Updated: Sep 12, 2019
As Feed-in-Tariffs (FITs) came to an end in March of this year, it may have been questioned if solar panels for farmers are still as viable and beneficial. Farmers might be surprised to see that a return can still be as good as ever…
The short answer is yes, Solar PV for farmers is still a viable proposition moving forward without the subsidy of the FIT’s.
This is thanks to the government’s new S.E.G (Smart Export Guarantee) scheme coming into implementation from January 2020. Under the S.E.G, a farmer/generator is still guaranteed payment for all unused electricity sent back to the grid.
This does, however, shift the onus back to ensuring a system is sized to meet the demands of a property.
The primary function of a Solar PV system is to minimise the consumption of energy from the grid and to maximise savings. The principle is that it’s more cost-effective to save heavily on a unit of electricity that may usually cost around 15p, than send energy back to the grid and get paid 5.5p for doing so.
This means it’s never been more important to size a system properly. The S.E.G does, however, mean the farmer is guaranteed payment for the electricity at more than the cost of generating it.
How to size a system
GB Solar will take an in-depth look at your energy consumption, using both your energy bill and (if available), your ‘half-hourly’ data supplied by your energy supplier. Using this information, we can identify your average, peak and off-peak demands. This allows us to model your energy consumption, enabling us to size a system to maximise self-consumption and therefore get the return on investment you expect.
How much payback can farmers expect from solar panels?
Exact paybacks are impossible to predict, many variables including pitch, orientation and capacity have a bearing on the capital payback and profit from a system, though it’s reasonable to expect a minimum return of 15%, in some scenarios a return can be as high as 25%-30%.
We’ve run an example below of how a 6-year capital payback and an average 19.75% return-on-investment can be achieved.
Example Installed Capacity: 50kWh
Example Install Cost: £37,500 + vat
Annual Electricity Generation: 43,000kWh
Annual Savings: Up to £6,880* based on 100% consumption.
Are there specific requirements for farmers to consider?
There are few criteria to fill for a farmer to benefit from a solar install. Provided the farmer owns the prospective property or land. Planning permission is often straightforward, allowing for a swift turnaround from concept to completion.
Any system capacity above 50kWh requires us to complete a ROOFIT application, as well as requiring application to the local DNO (Distribution Network Operative) to notify and subsequently connect to their network.
Thanks to the large volume of product now being installed across the UK, access to materials is swift, and the skilled labour required to ensure a robust solar install is plentiful.
How else can the Agricultural industry benefit?
Public pressure regarding green and clean credentials continues to weigh heavier on many industries, farming is no different. Corporate and Social responsibility benefits can be huge.
In 2019, a clean, green image can have a measurable effect on a company’s public image. A GB Solar system truly will benefit a busy farm, reduce its carbon footprint, make a measurable dent in the bottom line and provide an excellent return on investment.
How accurate is a GB Solar Proposal?
It isn’t just about the savings. It’s important that a farmer has the most accurate depiction of the lifespan of a solar system as possible. At GB Solar, we cover every base.
Our calculation takes into account the panel degradation, as warrantied by our market-leading manufacturers.
We can also factor in any cost of borrowing should a farmer not wish to capital finance a system, and build in an operation and maintenance costs should you wish for more peace of mind in ensuring your system delivers as promised.
A typical example of savings would be:
*AIA Offset – Annual Investment Allowance, see our information on corporation tax offsets.
What this means for farmers
As well as a hugely attractive ROI of 19.75%, this farmer would be securing a supply of nearly 1GW of electricity over 25 years at a cost of just 3.13p per unit. This is already less than a quarter of the average purchase price, normally around 14p/kWh.
Is Solar PV Beneficial for Agriculture?
Is Solar PV as attractive an investment as it was five years ago? Perhaps if you purely base your assessment on the return on investment, it might be a couple of points short of where the ROI percentage used to be.
However, in this day and age, with high-interest savings accounts returning 3% to 4% at best, considering the example figures detailed above, solar panels for farmers can be a low risk, high return investment.
For more information or a free survey, hit the Get in Touch form, or book online using our new online appointment page.