Tag Archive: Renewable Energy

Changes to the Renewable Heat Incentive from DECC

The Government has recently announced plans to reduce its support for payments concerning the Renewable Heat Incentive (RHI). New suggestions through an open consultation were recently released by the Department of Energy & Climate Change (DECC) which outline proposals to decrease payments for all new biomass and biogas [amongst other] installations as a result of sustained uptake.

Along with this consultation, DECC have also stated that they will cut the biogas RHI tariff by 10% as of the 1st April 2016. Plans have also been announced to completely phase out subsidies for any new solar thermal installations, which also claim the RHI subsidy.

DECC announced that whilst they allegedly support the RHI as an element of subsidy payments, these schemes must “deliver their objective in a manner which is affordable and offer value for money.” These reforms will be discussed following the closure of the consultation on the 27th April.

The announcement has caused fresh controversy as landowners and businesses are looking to offset their heat and energy demands by installing biomass or biogas systems, especially at a time when investment in solar and wind schemes to offset businesses carbon emissions is now dwindling.

It now appears that the government are generating uncertainty regarding the RHI as to how long tariff payments will be available for, similar to previous trends for superseded heat & energy generation tariff schemes.

Gasification or cogeneration Combined Heat & Power (CHP) units claim the biogas RHI payment and are fast becoming an attractive investment model in the UK to offset heat and energy demand.

Following a successful accreditation process through the non-ministerial department of Ofgem (The Office of Gas and Electricity Markets) numerous systems are now available which vary in both size and fuel type.

CHP machines generate both heat and electricity by burning wood chip or wood pellets at extremely high temperature in a gasification chamber, this gas then powers an engine in turn generating an electricity output.

If you’d like to learn more about Combined Heat & Power Units and the business opportunity they hold, please email Tom Vaughan or call 01665 511988

 

Source

Further reading on the consultation from DECC

 

Is it all over for the renewables market?

As you may have seen, since the election, the government has introduced some tough policy changes in the renewable energy sector. We firstly saw significant changes to planning policy putting more emphasis on the local community engagement (not a bad thing) and latterly, a proposed significant cut in the incentive structures. So does this mean the end of the road for renewables?

At present, the tariffs for renewable heat are still encouraging investment and new projects, particularly ground source heat generation. This is financially viable and worth considering if you have a demand for heat within your business. Whilst biomass has seen a reduction in tariff, there is still uptake due to the ability to grow your own biomass, low day to day running cost and the practicality ie if you install a biomass boiler on a poultry unit for example; it is easily interchangeable with a gas or oil system in case of breakdown or expense of operation.

Ground source is interesting, uptake to date has been low probably because there is little experience and it requires more technical input so there are not as many cowboy operators. It’s particularly good if you have electric generation on site as well but just be careful of the infrastructure (particularly pipework) required in the ground, which maybe ok if you’re on a new building site but not suitable in confined areas.

As to solar, hydro and wind, the outlook is bleak. Wind energy generation may be viable but only in areas with cheap grid connection and a very good wind speed. Just as with the solar market, I doubt that we will see any significant reduction in the system capital cost and with the energy wholesale price on the floor at the moment, the financial model does not make sense and certainly not viable from a lending perspective. Solar will only work if there is a significant drop in panel prices and a constant demand for the power on site. What worries me is the smaller manufacturers will start to shut up shop putting warranties in jeopardy or seeking additional cost in maintenance agreements to cover their loss of profit from new sales.

Where next then? Storage has to be the way forward. Our government should follow our European partners and incentivise and invest in electrical storage. Storage would allow us to match generation with demand and deliver it when needed rather than having to cover for that ‘what if?’ scenario which is costly and wasteful.

From my point of view, I’ve employed many people directly as a result of renewables and seen many businesses grow from nothing to employing many hundreds of people, kick starting a very vibrant new sector. I will be sorry to see those individuals that have studied and gained experience in the sector suddenly find that the jobs and work have dried up; they are often the ones forgotten in the party politics and vote winning.

Diversification during Challenging Times

With the current market perception of a disconnect between exceedingly high land values and low, fluctuating yields, Miles Crossley, Investment Director at George F. White, shares his thoughts on what can be done to support landowners with the growth of their agricultural businesses and the overall growth of the agricultural industry as a result.

During tough times, landowners who run their own agricultural businesses can be tempted to sell off assets in order to sustain their business’ cash flow as opposed to making profit – but could they be exploring alternative, high value usage that supports the core agricultural business as well as creating diversification?

When you start to ask this question you can see there are various options available and in our experience at George F. White there are three main options a landowner can look at: solar; mid wind; development.

If the landowner wishes to create a stable income stream that exceeds agricultural performance then they might want to lease their land to a developer, who will typically install a 5 mega-watt solar farm, for a 30 year period. The biggest benefit here is that the developer will assume the risk for both the financial element and securing planning.

Or it might be that they want a balance between the planning risk and return on their financial investment in which case a 500kw mid-wind turbine project might be the right choice. Despite the cloudy political climate following the Government’s announcement on onshore wind farm subsidies, there is still a market for mid-wind from a feed in tariff perspective especially where a well thought through community engagement strategy is used when approaching planning. These projects last for 25 years with government-backed tariff for 20 of those. Although self-funded, landowners can expect to see in circa of 25% return on their overall investment, dependent on FIT and grid connection, and to have paid it off within 8 to 9 years.

(Read more about onshore wind farm subsidies announcement here.)

A third option is to look at the development potential whether it is adjacent to urban settlement or the conversion of dilapidated buildings for higher value usage. If the landowner can raise the profile of their site through the Local Planning process they will create a market place that attracts more interest and in turn higher values from potential developers.

Each of these routes can spread risk for the landowner and leave them less vulnerable to input costs and the fluctuation of yields leading to the sustained support of the core farming business especially if looked at proactively and if the project is well managed. If more landowners choose to diversify and grow their businesses then not only are they supporting themselves but also the sustainability of the whole rural economy and secured succession for their families.

With extensive knowledge in securing land deals and managing risk Miles is committed to delivering projects with commercial value. If you or anyone you know would like to start a conversation about potential opportunities then please get in touch with Miles on 07894 885274 or at milescrossley@georgefwhite.co.uk.

 

Government creates uncertainty over Solar Energy Projects

Solar projects less than 5MW could now face significant uncertainty either being slowed down or deferred following the Government’s recent announcement on changes to subsidies. So what does this mean for the future of solar installations in the UK?

The main change announced relates to the ROC qualification (generally 1 MGW schemes and above). In order to qualify for a Renewable Obligation Certificate (ROC) under RO 1.3 a project must now be in planning, have a land deal in place and have secured a grid offer. If any one of these criteria is not met then the project will be subject to an uncertain ROC value. This creates a much tougher market place and as a result investors will now have to focus on delivering pipeline from existing projects, rather than looking at new projects.

For smaller scale projects reliant on the Feed in Tariff (FiT) the government have proposed looking at the level of the subsidy and also the possible removal of the pre-accreditation facility.

Subsidy levels for sub 250kW schemes have already been substantially cut over the past two years and it is unlikely these schemes will remain viable should further cuts be announced.

Pre-accreditation allows the applicant to tie in to the current level of subsidy for a period of 6 months; however it can only be applied for with a valid planning consent and an accepted grid connection offer. This was a very sensible facility the government introduced some two years ago and therefore very surprising to hear they now propose to axe it.

It is important to note that these are proposals at this stage and not implemented changes, although there does appear to be a clear message that government intend to make life extremely difficult for those thinking about investing in renewable energy projects.

 

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