Changes in the subsidy system for solar projects

Last week the government announced a consultation on changes to the subsidy system for large scale solar projects of over 5MW capacity which would equate to a site of about 30 acres. Originally it was planned that the current subsidy system which is involves so called Renewable Obligation Certificates (ROCs) was going to be phased out by 2017 but the latest proposal is to phase out ROCs for the large scale developments by 31st March 2015.

I suspect the primary reason for this is that there has been a huge expansion in solar development and as the general public have started to see these projects popping up in the countryside, support for such projects has started to dwindle.

It has been significantly easier to obtain planning consent for Solar parks than for wind turbines for example and as a result the scale of solar developments across southern Britain in particular has probably taken everyone by surprise, hence the government’s latest consultation.

After 31st March 2015, large solar projects will have to bid competitively for funding against all other forms of renewable energy production through a scheme called “Contracts for Difference” (CfD). As solar production is generally regarded as one of the less efficient forms of renewable energy production, it remains to be seen how well solar energy will compete for funding through this new scheme.

However, what this demonstrates is that the renewable energy sector, which is heavily reliant on subsidy, is a risky sector to be involved in because the government has a track record of chopping and changing its policy. These changes may be as a result of public pressure or the realisation the level of subsidy being offered is inappropriate, but for whatever reason this makes planning a renewable energy project very difficult.

It seems likely that if the ROCs are removed in March next year that we will see a headlong rush to develop out all the sites which are capable of being developed over the next year and so don’t be surprised to see a significant increase in the number of solar parks being developed in the coming months.

I am sure there will be many readers who will be pleased to hear that it is likely the development of large scale solar parks may now be curtailed but equally one cannot help wondering where our electricity will be coming from in 5 years time as many coal fired power stations are being decomissioned. Fracking is likely to be the next big source of energy and so perhaps all the antis need to be careful what they wish for. Maybe a few more wind turbines would not be a bad idea after all.

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Rules Need Clarifying

Confusion reigns as to whether farmers can continue claiming Single Payments where they graze sheep under solar panels and in my view the Rural Payments Agency should be called to clarify the rules urgently.

At present the advice contained in the 2013 Single Payment Scheme Handbook is not entirely clear. It states that, “the area taken up by the solar panels is ineligible, unless the area under it is capable of being grazed. If the primary purpose of the land parcel is for agriculture, the rest of the land parcel will be eligible. If the primary purpose of the land parcel is for operating solar panels, the whole land parcel is ineligible.”

The problem here is that in very many large scale solar parks, the land underneath the panels will be planted to grass which may well be capable of being grazed by sheep for example and so on the face of it, this land may be eligible for claiming single payments. However, in my view it is questionable whether it can be argued the primary purpose of the land parcel is for agriculture.

Accordingly my advice to farmers is not to claim the land under solar panels as being eligible for claiming single payments. This is because I believe it is hard to claim that the “primary” use of the land is for agricultural purposes, otherwise why would a farmer or developer have gone through the expense and hassle of obtaining planning consent for the solar panels and then spent millions of pounds erecting them on the land in order to generate electricity, the value of which will eclipse the value of the grazing which may be available for a few sheep.

If my thinking proves correct, this will result in many thousands of acres of farmland becoming ineligible to claim single payments which will result in a matching number of single payment entitlements coming on the market to be sold. The significance of this is that we are currently moving towards the trading deadline of 2nd April for entitlements to be sold and claimed on in 2014. If a significant number of “solar panel entitlements” now hit the market it is likely the price will plummet because there will effectively be more entitlements available than there is eligible land to claim them against.

If of course my interpretation of the rules is incorrect we will have the peculiar situation of farmers being paid a subsidy to graze the land under solar panels which in themselves are also receiving significant support payments to produce renewable energy. This does not seem appropriate and so I think it is important that the rules relating to this issue are clarified as soon as possible.

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk