MHA | At last - subsidised energy, but only for some

At last - subsidised energy, but only for some

Joe Spencer · December 22nd 2023 · read

Tractors on farm

As the progressive reductions in Basic Payments begin to bite, commodity prices remain flat and it is becoming clear that the new sustainable farm incentive scheme will not replace the lost income, even with a substantial cut in food production, what might be a piece of good news for some was released on 12th December.

Small scale solar is, in many ways, one of the easier forms of diversification, and under the latest version of the Farm Productivity Grants scheme, it will be added to the list of qualifying expenditure for grant support in 2024 (along with use of robotic and automated equipment and systems to aid crop and livestock production). For solar equipment, the grant available will be 25% of the cost of eligible items with the grant being between £15,000 and £100,000. The grant will cover up to 25% of the cost of eligible items. Roughly speaking it will cover installations of between 50 and 400Mw. Regrettably the grant aid will only cover roof mounted systems so will be of little help for those who have the right sites for ground mounted panels. Where appropriate buildings are available or are under construction (and where a three-phase supply is available nearby) it will be a potential opportunity.

The attraction of on farm solar is that power used on the farm will be effectively free, while surplus energy can be exported to the grid. The export prices are not as attractive as they were a year ago but nonetheless a 400Mw system exporting 100% of production could currently bring in about £40,000 annually. Where significant money is now being spent on driers, irrigation or livestock units, the return on capital would be higher.

An online checker, to assess eligibility should run from January-March with applications opening thereafter.

According to MHA agricultural partner Joe Spencer:

This could have been very good news, particularly for the smaller units which may have an eligible site and available capital but lack the management skills or enthusiasm for more complex diversification, but the restriction to roof mounted units only is disappointing.

Nonetheless where the right buildings are there or under construction, it will help diversification. In some cases, it may become a useful tool as part of a succession plan, giving the retiring partners a separate income stream and enabling them to step back from the main trade. In the longer term when we are looking at electric tractors and ever-increasing use of this form of power, this will help farms to become more energy independent".

Joe Spencer, Agricultural Partner

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