Since the intoduction of the government’s feed-in tariff scheme in April 2010, renewable energy and the potential for individuals to cash in has been a running theme in the British media. While certain newspapers have taken a negative view of the potential for green energy and an even dimmer view of some of the companies attempting to take advantage of the new legislation, there is little doubt that feed-in tariffs have had a big impact on the British mindset on renewables.

Historically reactive and often adverse to change, the British public is becoming increasingly aware of the financial rewards that can come from investing in renewable energy based on feed-in tariff pay outs both for the energy used by the household and energy fed back into the national grid. Once commercially unviable, feed-in tariffs work by offering premium, guaranteed rates to renewable micro-generator thus off-setting the high costs of solar panels while offering attractive returns to investors over a period of 20-25 years. This financial mechanism has led to a great deal of companies springing up with offers to fit solar panels to households for free, the benefit to the homeowner being reduced utility bills and the benefit to the companies being long term returns from the tariff.

Indeed, British Gas research alone has shown that the tariff will spur around half of Britain’s homes to eventually invest in solar panels, bringing in an annual revenue of between £600 and £1000. The national grid, which has been criticised of late for its perceived inability to cope with the shift towards green energy has released findings about the future for solar energy in the UK. Certainly, with the UK on target to meet its climate change targets within the next decade, it seems that solar photovoltaic (pv) should also go from strength to strength on the back of the tariff legislation. The national grid has shown that within the next 10 years around 31,950 MW of solar panels will be connected.

The national grid has shown that around 29,000 MW will be needed to exceed government targets of generating 15 per cent of energy by renewable means. This would mean enough energy to power around 20 million homes, a massive change in the way energy is both generated and consumed in the UK. The national grid has shown that while we are certainly on the right track in order to bring about a root change in the way the UK generates energy, the government has to remain focused on renewable energy. With a review of tariff rates due, it will be essential that the government maintains a tariff rate which continues to incentivise long-term investment.

The sun hasn’t shone much over the Christmas period however, the lead up to the Christmas period saw a refocus by the UK government on solar photovoltaic energy. Announced on the 22nd of December, the Department of Energy and Climate Change (DECC) consultancy will look at microgeneration and the way the UK government can help small scale renewable energy through mechanisms such as the feed-in tariff which has already proved successful.

The feed-in tariff, introduced back in April incentivises investment in renewable microgeneration by offering fixed, premium rates for units of energy both used and fed back into the grid. Already, this mechanism has seen a huge growth in solar pv investment with traditional industries such as farming taking advantage of the profits to be made out of solar panels. Despite this government support for renewable energy, there are some fears that if the plug is pulled on the tariff too soon,

future projects and of course the future of UK renewable energy will be jeopardised indefinitely.

The consultancy which will last until March 2011 will endeavour to ensure that the longevity of UK renewable energy is secured through foresight and careful legislation. The Department of Energy and Climate Change has stated that the consultancy will focus on ‘quality, technology, skills and information’ and that ‘consumers need confidence that microgeneration kit will be of good quality. The industry needs to develop the technologies, the supply chain needs skilled workers to install kit and consumers need good information on microgeneration’.

Announcing the consultancy, Energy Minister Greg Barker said,

“We’ve already pledged financial support to encourage people to install kit like solar panels and heat pumps, today’s consultation will ensure that the industry and consumers have the confidence to invest.”

Certainly, while the financial mechanisms are in place for the time being, consumer confidence is still lacking in what is a fledgling industry not always attracting responsible business operations. Speaking on behalf of the more responsible side of solar energy operations, Dave Snowden head of the Micropower Council said,

“We have already seen extraordinary growth in microgeneration power generation solutions thanks to the introduction of the feed in tariff earlier this year, and look forward to similar incentives being extended to renewable heating and hot water systems next June. Today’s welcome proposals will help the industry grow with proper attention to quality, technology and skills development, whilst making it all much easier for consumers.”

Farmers and landowners in the South West should think about the opportunities being presented with the growth in renewable energies.

Sonya Bedford, Head of Renewable Energy at Stephens Scown, says as fossil fuels become more expensive and renewable energy gets cheaper, people could earn an extra income off their land, “Maximising land use to prepare for a future without oil is a very sensible thing to do, especially when subsidies are looking more and more uncertain with 2012 looming.”

