Farmers are planning to invest heavily in renewable energy equipment this year, according to research by Barclays.
A third of dairy farmers polled said they were exploring options like biomass boilers or PV panels to generate heat and electricity and any surplus under the feed-in-tariff initiative.
Mike Porter, from 800 acre Hill House Farm in Suffolk, installed 252 PV panels on a new grain store last year as well as two biomass boilers – one to heat farm buildings and the other to dry grain.
He said the panels alone were already generating a good return for his business, which has a £450,000 annual turnover from its main crops of wheat, oil seed rape, naked oats, vining peas and linseed.
“The PV panels cost £101,000 and their peak output is 46kw. We project to generate 38,154 KW hours of electricity over the next 12 months. As the FIT is 31.4p per KW hour we anticipate an income of £12,000,” Mr Porter said.
“If we use 75pc of what we generate we will have a saving of £2,299 and selling the 25pc will give us £286, which gives us a total saving of £14,556 per annum. It all means we are looking at approximately a 6pc return on capital and there’s nothing in our line of agriculture that gives you that sort of return.”
Mr Porter said other farmers had been in contact to see if they could benefit. “Yesterday I had a poultry farmer come to see me with the people who installed my panels and he is looking to have PV panels on four of his poultry houses,” he said.
Mr Porter, 61, is the third generation of his family to farm at Hill House and said he took a long-term view on investments like renewables. He first borrowed to buy a biomass boiler in 2006, following a research trip to Denmark.
He discovered he could use waste grain screening to fire the boiler, which heats his house, outbuildings and a wet house used on the farm’s small campsite. After securing grants for half the sum from his regional development agency, Mr Porter has covered his costs after only four years from the fuel savings.
Mr Porter said his bank, Barclays, had always been willing to lend because of the rising value of the land he offered as security. He said he thought the bank’s attitude to the FIT had become more positive after one senior farming banker initially expressed concerns that the 25-year income guarantee might be watered down.
Barclays today launches a £100m fund that will be allocated to farms looking to invest in renewable energy.
Separately, business groups have urged the Government to stick with reforms to the planning system.
Conservation groups, including the National Trust, had expressed concern that the reforms will lead to the erosion of green space.
However, property chief executives said the new policy framework was much needed.
“Claims that our cherished countryside is to be slathered in concrete misunderstand the system that has been proposed and the safeguards that it will contain,” said British Property Federation chief executive Liz Peace. “Councils – not developers – will have the power to dictate where development will go, and planning applications that deviate from these local plans will quite rightly be thrown in the bin.”