Farm Diversification

When considering wind power there are two distinct scales of operation; large commercial sites focused on exporting power to the grid and micro-generation, focused on substituting for purchased power within the farm business. As the price of power rises, the economics of generating power also improve.

Electricity generated through a wind farm can be used:

• entirely by the farm
• shared/sold between the farm and neighbouring farms
• shared /sold between the farm and a commercial user (e.g. factory)
• shared/sold between the farm and the local community
• sold to an electricity supply company
• to add value through "green" image (eg to reduce the carbon footprint of the business).

For landowners with suitable sites for large scale wind turbines the options available are:

• to allow a developer to install turbines in exchange for an annual payment, or;
• to install the turbine(s) independently.

Turbines need to be located in exposed areas, with an open aspect to the prevailing wind direction. This ensures an uninterrupted flow of wind to the turbine. Proximity to woodland or trees needs to be considered as trees will cause turbulence thus creating an ‘interrupted’ flow of wind. The same applies to any large buildings and structures that could impact on the wind flow.

Turbines also need to be located far enough away from houses, to ensure no detrimental amenity impacts on residents but as close as possible to a grid connection point. Grid connection costs can be quite high especially if the turbine is a distance away and long cable runs are required. In addition the proposed site needs to have a good road access or the facility to put a track in leading to the turbine site.

When siting a wind turbine proximity to watercourses (pollution risk arising from construction), overhead pylons and public roads needs to be considered.

The wind speed at the site they key variable. Energy yield depends on turbine model and local wind speed (average for Scotland is 6.4 m/s at 25 m above ground level). A published wind database for the UK does exist with average wind speed figures per kilometre squared. This can be found at the DECC website . The actual power produced will depend on the average wind speed in the area and other factors such as height of turbine, diameter of rotor and the correct siting of the wind turbine(s).

For farmers with suitable sites for large scale wind turbines the options available are:

• to allow a developer to install turbines in exchange for an annual payment, or;
• to install the turbine(s) independently. 

Energy yield depends on turbine model and local wind speed (average for Scotland is 6.4 m/s at 25 m above ground level).  Attractive sites are those with average speeds above 8 m/s.

Gaining planning permission requires a large investment which will be lost if unsuccessful but for those prepared to take the risks involved in installing large turbines the payback can be short, and the investment highly economic.

Wind Turbines

Larger wind turbines catch the higher wind speeds at greater altitude and so are more efficient and economic but require large initial investment.
When comparing the potential benefits of wind power, it is important to be able to compare like with like.

The actual power produced will depend on the average wind speed in the area and other factors such as height of turbine, diameter of rotor and proximity of any shelter.

The following costing information is general and current prices should be sought for budgeting purposes.

• Typically £1,000 - £2,500 per kW for single grid-connected turbines. Turbine costs per kW are lower for larger turbines.
• Initial site assessment costs around £3,000 while work towards full planning submission would cost upwards of £25,000.
• Wind monitoring, normally required by banks before they will lend as well as turbine manufacturers, costs about £25,000 for the mast and a similar amount for data collection and analysis 
• Costs for access roads and for electrical connection to the grid are very variable, depend on the existing facilities
  

Example 1: Medium/Large scale wind turbine, all power sold to grid

This size of turbine will be about 50m to the hub with a 48m diameter rotor. It will cost in the region of £1,100,000 to install giving an approximate payback period of 6 - 7 years.

A very approximate indication of the potential income (note that price will vary according to deal made with purchasing company) can be gained from:

Example 2: Small scale wind turbine, all power used to replace electricity bought from the grid

A 15 kW turbine will be approximately 15m to the hub and have a rotor of around 10m diameter.  It will cost in the region of £60,000.

A very approximate indication of the potential income (excl. interest, maintenance etc) can be gained from:

Note: the calculation above implies that the payback period for a 15 kW turbine, costing around £60,000 would be around 6 years.  However this depends on the percentage of power generated by the turbine that will be used on site.  Demand is usually not constant so it is likely that a proportion of the power produced will have to be sold to the grid, extending the payback period

Annual maintenance and insurance typically 2 - 3% of capital cost. Routine maintenance and lubrication of small turbines can generally be carried out by farm staff.

