UK - Renewable energy feed-in tariffs set to transform rural estate incomes

Some key facts:

- Rural estates and farms can generate significant extra income from renewable energy feed-in tariffs (FiTs)
- FiT payments are index linked and guaranteed for up to 25 years
- You can still claim FiTs even if you use the electricity yourself
- Most rural estates can benefit from some sort of renewable energy scheme

Rural estates and farms could use the new renewable energy feed-in tariff scheme to increase their annual income by tens of thousands of pounds each year.

A hypothetical “renewable energy” estate is described below utilising all the main forms of renewable energy – solar, wind, hydro and anaerobic digestion. also shown is how much income could be derived annually from each using feed-in tariffs:

• Two wind turbines (two 250kW** turbines wind speed of 7m/s) create an annual income* of £300,000 assuming all electricity produced is exported to the national grid.
• An anaerobic digester (350kW system 200 cows & 600 acres of maize) creates an extra £460,000 per year
• A modest hydroelectric scheme (100kW water turbine) adds £190,000.
• The contribution from photovoltaic solar panels (900 sq/m - 450 panels - on dairy roof) is £26,300

The total annual income came to £916,000 with a lifetime potential of £18,500,000!

*Income figures will vary based on local conditions and equipment performance. They do not include tax.

** A 250kw turbine produces an equivalent amount of energy to that consumed by 125 three-bed houses for a year.

If the electricity produced is used on the estate the annual benefit increases to £1.1m. This is because the estate will still receive the FiT payments, but will be saving on its current electricity expenditure.

Feed-in tariffs were introduced in the dying days of the Labour government and were designed to encourage people to create their own renewable electricity. An index-linked payment guaranteed for up to 25 years is made for each unit of electricity produced even if it used by the generator for their own consumption. The tariff varies depending on how the energy is being generated and the scale of the scheme. The smaller the scheme and the longer its potential payback, the larger the payment.

FIT rates:

• Anaerobic digestion 9.0 -11.5 pence/kWh over 20 years 
• Hydro 4.5– 19.9 p/kWh over 20 years
• Solar photovoltaic 29.3 – 41.3 p/kWh over 25 years
• Wind 4.5 – 34.5 p/kWh over 20 year

Add 3p/kWh for all electricity supplied to the national grid (large schemes can negotiate a higher supplement)

We have already seen a huge surge in enquiries from landowners looking to take advantage of feed-in tariffs. One of the most attractive things about them is that the payments are guaranteed for up to 25 years, which means it is now easier to get bank funding to set up renewable energy projects.

Reassuringly in the current fiscal environment, there is also no danger that FiTs will be hit by government cuts because they are funded by electricity generators (via our bills) not the exchequer.

Although it would be unusual for a typical rural estate to be able to utilise renewable energy to the same extent as our idealised estate, there are very few rural properties that cannot benefit from FiTs in one form or another. The estate shows the extent of the potential income available, even from relatively modest schemes. The wind turbines we are using, for example, are much smaller than those used in large-scale wind farms.

At a time when the income streams on many rural estates are under threat from poor agricultural commodity prices and falling farm subsidy payments, renewable energy will play an increasingly important role in securing a viable future for landowners and farmers.

Next year we should see even greater opportunities when details of the Renewable Heat Incentive are finalised. This will pay a tariff for heat produced by renewable sources and could be of real benefit to rural landowners who use a lot of heat themselves or who can supply heat to other users.

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