Farm renewables rates cut: Solar down 87%, wind 58%

Huge cuts to renewables subsidies could threaten the viability of on-farm solar and wind projects.

The government has proposed massive drops in Feed-in Tariffs (FiTs) from January 2016, which signal an end to support for some technologies.

Advisers have warned farmers and landowners to complete projects by the end of the year if possible – or they risk being burned by lower-than-expected returns.

See also: Farm-based renewables must adapt to tougher future

Solar energy

Small-scale photovoltaic (PV) would be massively hit in the plans, with rates falling up 87% to 1.63p/kWh for 0-10kW installations and 3.69p/kWh for 10-50kW.

Mandatory digression would also see FiTs disappear for solar projects below 10kW and above 1MW by January 2019.

Strutt & Parker head of resources and energy Alexander Creed said he had reviewed three recently completed solar PV projects.

“The future of the small- to medium-scale renewable energy markets is uncertain across all technologies due to the government’s proposed cuts”
Andy Lowe, Locogen

They would have all seen major drops in expected returns if they had been accredited in January 2016 with the proposed rates.

The return on a 50kW project in Leicestershire would have fallen from 12.1% to 4.55%, while an 80kW site in Kent could have returns slump from 11.12% to 5.78%.

Mr Creed said the changes would likely mean an end for investors funding installations, as 4% returns could not fund a development with debt.

Wind energy

Wind turbines also face significant proposed cuts.

Projects between 50 and 1500kW could see tariffs drop up to 58% to 4.52p/kWh.

Installations below 50kW would see rates fall 37% to 8.61p/kWh.

Any schemes above 1.5MW could also face zero support from January.

Hydropower

Hydro has been less affected by the plans, though FiTs could still drop.

Savills director of energy Nick Green said that while there were relatively few hydro projects there was a long period between starting the process and completion. Now there would be less certainty on tariffs throughout that time.

“No technology has been left untouched,” Mr Green said.

“The review places a challenge on all technologies of all scales.”

Anaerobic digestion

FiTs for anaerobic digestion were not included in the document, though further proposals are expected to follow.

The Department of Energy & Climate Change (Decc) has put the new plans out in a consultation running until 23 October.

It follows a separate consultation on an end to pre-accreditation for FiTs that closed on 19 August.

This allowed developers to lock-in a known level of support once a project reached a certain stage.

This summer Decc has made a string of announcements that have hit the wind and solar sectors.

In June, the government closed the renewables obligation (RO), which funds medium and larger installations, a year early on 1 April 2016.

Then Decc proposed dropping the RO for rooftop and solar projects up to 5MW from the same date.

New planning laws also put the future of on-farm wind in doubt, by giving people living nearby the final say on planning applications.

FiTs cap

Decc’s latest consulation also proposes a cap on new FiTs spending of £75m-£100m by 2018-19.

It notes that if the regime is not “affordable and sustainable” it could end generation tariffs for new applicants as early as January next year.

Andy Lowe, technical manager at developer and consultant Locogen, said the plans have a “significantly adverse” impact on farmers and landowners.

He said he strongly urged people to aim for installations in 2015 to secure the maximum rate of return.

“The future of the small- to medium-scale renewable energy markets is uncertain across all technologies due to the government’s proposed cuts,” he said.

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