Richard Palmer Head of Energy and Estate Management at Butler Sherborn talked to BF & G about the future of renewables.
There are still opportunities for investment in energy and renewable projects for farmers but the key challenges still remain; balancing Government subsidy, planning and grid connection. - Richard Palmer, Butler Sherborn
Richard Palmer Head of Energy and Estate Management at Butler Sherborn talked to BF & G about the future of renewables.
"There was no specific mention of Climate Change in the Autumn Statement, although £390 million worth of investment was pledged towards low carbon transport by 2020-21. The Government also ratified the Paris Agreement at the beginning of November working towards a zero emissions economy by the end of the century.
"The 2015 Government Policy and Spending Reviews of the Renewables Obligation (RO), Feed-in Tariff (FiT) combined with uncertainty regarding the future of the Renewable Heat Incentive (RHI), hit investor confidence and financial returns in renewable generation projects."
Mr. Palmer pointed out that the Government are still committed to the decarbonisation of heat and three approaches stand out; electrifying heat with heat pumps, replacing methane with green gases such as biomethane from Anaerobic Digestion (AD) plants and developing heat networks or district heating schemes.
"AD plays a key role in UK Agriculture’s Greenhouse Gas Action Plan," explained Mr. Palmer "and it would be a surprise if the Government did not provide a continued framework for investment. But the uncertainty about the outcome of the RHI consultation is currently affecting investment in AD projects."
Mr. Palmer said "The Renewable Energy Association (REA) sees energy storage as a key element for future energy policy to integrate more renewables in to the energy mix, improve our energy security, provide system stability and reduced network upgrades for ‘Smart grids’. Furthermore, there is greater potential for Demand Side Response (DSR) encouraging electricity users to reduce their consumption at specific times; this is particularly useful at times of narrow system margin. There is potentially significant value in these opportunities but it is complex and it is important to be working with the right developers and investors and energy suppliers.
Really, farmers need a significant change in mindset; on site energy demand is a key criteria. This is particularly true for solar PV investment whereas historically the economics could allow for greater export to the grid. Grid parity over the next couple of years might allow for new solar farms. There is very little investment in onshore wind but smaller wind turbines which can offset demand could be viable. Heat pumps and Biomass district heating systems can still deliver investment returns if designed and implemented well"
Mr. Palmer also advised that farmers with existing renewable generation assets should continue to look for opportunities to ‘sweat their existing assets’, for example, optimising existing Power Purchase Agreements or premiums for the emerging green gas market.
Rental energy standards
Mr. Palmer mentioned the fact that many farmers and landowners have let residential and commercial property portfolios. He advised that for new lettings these properties will need to meet minimum energy efficiency standards by 1st April 2018.
"Energy efficiency is critical to meeting carbon emissions targets and energy audits and portfolio reviews are required now which can include renewable heat and electricity solutions. Approximately 80% of farm and estate business incomes are from agriculture and residential assets, and given the uncertainties with the Basic Payment Subsidy which provides income support, it is important for farmers to start thinking far more strategically about their businesses with trusted professional advisors,"
