Farm enterprises that have taken up renewable initiatives, such as anaerobic digestion plants which also supply heating to tenanted properties need to be aware of rule changes that come into effect by the end of this month.
The Heat Network (Metering and Billing) Regulations 2014 are bringing a change of legislation that will affect how tenants of buildings with communal heating systems will be invoiced for their use of heating, cooling and hot water to ensure that end-users of heat are only charged for the heating they use.
Obligations imposed by the regulations on any supplier of central heating systems are wider than previous legislation and include landlords and owners of buildings where heating is supplied from a central source to more than one tenant, for example shared offices, within the definition of a “supplier”.
As well as landlords who invoice directly for heating charges, buildings where heating is included within rent or service charge payments are also included.
By December 31, 2015, each supplier must send a notification to the Secretary of State for Business, Innovation and Skills via the National Measurement and Regulation Office providing estimates of the yearly heat capacity, heat generated, and heat supplied applying to the heat source in question.
The Secretary of State must also be supplied with practical information about the location of the heat supply, the type of building in which it is contained, and the type of customer supplied. Following the initial notification this information will need to be updated with the minister every four years.
By December 31, 2016, the supplier must install meters in its building which measure the individual consumption by the end-user in all cases unless it is not cost-effective or not technically feasible to do so. The regulations contain a test for whether or not it is cost-effective for meters to be installed.
Where it is not cost-effective, this must be considered again every four years and meters installed upon any substantial reconstruction of, or installation of new services in, the building.
By December 31, 2016 heating for each end-user will be separately metered where possible based on actual consumption.
Non compliance by a supplier is a criminal offence and punishable with a fine of up to £5,000 per offence plus daily penalties of £500 until the breach is remedied.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
A property blog written and authored by our specialist blogging team, discussing all and any matter relating to the residential, rural and commercial property markets.
Showing posts with label anaerobic digestion. Show all posts
Showing posts with label anaerobic digestion. Show all posts
Wednesday, 9 December 2015
Friday, 10 January 2014
The Future of Farming
With farmland prices at an all time high, now may just be the time to think about selling land if you are looking for a better return on capital value.
Farmland tends to provide a yield of not much more than 1-2% which reflects the low risk nature of farmland compared to many commercial property investments. But in recent years the total return from farmland has been bolstered by significant capital growth and the big question is whether this capital growth will continue as the wider economy recovers which may attract non farming investors in particular to search for higher yields elsewhere.
However, farmland does still have very significant tax advantages as compared to many other assets. For instance let land qualifies for Agricultural Property Relief which can provide up to 100% relief from Inheritance Tax on the agricultural value of the land. This can be a significant driver for many cash rich individuals who may be prepared to accept a low return on capital in order to shelter their money in the long term from the tax man.
There are then farmers themselves who are generally feeling optimistic about the future of farming following some more profitable times in recent years. Having said that it is still difficult to justify the price some farmers are prepared to pay for land considering the relatively modest profit that will be generated from farming the land.
But land is an unusual asset in that unlike shares for example, “they are not making any more of it” and there may be one off opportunities that arise which may not have been anticipated at the time of purchase. For instance, if one had purchased an area of poor quality land on some windswept hillside twenty years ago you would probably not have anticipated the renewable energy opportunities which are now available which could liberate both capital value and significant revenue generating opportunities. Clearly if you don’t own the land such opportunities would not be available to you and although it is difficult to quantify this in terms of value I believe owning land does bring opportunities which owning other assets may not.
So, there are conflicting forces at work although if my firm, Carter Jonas is anything to go by we did see an upturn in farmland sales last year where we offered over 18,000 acres of land in to the market across the country. This does perhaps indicate that some large landowners are now prepared to consider rebalancing their property portfolio by selling at least some of their agricultural land to take advantage of the record prices currently being achieved.
So what are the prospects for 2014? Well, it seems to me that demand is still likely to outstrip supply but the market is patchy with good sized blocks of arable or dairy land likely to attract premium prices while smaller blocks of secondary quality land are attracting less predictable demand and consequently, on average lower prices.
Anyone interested in discussing either the sale or purchase of farmland is welcome to contact me in Wells or Kit Harding in our Bath office who heads up our farm agency team in the South West.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
Friday, 3 January 2014
Environment & Rural Growth
The farming industry in general has welcomed DEFRA secretary, Owen Paterson’s decision to reduce the proposed 15% shift in payments from direct payments to farmers to the environment and rural growth. It had seemed the government was committed to the 15% shift in their consultation document on CAP reform published earlier in the autumn, but they have listened to what the respondents to this document have said which is gratifying.
