There are energy opportunities – but be wary

Someone from the audience asked a question about renewable energy at Cereals last month during a HSBC-hosted forum entitled “Trading Thoughts”.

As you might expect, the great and the good on the platform expressed enthusiasm for it. Then, the chairman, John Humphrys (of the BBC radio programme Today) asked the audience of around 200 for a show of hands on how many had already invested in some form of renewable energy or intended to do so in the near future?

The vast majority of the crowd raised a hand. It was hardly a scientific survey and if it had been possible to pose the same question to all 27,000 who attended the event over two days the result might have been different.

But it did suggest that a significant proportion of British farmers have been seized by the possibility of generating energy and possibly selling some to utility companies rather than just purchasing it at ever-inflating prices.

For the record, the vote took place before the recent release of extra supplies of crude oil on to the market that brought the price down a bit, but which is unlikely to have a lasting effect.

The fact that the show featured a major new section on various types of renewable energy and that many of those in the audience might have toured those stands could have influenced them. For there were firms selling hardware and advice on every conceivable system of generating renewable power. Wind, solar panels, anaerobic digesters, grain and sugar-based ethanol, biomass and so on were all represented.

And virtually every newspaper and magazine these days (including Farmers Weekly) includes regular ads and articles on the potential benefits of renewables; of fitting photovoltaic cells on the roof of your house, etc. Although the reduction of the Feed-in Tariff (FiT) for major schemes (while leaving rates for small ones intact) must have cast doubts on the viability of some ambitious plans for whole field installations.

In fact, the payback period even for small sub 50kW installations that the government favours, compared with the substantial investment required, is not particularly attractive. The best claim I’ve seen suggests around seven to eight years and such figures come from the people wanting to sell the systems, so it might be prudent to plan for longer. And there’s always the possibility government might renege on the level of FiT as it has with big schemes.

In other words, the main incentives for investment might be the probability of rising energy costs, concern for the environment, depleting fossil fuels and public opinion. Certainly those marketing such systems and expertise stress such arguments as well as the potential returns from the FiT and although I’m sure most are genuine, insiders are advising caution because the meteoric rise of the renewable energy industry is inevitably attracting some “cowboys”.

The other reason for considering renewable energy is the likelihood, according to some, that this country will face major power cuts in a few years and that the recently announced decision to build a couple of nuclear power stations to replace those being decommissioned will still leave us short of power for a few years because they won’t be ready in time. Maybe on-farm generation will help our industry and those with pv cells on their roofs or windmills in their yards, etc, to bridge that gap.

So, despite some misgivings, we will continue to monitor the situation closely and may well invest in a modest scheme – while always trying to avoid the cowboys.

David Richardson farms about 400ha (1,000 acres) of arable land near Norwich in Norfolk in partnership with his wife, Lorna. His son, Rob, is farm manager.

Read more from David Richardson and our other columnists at www.fwi.co.uk/columnists