own electricity as you possibly can, rather than trying to export it.”

The ideal angle for PV cell arrays is about 35º at UK latitude, although most roof pitches of 10-15º are quite adequate.

Wind

For wind turbines, the sums work out a little differently. Typical capital expenditure for a 15kwP unit would be £65,000, including planning permission.

The feed-in tariff is lower, at 26.7p/KwH. Total annual income for this unit is projected as £8800, including savings from own use of electricity, and after deducting an annual maintenance cost.

Return on capital works out at 14% with a payback over 7.2 years: “The case study shows faster return on capital, so the wind turbine is slightly more attractive,” said Mr Tyers.

To finance wind and solar projects, finance should be available from commercial lenders. “If you get a grant, you won’t get the feed-in tariff, and the feed-in tariff is more attractive.”

CHP

Combined heat and power, or CHP, covers systems running on bio-diesel, biomass and anaerobic digestion.

“A typical 500 KwP plant for biomass will produce nearly 4m KwH annually. It sounds really attractive, and a lot of people are going into it.”

However, the heat production is an added complication: “With biomass, for every 1kw of electricity generated, it will produce around 1.5-2kw of heat, and what are you going to do with it?”

The tariff rate is also much lower, at only about 9p/unit, while the incentives for the generation of heat from renewable sources are still under negotiation, but should kick in by April 2011.

A 500kw Aerobic Digestion plant could cost around £2m and produce a net income of £222,000, and would give a payback over nine years at 11% return on capital.

Case study costings for renewables

 

Photo voltaic 20kW

Wind turbine 15kW

Anaerobic digester 500kW

Feed-in tariff

31.4 p/KwH

26.7 p/KwH

9.3 p/KwH

Annual output

16,000 KwH

30,000 KwH

4.8m KwH

Feed-in tariff income

£5,024

£8,010

£448,500

Savings from own use

10,000 kWh @ 10.45p + £1,045

=12,000 KwH @ 10.45p = £1,254

100,000 KwH @ 10p = £10,000

Exported to grid

6,000 KwH @ 3p = £180

18,000 KwH @ 3p = £540

3.8m KwH @ 3p = £114,000

Operating costs

£0

£1,000

£350,000

Annual income

£6,249

£8,804

£222,500

Capital costs

£54,000

£65,000

£2m

Return on investment

11.50%

14%

11%

Simple payback

8.7 years

7.2 years

9 years

Source: 7Y Energy