As a consequence Paterson has announced that instead of transferring 15% of payments away from direct support they will now only transfer 12%. Many farmers had been hoping the shift would have been even less than this but even so this move has been generally welcomed by many.
Mr Paterson said, “England’s £15 billion Common Agricultural Policy must deliver real benefits to farming, rural businesses, the countryside and the taxpayer. Today’s decision will see £3.5 billion invested in the environment and rural development schemes over the next seven years. This is a significant change in the way we allocate CAP money and even with a smaller overall CAP budget, the Government will be spending a bigger share of the budget on the environment than before.”
In response to this announcement the Country Land and Business Association president Henry Robinson said: “We are pleased that DEFRA secretary Owen Paterson has listened to the industry and moved 12% from Pillar 1 to Pillar 2 rather than choosing the maximum figure allowable of 15 percent. He has struck a reasonable balance between supporting the environment and rural development and ensuring that farmers in England get a fair deal.”
These sentiments were also echoed by NFU deputy president Meurig Raymond who said: “I am delighted Mr Paterson has decided to keep the rate of modulation below the maximum for the four years until it is reviewed.”
I suspect many farmers will still question why as much as 12% of “their” payments are to be siphoned away from money that in their minds is rightly theirs but I think if such payments are to continue to receive any degree of public support they need to be seen to be delivering wider public benefit than simply income support for farmers. So, it appears this is probably a compromise which will not keep everyone happy but at least it shows the government are willing to listen to reasoned argument when it is presented to them.
However, the next big challenge will be for the policy makers to ensure the schemes which will be formulated to deliver the £3.5billion are put in place as soon as possible. The rules will also need to be simple because if my experience of the roll out of similar schemes is anything to go by, there is likely to be a significant pregnant pause before any of this money hits the ground which in my view has been one of the biggest weaknesses of rural development programmes in the past.
As a consequence Paterson has announced that instead of transferring 15% of payments away from direct support they will now only transfer 12%. Many farmers had been hoping the shift would have been even less than this but even so this move has been generally welcomed by many.
Mr Paterson said, “England’s £15 billion Common Agricultural Policy must deliver real benefits to farming, rural businesses, the countryside and the taxpayer. Today’s decision will see £3.5 billion invested in the environment and rural development schemes over the next seven years. This is a significant change in the way we allocate CAP money and even with a smaller overall CAP budget, the Government will be spending a bigger share of the budget on the environment than before.”
In response to this announcement the Country Land and Business Association president Henry Robinson said: “We are pleased that DEFRA secretary Owen Paterson has listened to the industry and moved 12% from Pillar 1 to Pillar 2 rather than choosing the maximum figure allowable of 15 percent. He has struck a reasonable balance between supporting the environment and rural development and ensuring that farmers in England get a fair deal.”
These sentiments were also echoed by NFU deputy president Meurig Raymond who said: “I am delighted Mr Paterson has decided to keep the rate of modulation below the maximum for the four years until it is reviewed.”
I suspect many farmers will still question why as much as 12% of “their” payments are to be siphoned away from money that in their minds is rightly theirs but I think if such payments are to continue to receive any degree of public support they need to be seen to be delivering wider public benefit than simply income support for farmers. So, it appears this is probably a compromise which will not keep everyone happy but at least it shows the government are willing to listen to reasoned argument when it is presented to them.
However, the next big challenge will be for the policy makers to ensure the schemes which will be formulated to deliver the £3.5billion are put in place as soon as possible. The rules will also need to be simple because if my experience of the roll out of similar schemes is anything to go by, there is likely to be a significant pregnant pause before any of this money hits the ground which in my view has been one of the biggest weaknesses of rural development programmes in the past.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
Monday, 28 October 2013
Producing Renewable Energy From Waste
Interest in Anaerobic Digestion (AD) as a means of producing renewable energy from waste – usually methane, which can either be burnt to generate electricity or put directly in to the grid as gas – has increased.
This is exemplified locally by the new AD plant which has been set up by local cheese producers, Wyke Farms near Bruton. This has represented a huge investment in both time and money. The facility has cost £4m and has taken five years to plan and construct. It consists of three 4,600 cubic metre digester vessels which digest cow slurry, pig slurry, rape straw and “whey permeate” from the cheese making facility. The German technology is capable of converting 75,000 tonnes of biodegradable waste each year.
