Renewables Here To Stay In UK Rural Economy

Recent developments are cementing renewables and particularly small wind turbines, firmly into the UK rural business model.

To listen to some media – particularly in England, one would be excused for thinking that wind turbines were not only a blot on the rural landscape, but a poor investment as well. But out in the countryside, real people, in real homes and business across the UK are now not only banking on the income from these investments - the energy generated is increasingly being used on-site to offset costs of rocketing energy prices, and provide a buffer against increases.

In a year that saw crop yields reduced and productivity down to 1980s levels, this has often been the difference between financial success and failure. RenewableUK, said this year: "The UK has the most powerful wind resource in Europe and this has provided a vital source of income for farmers, helping to preserve rural communities in Britain."

In 2012, one in five NFU members produced renewable energy. Dr Jonathan Scurlock, NFU chief adviser for renewable energy and climate change, said: "2012 was a difficult year for the farming community, with bad weather hitting incomes hard. Investing in renewable energy provides additional earnings at a time when budgets have become much stretched."

A recent NFU report said: "Renewables give hard-pressed farmers a vital stream of income, with wind offering the highest rate of return". The analysis, from NatWest, RBS and RenewableUK showed that farmers earned £12,000 - £50,000 a year from generating their own wind energy.

Energy Independence

At Gaia-Wind we are finding that our turbines are increasingly becoming an integral part of a business, underpinning the aim of individual "Energy Independence". The MgGowans, who farm in Perthshire, said: "We own a mixed livestock and arable farm. We decided to lower our carbon footprint and reduce our energy costs. We installed a Gaia-Wind turbine which powers a water bore hole supplying four farms. About 73% of the energy is used on the farm and the rest is sold to the national grid. Our electricity bills have reduced by nearly a third and the extra income has helped us enormously in making farm improvements. ..our plan is now to install a biomass heating system."

It's not jam all the way: In a January 2012 survey, the NFU and NatWest found that 34 per cent of farmers were concerned about cost of renewables and over half were nervous about planning. This is now being actively addressed:

· On finance, up to date and accurate information is key and renewable companies and lenders are now working with organisations like the Met Office, to provide for example, bespoke wind speed data, supporting accurate assessment of the potential profitability of a wind turbine project early in the process.

· Planning can loom large as a disincentive, with some planning bodies somewhat overzealous – to put it mildly. However, this is being addressed: in Scotland for example, all 16 councils which recently bid for extra funding for planning officers received it; and surveyors Fisher German say:" 82 per cent of applications for smaller wind turbines are approved at local level. Of those that do go to appeal, a further two thirds are also granted consent.

Another reason for the increasing integration of renewables into the rural business model is that after some turmoil, the Feed in Tariff is now stable. A big – if time limited bonus is that, businesses looking to invest in renewables have currently got a huge window of opportunity, flung wide open by HMRC: A giant increase in the annual investment allowance (AIA) - giving 100% tax relief on investments: A "Ten Times" leap from" £25,000 investment limit to £250,000 for this year and next.

This allowance means that a business owner can offset the entire cost of even several small wind turbines against their income tax in year one. So for example, investing in one turbine at around £45,000 means the net cost of the turbine for a 40% tax payer would be £27,000. So, for example, payback time on a Gaia-Wind turbine based on the current Feed in Tariff drops from 5.3 years to 3.4 years.

Ofgem predict that the big six power suppliers will more than triple their margins in the next twelve months, so the prospect of being able to use your own energy on site as well as sell the surplus back to the grid, while still receiving a still substantial feed in tariff, has become increasingly attractive.

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