Until recently wind turbines seemed the most viable renewable energy option for many farmers. However the introduction of a new incentive scheme this spring has made the picture look very different.

Feed-in Tariffs (FiTs) provide a guaranteed income to renewable energy producers for the next 20-25 years. The scheme can offer greater subsidies for solar projects than wind.

“FiTs have changed everything for renewables – solar is now a much more attractive proposition for projects up to 5MW,” explains Rob Denman of the Green Company. “However, in the right place, wind can generate greater returns than solar.

“It’s all about picking the right spot. Wind is volatile and potential turbine sites need to be monitored for at least 12 months.”

Conversely light can be more predictable and doesn’t require the same amount of monitoring. So although energy yield might be lower, it may be a safer bet.

What to go for? Wind or solar?

The viability of wind depends entirely on the location. The DTI’s website provides an idea of wind trends on a kilometre-scale grid reference basis. Unfortunately this is rarely accurate enough to base decision making on, so site-specific monitoring at turbine hub height is the only option.

Solar luminescence is more regional and it is generally accepted that only sites south of, say, Birmingham are viable when exporting energy to the grid.

What’s the first step?

Consider how much risk you want to take. There are two options:

• Source your own capital. Run the installation yourself – you reap all the benefits, but you carry all the risk.
• Lease sites out to specialist renewable energy developers. There’s no risk, but you’ll only receive a rent – usually set for a minimum 25 year term.

With solar installations this can be between £3000 and £5000/ha a year. Index-linked, this looks attractive, but usually there is a minimum land requirement of 10-12ha and unsurprisingly Areas of Outstanding Natural Beauty and SSSIs are often no-gos for planning reasons.

“There is a risk that putting land aside for 25 years, you’re locking up its potential, particularly if there is any likelihood of development,” explains Strutt and Parker’s Alexander Creed. “However, with returns as they are, it’s pretty attractive.”

What about planning?

Solar installations are generally looked upon more favourably by planning authorities than turbines, particularly those that are to be fitted to existing structures, eg. barn roofs. Wind turbines should be situated away from buildings to avoid turbulence.

The planning phase for solar projects is expected to take three to six months. Because the monitoring and site selection process is more complex for wind, that is generally at least six months.

The total time for a typical wind project to get off the ground is 12-24 months while a solar scheme generally takes half the time.

How big?

Electricity is a lot more expensive to buy than the return you receive when selling it. So it makes sense to use as much as possible on site.

For example, average power costs might be about 10p/kWh. Selling electricity to energy providers will generally yield about 3p/kWh. Either way FiTs payments are received.

For wind, says the Green Company, turbines of 50-500kW are most attractive under FiTs.

How long is the payback?

Return on investment will vary greatly between sites. In the right spot, a wind turbine can cover its build costs in just three to five years. Given that the FiTs term is 20 years for wind, in theory that can provide 15-17 years of clear, guaranteed income, although maintenance costs can be higher for wind than solar.

Solar projects generally take a lot longer to pay back (8-12 years) so the clear revenue period is shorter although the FiTs term is 25 years and maintenance costs are virtually nil.

Volatility is also greater, with wind varying by as much as 20% year-on-year. Solar radiation only fluctuates by about 5% each year so budgeting is that much easier.