Richard Clothier, who is the managing director and third generation family member at Wyke Farms, said: “We aim to operate our business in a way that has minimal impact on the Somerset environment, and create a truly symbiotic relationship with the countryside.
“We’re committed to energy efficiency and we’re proud to be one of the first national food brands to be self-sufficient.
“Sustainability and environmental issues are increasing in importance to each and every consumer in the UK and green energy makes both emotional and practical sense.”
Mr Clothier said the plant “simply creates a cycle - we can now take the cow waste, which has inherently been a problem, and turn it into pure, clean, energy to drive all our own needs and more. This, in turn, leaves a natural fertiliser that we can plough back into the land to invest in the future health and wellbeing of our cattle – and so the cycle starts again.”
Clearly the Clothier family believe in the importance of sustainability and have realised that this is becoming of increasing importance to us all, hence their major investment, however not all farmers have been prepared or are able to take this “leap of faith”.
The potential for the use of on-farm AD has been recognised for some years but in general it is only a few large plants which have been set up. As a consequence DEFRA has recently announced it has established an “On-Farm AD Fund” to reduce financial barriers to the development of small scale on-farm anaerobic digesters in England. The Fund is to be administered by the Waste & Resources Action Programme (WRAP) which itself was established as an independent not-for-profit company limited by guarantee in 2000.
It is believed the fund will provide:
• Grants of up to £10,000 to prepare business plans and feasibility studies for AD units.
• Loans of up to £400,000 (or a maximum of 50% of the cost) for constructing an AD unit.
To qualify for access to the fund it is believed various conditions will be applied which include:
• The farm must “have access to manures and slurries” – but it is not clear to what extent these will have to be used in the AD plant.<br />
• The maximum size of the AD unit will be 250kW.
• A business plan must have been prepared before a loan can be applied for.
• Loans will be available from early 2014, although no exact date has been given.
• No details about the term of the loan or interest rates has yet been released.
At this stage it is not clear how much money will be available or how useful this fund may be but if anyone should have any initial enquires they should contact local Renewable Energy expert Thomas Ireland via email.
This is exemplified locally by the new AD plant which has been set up by local cheese producers, Wyke Farms near Bruton. This has represented a huge investment in both time and money. The facility has cost £4m and has taken five years to plan and construct. It consists of three 4,600 cubic metre digester vessels which digest cow slurry, pig slurry, rape straw and “whey permeate” from the cheese making facility. The German technology is capable of converting 75,000 tonnes of biodegradable waste each year.
Richard Clothier, who is the managing director and third generation family member at Wyke Farms, said: “We aim to operate our business in a way that has minimal impact on the Somerset environment, and create a truly symbiotic relationship with the countryside.
“We’re committed to energy efficiency and we’re proud to be one of the first national food brands to be self-sufficient.
“Sustainability and environmental issues are increasing in importance to each and every consumer in the UK and green energy makes both emotional and practical sense.”
Mr Clothier said the plant “simply creates a cycle - we can now take the cow waste, which has inherently been a problem, and turn it into pure, clean, energy to drive all our own needs and more. This, in turn, leaves a natural fertiliser that we can plough back into the land to invest in the future health and wellbeing of our cattle – and so the cycle starts again.”
Clearly the Clothier family believe in the importance of sustainability and have realised that this is becoming of increasing importance to us all, hence their major investment, however not all farmers have been prepared or are able to take this “leap of faith”.
The potential for the use of on-farm AD has been recognised for some years but in general it is only a few large plants which have been set up. As a consequence DEFRA has recently announced it has established an “On-Farm AD Fund” to reduce financial barriers to the development of small scale on-farm anaerobic digesters in England. The Fund is to be administered by the Waste & Resources Action Programme (WRAP) which itself was established as an independent not-for-profit company limited by guarantee in 2000.
It is believed the fund will provide:
• Grants of up to £10,000 to prepare business plans and feasibility studies for AD units.
• Loans of up to £400,000 (or a maximum of 50% of the cost) for constructing an AD unit.
To qualify for access to the fund it is believed various conditions will be applied which include:
• The farm must “have access to manures and slurries” – but it is not clear to what extent these will have to be used in the AD plant.<br />
• The maximum size of the AD unit will be 250kW.
• A business plan must have been prepared before a loan can be applied for.
• Loans will be available from early 2014, although no exact date has been given.
• No details about the term of the loan or interest rates has yet been released.
At this stage it is not clear how much money will be available or how useful this fund may be but if anyone should have any initial enquires they should contact local Renewable Energy expert Thomas Ireland via email.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
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