The financial incentives to encourage renewable energy generation, both for use and for export back to the grid, are suddenly starting to look very attractive, and are within the reach of far more people than ever before. Commercial developers and utility companies are starting to take an active interest in renewable energy generation. Community projects that previously might have struggled to raise capital should now find it easier to get funding from the banks because of the higher returns available. The profitability of on farm or private estate projects will also be vastly improved.
The answer to these improvements in terms of renewable energy generation can be found in the feed-in-tariffs. One of two new energy policy mechanisms announced by the UK Government in February 2010, the feed-in-tariffs came into force on 1st April as part of the Low Carbon Transition Plan. They were introduced to meet the targets of the Climate Change Act, respond to Copenhagen commitments, cut carbon emissions and stimulate growth in low carbon electricity.
One of the key aspects of feed-in-tariffs is that the financial support for small scale renewable energy generation is twofold, and that people producing green electricity receive a generation tariff - paid by an electricity company - for everything they generate plus an export tariff for everything they feed back to the grid.
With advancing legislation favouring renewable energy generation of small scale, more and more people stand to gain financially, as well as making a personal contribution to cut carbon emissions and combating climate change.
The Renewable Heat Incentive due to be implemented in April 2011 will generate a new wave of investment opportunities in renewable energy generation projects
It seems likely that medium scale wind and solar PV will be particularly attractive renewable energy generation sources. Although all the technologies covered under the feed-in-tariffs, including anaerobic digestion, hydro and micro CHP, will give returns that stack up very well against other forms of renewable energy investment.
Those wind projects with installed capacity of between 100-500kW are now likely to provide optimal investment opportunity thanks to the level of tariff and the economies of scale of this size of turbine. But, the Solar PV installations benefit from the highest feed-in-tariff and offer a good return on investment, especially for early adopters. Also, achieving planning consent for these is likely to be easier than wind energy generation developments thanks to the minimal environmental impacts. Small scale hydro developments will also benefit from the feed-in-tariff.
All of these renewable energy generation technologies are ideal for enterprises and developments on industrial estates. Smaller scale projects won’t bear the costs of appealing a failed planning application – so choosing the right ones and the right sites at the outset is of paramount importance.
As carbon reduction targets grow ever tougher, developers will have to look at new options for meeting them in ways that make financial sense. Besides, with the Renewable Heat Incentive due to be implemented in April 2011 a new wave of renewable energy investment opportunities in medium scale biomass and building integrated heating seems the likely next step.
