Bowler Energy, the leading provider of renewable energy solutions to the agricultural sector, is lobbying government ministers to think again about proposed changes to guaranteed payments for Solar Energy production (the feed-in tariff (FiT) payments), warning any further changes could decimate the industry, lose customer confidence in solar and therefore drastically limit the potential power of solar and other renewable energy sources to clean up agricultural energy.
In a three page letter to the Department of Energy and Climate Change, and Bowler Energy’s local MP Heather Wheeler, and separately in a detailed response to the current official Environmental Audit Committee’s consultation on Solar FiTs, John Bowler (owner of John Bowler Eggs and Bowler Energy) questions the sanity of proposed changes to the Solar FIT, querying not so much the reductions themselves but the manner in which they have been introduced –seeing it as a clear case of too much, too soon. Bowler is urging the government to think again or risk dis-incentivising farmers from investing in renewable energy. Mr Bowler believes:
“There is simply no need to decimate our industry and reduce confidence in solar by acting in such a drastic manner, when with a little extra thought such a negative time could have been made much more positive, for the benefit of the economy, the planet and consumers and sellers of energy”.
Mr Bowler raises real concerns about the impact of the policy changes on agriculture and highlights somewhat of a paradox. On one hand farmers face a raft of legislative and regulatory drivers to clean up and become more self-sufficient in their energy supply, yet on the other hand they face a sweeping change to the very policies that would have encouraged and incentivised them to become greener – essentially removing the carrot and leaving only the stick. And that stick promises to have a lot of clout with ambitious (some might say pernicious) targets. In the Low Carbon Transition Plan agriculture is tasked with achieving 5% of the overall 34% reduction in emissions in the UK by 2020i. In Scotland alone we’ve seen the introduction of targets for farmers to generate 100% of their own energy by
2020, and to reduce emissions over all by 42%ii. And now comes the proposal that domestic and commercial buildings from April 2012 should meet energy requirements with an EPC of C or aboveiii which will affect agricultural buildings. These measures all come under the steam of the self –titled ‘greenest government ever’ but carry no real thought as to how they will be implemented or financed.
Crucially, Bowler points out, the proposed policy actually severely impacts the agricultural sector but the policy makers seem to have given this no real consideration. Mr Bowler says:
“Whilst I understand the need to improve energy efficiency in domestic dwellings, there has been no consideration whatsoever as to how or whether this will be applied to Agricultural Buildings. It is impossible to think that a Free Range Chicken Unit or Cattle Shed can have an energy efficiency certificate of C or above. The Proposals are that the FiT Tariff drops from 15.2p to 9p for a system between 10-50kW. I am sure you will agree this is a considerable drop for our producers to take, especially as these farms are looking to consume most of their electricity on site and are not in it for profit alone. We have been advised by The Carbon Trust that DECC have omitted & not considered Agricultural Buildings when proposing this amendment to the FiT Guidelines. The consultation period is due for completion on 23rd December but we are not going to be advised of the confirmed amendments until February 2012, this leaves huge gaps in how legislation is going to be applied and leaves our industry scratching its head on how best to advise our customers on a way forward!.”
Bowler Energy are also responding formally to the current consultation on the Solar FiT being handled by two influential cross-party committees which will examine the government’s management of Solar FITs. The Environmental Audit Committee and the Energy and Environmental Committee will examine the factors the government should consider when setting the rate of future FITs, factors such as jobs created, emissions reductions, energy saving behavioural change, affordability of solar versus other renewable energy technologies as well as the government’s overall management of the FITs consultation and have called for feedback from the industry and the public.
In their formal response to the consultation Bowler Energy agrees that a program of tariff reductions is necessary as it is clear that if the capital costs of installation reduces then leaving tariffs unchanged will lead to returns that are higher than expected targets. However they disagree that a target return of 5% - 8% is a realistic return on non-domestic installations as it is based on unrealistic capital costs and projections, given the DECC have failed to consult properly with the industry to understand the real story. And the net result of that will be a reduced financial return which will in turn naturally dis-incentivise the necessary investment, resulting in a much lesser environmental return.
“Reducing the tariff for business size installations and linking to energy efficiency will therefore actually continue to increase demand for dirty energy and the related pollutants; not reduce it as intended. In our opinion the proposals as they currently stand are
detrimental to the one sector where a significant volume of renewable technology could be promoted.”
Always keener to focus on solutions rather than problems, Bowler have actually proposed several measures which will ease the pain and increase the gain, both financially and environmentally. These include a lesser reduction in the tariff to allow for a shorter payback term than the proposed reductions would currently allow for (i.e. A reduction in the 50Kw tariff to circa 23p [from 32.9p] would allow a 12 year [EBITDA] payback and allow the cash account to work on or around a breakeven basis over a typical financing period whereas, under the proposed tariff reduction, it could take up to 20 years to see a positive return).
Bowler also disagree with the current method of implementing tariff changes that involve swift unplanned reductions that are implemented without adequate consultation or thought. The consultation document argues for a change in the method of implementing reductions on the basis of three suggested methods, those being contingent digression, rolling reviews and rationing and quotas. Bowler argue that a structured approach that uses a combination of all three methods might bring sustainability to the industry and enable solar energy to be developed in a more structured and certain manner, and with certainty will come the confidence for farmers to invest.
And farmers need to have that confidence, as well as generating a massive environmental return, renewable energy projects insulate against rising prices and provide new income. Indeed as the NFU’s Head of Economics Tom Hind recently stated:
“Investment in renewables is part of the defence against volatile commodity prices”iv
In addition to securing energy supply and diversifying income, investing in renewables also helps many in the sector meet the sustainability agendas and standards now prevalent in agriculture, driven by both consumer and retailer demand to decarbonise the food chain. The focus on sustainability continues to grow with The European Commission recently announcing plans to reform the Common Agricultural Policy (CAP)v with a greater focus on sustainable farming. As part of a raft of agri-environmental initiatives, the Commission is proposing that the preservation and the restoration of ecosystems and the fight against climate change, together with the effective use of resources, should be two of the six priorities of rural development policy – a policy which will actively encourage farmers to implement renewable energy solutions, encouragement which needs to be echoed closer to home in the government’s FIT policy.
Bowler Energy have extended an invite to energy ministers to come and actually experience the impact of renewable energy solutions on their own and client farms and to enable an open debate on the future of renewable energy for agriculture – a debate which is crucial as Bowler says:
“The approach that the DECC is taking is both arrogant and portrays a total disregard for the opinions and evidence of the industry itself. How does the DECC propose to promote the trust and confidence that is required within the private sector to deliver the aspirations of the DECC if it treats the industry in this fashion?.”