Renewable energy? Make hay while sun shines
For landowners and farmers, renewable energy schemes can present an opportunity for investment with some good returns, writes Robert Paul of Strutt & Parker.
Large wind turbines can have a payback period of a little over three years and even on some solar schemes it can be as few as five years. But given that the funds for the subsidies are syphoned off our household bills, one question from the general public is whether this is really sustainable?
Undoubtedly cost effectiveness will vary across different technologies. For instance, the Swansea Tidal Lagoon will cost £1 billion to construct and will enjoy a 35-year subsidy but, subject to maintenance, could produce energy for 120 years. Arguably, the natural movement of water, whether fluvial or tidal, gives greater consistency and certainty than reliance on wind or the sun.
Solar power is predicted to perhaps become the cheapest form of energy generation by 2025. Currently in Dubai the cost of producing solar power is five cents per unit, in Germany it is nine cents per unit but for the UK it is significantly more.
With recent developments in materials efficiency the figure should drop to four to six cents per unit across central and southern Europe and this will compare well with electricity from new coal and gas fired plants, currently costing between five and 10 cents per unit. Nuclear energy can be as much as 11 cents per unit.
Solar PV capacity at the end of 2014 in the UK was 5,095 megawatts, an increase of 79 per cent from the end of 2013. This represents nearly 650,000 installations and an increase of 28 per cent from the end of 2013.
So investments in solar panels are becoming increasingly popular and for good reason, but as efficiencies improve and the uptake increases, the incentives will diminish.
Solar farms are now springing up all over Shropshire but are these schemes sustainable? The answer is probably that the UK needs a good mix of renewable technologies and just as the costs of solar energy will reduce with investment so will the cost of tidal turbines and tidal lagoons.
The arguments for renewable sources of energy over fossil fuels are undeniable. In the long term these technologies will be considerably cheaper, but then the subsidy incentives will not be the same. So for landowners in the meantime, it is perhaps a matter of making hay while the sun shines.