Please remember that special consideration must be given to the VAT aspects of diversification as the new activity may not be treated the same as the existing farm business from a VAT stand point.

The primary benefit to be obtained from on-site renewable electricity generation is from replacing existing electricity supplied to the business (in the region of 9 – 15 pence per kilowatt hour).

Income sold either directly to an electricity supplier or through a broker will have a value of between 3.2 – 5 pence per kilowatt hour depending on the market demand for renewable energy.

In addition to the energy produced, all electricity suppliers are required to produce a percentage of their power from renewable sources. The Feed in Tarrif scheme and the Renewable Obligation Certification are two renewable energy payments schemes that are paid for every unit of renewable energy generated. Please refer to the Grants section for more information

Environmental Considerations:
Environmental issues need to be assessed when considering a wind turbine development. The effect of the turbine on ecology or the impact on the surrounding landscape etc need to be considered when siting a wind turbine development to ensure that this will not cause an adverse impact on the environment.

Technical Considerations:
The wind speed at the site is the most important factor that needs to be considered as the wind speed will determine the viability of the project. In addition the proximity to a grid connection point and the cost to connect need to be investigated early on as this could be a very high cost. It is also worth noting that the grid capacity in some areas is limited therefore any upgrades would be costly. Other issues such as the impact of the turbine(s) on airport/MOD radar and the interruption of microwave links need to be addressed

Planning Permission:
Obtaining planning permission for a wind turbine is an uncertain variable. It is very important that feasibility assessments are carried out at an early stage. This will identify any ‘show stoppers’ at an early stage as well as highlight any issues that would need to be addressed further. Early consultation with the council and other stakeholders is recommended in order to ensure that the turbine(s) is being sited appropriately. In addition, this consultation will inform the level of supporting environmental information will be required to accompany a planning application. This ensures that a planning decision is not held up due to insufficient information.

For more information on wind turbine siting please refer to the BWEA website.

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The Feed in Tariff scheme (FITs) is an environmental programme introduced by the UK Government to promote the uptake of a range of small and medium scale renewable and low-carbon renewable electricity generation technologies. FITs are available for a number of technologies (photovoltaic panels, wind, hydro, micro combined heat and power and anaerobic digestion) up to a maximum capacity of 5MW.

This has superseded the Renewable Obligation Certificates (ROCs) which has a value of about 4.5 p/unit. Renewable energy generation schemes below 50kW automatically go onto the FIT scheme. Generation installations between 50 kW and 5 MW have the option to choose whether to receive FITs or ROCs while any schemes above 5 MW will automatically go onto the ROCs scheme.

The FIT scheme is subdivided into two parts: 

• A generation tariff (see table below). This is adjusted annually in line with inflation
• An export tariff (set at a minimum of 3 p/unit – adjusted to 3.2 p/unit in line with inflation for 2012/2013)
  

For details see SAC's FITs FITs sheet and OFGEM's FiTs Factsheet

The Scottish Rural Development Programme (SRDP) offers potential funding for farmers investing in renewable energy production including grants on a proportion of capital costs for wind turbines. Rural Development Contracts - Rural Priorities (RDC-RP) include a theme on adaptations to mitigate climate change and may provide opportunities for further support. The compatibility of grants and FITs is subject to state aid de minimis regulations compliance. Further guidance can be found on the OFGEM website.

The Renewable Energy Loan Fund was a £2.4 million loan fund that was made available in 2011-12 to landowners to help them harness Scotland's renewable energy potential. This scheme was so popular that is has been extended for this financial year. This scheme is designed to de-risk the pre-planning stage by offering loans of up to £150,000 to cover up to 90% of the costs, providing there is a community benefit from the project. If the project successfully obtains planning permission the loan will be re-payabable at commercial rates. If planning permission is refused the loan is written off. Loan fund is being administered by CARES (Communities and Renewables Energy Scheme). 
More information and eligibility criteria can be found on the CARES website .

For further information about what specific support is available see the section on Rural Priorities - Renewable Energy from Agriculture and Rural Priorities - Renewable Energy from Forestry and Rural Priorities - Renewable Energy - Non Land Based