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Renewable energy feed-in tariffs set to transform rural estate incomes

Two wind turbines created an annual income of £300,000 assuming all electricity produced was exported to the national grid. An anaerobic digester created an extra £460,000 per year while a modest hydroelectric scheme added £190,000. The contribution from photovoltaic solar panels was a more modest, but still significant, £26,300. The total annual income came to £916,000 with a lifetime potential of £18.5m.
If the electricity produced was used on the estate the annual benefit increases to £1.1m. This is because the estate will still receive the FIT payments, but will be saving on its current electricity expenditure.
Feed-in tariffs were introduced in the dying days of the Labour government and were designed to encourage people to create their own renewable electricity. An index-linked payment guaranteed for up to 25 years is made for each unit of electricity produced even if it used by the generator for their own consumption. The tariff varies depending on how the energy is being generated and the scale of the scheme. The smaller the scheme and the longer its potential payback, the larger the payment.

Christopher Smith, head of Knight Frank’s Renewables and Energy department, said:
“We have already seen a huge surge in enquiries from landowners looking to take advantage of feed-in tariffs. One of the most attractive things about them is that the payments are guaranteed for up to 25 years, which means it is now easier to get bank funding to set up renewable energy projects.
“Reassuringly in the current fiscal environment, there is also no danger that FITs will be hit by government cuts because they are funded by electricity generators (via our bills) not the exchequer.
“Although it would be unusual for a typical rural estate to be able to utilise renewable energy to the same extent as our idealised estate for the pros and cons of each type of renewable energy), there are very few rural properties that cannot benefit from FITs in one form or another. The estate shows the extent of the potential income available, even from relatively modest schemes. The wind turbines we are using, for example, are much smaller than those used in large-scale wind farms.
“At a time when the income streams on many rural estates are under threat from poor agricultural commodity prices and falling farm subsidy payments, renewable energy will play an increasingly important role in securing a viable future for landowners and farmers.
"In marginal upland areas the income from renewable energy could be the key to survival for some businesses."
“Next year we should see even greater renewable energy opportunities when details of the Renewable Heat Incentive are finalised. This will pay a tariff for heat produced by renewable sources and could be of real benefit to rural landowners who use a lot of heat themselves or who can supply heat to other users. Our estate already benefits from a wood fuel-boiler. This uses waste timber from the estate and saves £10,000 a year in heating bills.”

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