Renewable energy projects have become increasingly popular to help farm diversification and sustainability. However, recent changes to planning policy and support mechanisms are now limiting what can be done by farmers and landowners in order to support their existing business. This means that advances in technology and the falling cost of installing and operating renewable energy projects is taking precedence over reliance on support mechanisms when it comes to on-farm renewables.
What obstacles are in place?
In recent years, there has been a big change in government policy and support mechanisms have been slashed, particularly the Renewables Obligation and Feed-in Tariff for wind and solar. In addition, changes to planning policy have introduced significant hurdles to securing planning permission in England and as a result the number of schemes being consented has declined.
Unexpected cuts were also announced in August last year which reduced the funding available under the Renewable Heat Incentive for certain types of combined heat and power (CHP) biomass systems; it was intended that these changes would affect the funding for any plants where power efficiency (i.e. the total percentage of fuel that is turned into electricity) is lower than 20%.
However, after much lobbying, the government is now consulting on this proposal (consultation closes 10 March 2017) and there is a transitional period from 1 January until 31 March 2017 where plants with an efficiency of 10% or above will continue to receive the full biomass-CHP tariff, while those with a power efficiency of below 10% will see a proportionate reduction in the level of heat receiving the biomass-CHP tariff. Numerous farmers have built CHP plants to utilise biomass that is a by-product of agriculture and so these changes are likely to affect a number of existing operations.
In addition, in 2016, a consultation was launched by the government which proposed cutting feed-in tariff subsidies for larger biomass and anaerobic digestion (AD) plants altogether, with reduced support for smaller plants. The government published its response to the consultation this month and has decided to implement revised AD generation tariffs from 1 April 2017, which are a slight improvement on those that were initially proposed. In addition, the government has decided to introduce sustainability criteria and feedstock restrictions, which will apply to all new AD installations from 1 May 2017. The NFU has estimated that farmers own about 200 AD plants, while up to 1,000 farms may have an interest in AD, for example by supplying them with crops. This will therefore directly affect not only operators, but also others who are interested in biomass and AD schemes.
What opportunities remain?
It is not all doom and gloom; we are still seeing lots of smaller scale installations coming forwards and it is important not to forget that some domestic, micro-generation renewable schemes can be carried out using permitted development rights, without the need to apply for express planning permission. There are, however, various criteria and exceptions to the rules so it is important to check carefully whether these apply.
The government is also now encouraging the development of energy storage schemes. These involve large batteries, usually housed in shipping container-type storage or even existing barns, which connect to the grid and/or an existing source of power such as a wind or solar installation, and are used to store energy. The batteries can either take energy from the existing source and store it, when there is less demand for it to be exported to the grid, or the batteries can take and store energy from the grid when prices are reduced during periods of low demand and then export it again in times of peak demand.
In this country, energy storage is still a relatively new technology but it dominated the outcome of National Grid’s 200MW Enhanced Frequency Response tender. In total, 64 bids were made for the four-year contracts, totalling more than 1.2GW, which included 888MW of battery storage. The tender awards were announced in August 2016 and energy storage will now be used for balancing services at grid scale for the first time in the UK. This has kick-started the energy storage market, meaning that developers are looking for sites for larger projects and farmers may also consider using small-scale energy storage as an on-farm energy solution.
How can Burges Salmon help?
Combining expertise across our industry-leading agriculture and renewable energy teams, we provide expert advice on all types of on-farm renewable energy projects, including including wind, solar, biomass, biofuels, EfW and AD. If you have any questions please contact Alastair Morrison.