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Strutt and Parker’s Alexander Creed looks at the development of green energy on farms in recent years.
FARM ENERGY – WHAT NEXT? If we go back five years energy was not a regular topic of discussion on farms. This started to change in 2010 when the Government introduced Feed-in Tariffs (FiTs) and then subsequently brought in the Renewable Heat Incentive (RHI). These policies focused on kick starting investment in renewable technologies in the UK and were particularly embraced by farmers because they fitted well with rural businesses.
As a result, over the last five years we have seen phenomenal uptake of solar PV both on the ground as solar farms and on buildings and a significant installation of small to medium wind turbines in suitable locations. As such it is now estimated that by 31st March 2016 the UK will have 10 gigawatts of solar PV installed of all types while wind has also seen similar success with 13GW to be installed. Both figures significantly exceed targets. The RHI has also been successful at introducing biomass boilers and heat pumps as renewable heating sources to farms. Many farming businesses have found this a great opportunity to diversify their income streams and generate new revenues whether from rent by letting a third party develop renewables on their land or through directly investing and taking benefits from both the FiT and the RHI as well as benefitting from reduced energy costs for their own business. These opportunities have been particularly relevant to the UK dairy industry as it is one of the more intense energy users in British agriculture with a daily demand for heating, cooling, light and power.
As a result of the success of these policies the Government has made significant changes recently to the support payments and at the time of
Alexander Creed partner in Strutt and Parker
writing it looks highly likely that the Feed-in Tariff will be significantly reduced from early 2016 while support for wind turbines and large ground mounted solar farms has been removed almost entirely.
WHAT NEXT?
This, therefore, leaves a question as to where energy policy is going? What is quite clear is that the Government is actually returning to the original basis of the Energy Acts from 2008 and 2011 that brought in a lot of the support payments that have been so successful over the last few years. This original basis was a focus on reducing carbon emissions and reducing the total UK greenhouse gas emissions by 2050 by 80% from a 1990 base year. Policy going forward is, therefore, going to focus much more on energy efficiency and driving businesses to reduce their energy use which in turn will reduce carbon emissions.
The dairy industry will find itself part of this. While the whole issue of methane emissions from livestock remains a separate challenge for further scientific investigation and solutions the day to day use of energy will continue to be a focus.
Producers will have found themselves coming under increasing scrutiny from the buyers they supply who in turn are being scrutinised by their end customers, whether it be a supermarket or a specialist processor, to understand the energy use and consequently the carbon emissions in the production chain.
ENERGY OPPORTUNITIES So while there are changes to energy support coming over the next few months, it does not remove the need to
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