The main forms of renewable energy are wind power, hydropower, solar energy, biomass, biofuel and geothermal energy.

She adds; “Renewable energy is ideally suited to rural areas and if you’re looking to diversify, mitigate climate change and earn an extra income then renewable energy may be the way forward. With the continuing and growing Government support for renewable energy, this is a development area that farmers and landowners can explore very seriously.”

By the end of 2009, worldwide wind farm capacity had increased by nearly a third during the year and wind power supplied over one percent of global electricity consumption.

Once the renewable infrastructure is built on the land in whichever form is most suitable, the fuel is free forever. Unlike carbon-based fuels, the wind and sun and the earth itself provide fuel that is free, in amounts that are effectively limitless.

Sonya says, “A wind turbine is now a much more common sight than it was and the wind power operators are on the look out for more and more land that is suitable. Landowners have an opportunity to earn additional income for each turbine they have on their land. Wind farms provide landowners with a regular income, generally for no additional labour or expense, usually for a period of 25 years.

The arrival of feed-in tariffs means there may now be profit to be made by generating electricity through photo-voltaic (PV) panels on barns/houses or commercial building roofs – the same can be said for the generation of electricity through wind turbines.

She adds, “More farmers and landowners are choosing to install their own apparatus, rather than relying on the companies to approach them for installation. The effects of increased generation of electricity will also mean that more farms and estates will be able to be completely self reliant when it comes to their energy needs.”

Biomass, another form of renewable energy, is being used by farmers both as a cash crop and to power and heat the farm itself. Biomass fuel can also include sewage sludge and animal manure and can be a useful way of using a bi-product which may otherwise be difficult to dispose of with the increasing regulations.

Hydroelectricity is generated by the production of power through use of the gravitational force of falling or flowing water. Micro-hydro can be cost effective if you have a sufficient flow and head of water on your land.

With the Nitrate Vulnerable Zone designations, the requirement for farms to increase slurry storage capacity over the next few years could mean that farmers look to Anaerobic Digestion (another renewable energy source) as an alternative option for manure management. The gas produced from anaerobic digestion can be used to heat or produce electricity.

Experienced solicitors at Stephens Scown are available to guide and assist you in making optimum use of your land. For more help or advice, contact Sonya Bedford on 01392 210700, email s.bedford@stephens-scown.co.uk or visit www.stephens-scown.co.uk

With many South West farmers looking to capitalise on the opportunities from renewable energy, Sonya Bedford from Stephens Scown looks at some of the key considerations you should make before rushing into an agreement for a solar park:

• Despite relatively tight timescales, don’t give into pressure and make sure you take proper professional advice before entering into a binding agreement.

• Be aware that some terms on offer are quite miserly – we’ve seen an option fee as low as £100 quoted. The commitment will be for a 25 – 50 year Lease (or possibly even an outright sale) and should not be entered into without proper remuneration.

• Bear in mind that it’s desirable not only to receive a simple rent under a Lease for your land, but also to obtain a share of the revenues from the sale of electricity generated on the site. You may also be able to negotiate an electricity supply for your own property, often for no cost.
• Be aware of any other development you might want to carry out on your land. Often leases and option agreements will include restrictions on developments adjacent to the site and which could have an effect on the performance of the solar PV arrays.
• Ask who will remove the equipment at the end of the lease and to what extent will it be removed at all?
• Seek professional advice about the potential tax implications. You may already have plans for mitigating Inheritance Tax, but granting an Option for a ‘solar park’ will impact on that, with reference to (where you are a farmer) the removal from agricultural use of some of your land.
• Consider the implications on any stewardship schemes you have in place – consent from Natural England will need to be obtained
• And if your land is mortgaged to a bank you will need to get consent to enter into long leases or sales.

Having said all this, there are exciting opportunities in the Westcountry where the solar resource is at its greatest and such opportunities should be seized, with a view to converting them into a 25 year income stream.

Sonya Bedford is Head of Renewable Energy at Stephens Scown. Visit www.stephens-scown.co.uk to download a specialist guide to solar energy for farmers or call 01392 210 700.