Farmers and landowners considering installing renewable energy systems have been told that attractive financial returns are no longer guaranteed.
The new Smart Export Guarantee (SEG) – which supersedes the Feed-In Tariff (FiT) – does not set any base price for renewable electricity, and only ensures a payment of more than 0p/kWh for power exported to the grid.
As a result, farmers and landowners have been urged to take a much more considered approach to their investment.
In the days of the FiT, farms and estates could put solar panels on the roof and get paid a subsidy for all generation as well as a guaranteed floor price for any electricity exported to the grid.
Many had hoped that the new SEG would set a minimum price for export - like the FiT - but it has not done so.
Instead, it only guarantees that operators will have access to a market and are paid more than 0p/kWh at all times of export.
Because of this, energy experts Roadnight Taylor said the SEG is neither 'smart or guaranteed'.
“With no guaranteed payments, it is important that landowners now focus on sizing schemes to their site’s energy demand, minimise any surplus exported to the grid and pay close attention to tariff structures,” said senior consultant Richard Palmer.
Anyone interested in installing renewable technology should first analyse historic data from a half hourly meter or install half hourly metering to profile demand, he said.
They should then consider all existing generation assets before looking at the most suitable technology, whether that’s solar, wind, anaerobic digestion, battery storage or combined heat and power.
Mr Palmer added: “Many operators with existing installations opted out of the FiT base price and instead achieved higher export prices through Power Purchase Agreements (PPAs).
“This will still be a good option for those schemes of a suitable scale. But for small-scale operators on the SEG alone, the lack of a guaranteed price or contract length is a risk due to exposure to falling electricity wholesale markets and the potential lack of competition, leading to an under-valued export price.”
Any new renewable installation or addition to existing schemes after 31 March 2019 will not be eligible for the FiT, but should ideally be built to comply with the SEG so that operators can access the available markets, he said.
The SEG applies to the main renewable technologies, up to 5MW, subject to eligibility criteria including a requirement to meter half hourly.
The scheme comes into effect from 1 January 2020 with the full range of SEG tariffs being available from this date.
