Minor change to solar payments but farm schemes still shine
Published September 16th, 2014
There have always been two tiers of solar projects – small on farm schemes (generally up to 250kW) that are supported by the Feed In Tariff (FiT) and larger schemes (generally from 2MW to over 20MW) that are supported by Renewables Obligation Certificates (ROCs).
There will be a minor change to FiTs in January 2015, but this is likely to be a minor decrease and still means on-farm solar projects are viable and a good plan. A 250kW system covering approximately an acre will cost between £250,000 and £300,000 and will provide an income of between £36,000 and £48,000 per annum depending on on-site usage.
These schemes are especially good if you have a high electricity usage such as broiler units, intensive dairies or a diversified commercial premises.
ROCs will stay for schemes up to 5MW. These are 25 – 30 acre schemes; generally these are done on a lease as investment would be in the region of £5million. Annual rental returns would be in the region of £700 to £900 per acre, depending on location.
The ROCs on larger schemes (above 5MW) are changing fairly drastically; they are being abolished and will be replaced by Contracts for Difference (CfD). This will happen in April 2015.
A CfD is a private law contract between a low carbon electricity generator and the Low Carbon Contracts Company (LCCC), a government-owned company.
A generator party to a CfD is paid the difference between the ‘strike price’ – a price for electricity reflecting the cost of investing in a particular low carbon technology – and the ‘reference price’– a measure of the average market price for electricity in the GB market.
It gives greater certainty and stability of revenues to electricity generators by reducing their exposure to volatile wholesale prices, whilst protecting consumers from paying for higher support costs when electricity prices are high.
We are yet to see how these changes will affect the solar industry, the likelihood is that rents will have to reduce and only the best sites with the cheapest grid connections will be viable.
For further information contact James Fulton or Kamil Ciesluk in the renewable energy team at Berrys’ Kettering office on 01536 532394 or email firstname.lastname@example.org