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 Small 11kw turbine from Segen
Renewable energy generation is a sound diversification for rural landowners in light of recent Department of Energy and Climate Change proposals says Savills. The UK Low Carbon Transition Plan includes the consultation on the shape and rates of a new ‘clean energy cash-back’ scheme known as Feed in Tariffs (FITs) where those generating their own electricity from low carbon sources such as wind turbines and photo voltaic panels, will be paid for doing so, similar to current agricultural subsidies. If agreed the legislation will come into effect for April 2010.
“This is excellent news for rural landowners across the UK,” comments Robert James of Savills Energy. “For rural landowners and businesses using large amounts of electricity, such as dairy farmers for example, or sometimes even those with just sufficient wind resource and grid connection, renewable energy is a financially viable option under this proposal. The new tariff will pay for all energy generated by a wind turbine, irrespective of whether the farmer or landowner uses it or sells power back to the grid. The amounts paid are in addition to any saving the landowner will make by purchasing less electricity from their supplier and any income earned from selling their surplus electricity to their regional supplier.”
Whilst the FITs will be banded by technology and scale, it will be mandatory for installations up to 50kw rated output to take up FITs. For installations between 50kw and 5MW an owner may opt to take the FIT or to take ROCs. However its is worth noting that once the choice has been made it is permanent. Using a meter, the FITs will allow owners to claim for energy generated and as with ROCs, the owner will be paid for the generation even if the output is not used on site.
A comparison of the difference between the existing ROC mechanism and that of FITs isshown in the figures below onthe assum,ption of an annual average wind speed of 5.5ms and a total output of 30,000kWh with 66% of energy used on site and the balance exported:-
Wind Turbine On site energy offset/ Export value/ ROC Payment/FIT Payment/Benefit
Current £2,000 £500 £2,700 NA £5,200
Proposed £2,000 £500 NA £6,900 £9,400
*Assumes an import price per kWh of 10p and an export price of 5p per kWh and a ROC value of £45 per Megawatt Robert James continues, “Overall there are 21 different proposed tariffs relating to the different technologies. Wind turbines look like an especially attractive investment if you have sufficient wind resource. This legislation will be effective as of the 1st April 2010, but all systems commissioned from now on would qualify. It is however likely that grants and interest free loans will be phased out in many instances as the scale of the proposed tariffs is considered adequate to justify the investment.” Rural landowners have the potential to generate a significant amount of renewable energy, either from the natural resources on their land, or utilising waste products from existing enterprises. Landowners have the opportunity to be either the developer and operator, or the landlord, depending on the technology and scale of development. Renewable energy generation has very strict development criteria; availability of feedstock or wind speed, grid connection, capital funding, planning policies to name a few. The scale of the development is constrained by the lowest common denominator. |
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