With current electricity prices ranging anywhere from €0.20-€0.30/kWh, installing a solar PV system to generate your own electricity is attractive. Farms which have a high, relatively predictable electricity demand stand to have the shortest return on investment.
However, that doesn’t mean that farms with a low electricity demand shouldn’t consider solar PV as an investment. Livestock and tillage farmers generally have inherently lower energy consumption on site. As such, any solar PV system returns will mostly be based on exporting the electricity to the grid.
Traditionally, the economics of this wouldn’t have made sense. However, the microgeneration support scheme is changing that. Farmers can now avail of the Clean Export Premium (CEP) and/or Clean Export Guarantee (CEG) payments.
Considering most livestock and tillage farmers have large roof spaces, this becomes an interesting case study.
The following outlines the assumptions for this case study:
Solar PV system
For this scenario, a 30kWp (ie the peak output of a solar PV system) was selected. This would require around 225m2 of roof space and would require planning permission and an ESB grid through the NC-7 process.
The annual output of this system is expected to be 25,200kWh and around 90% of this would be exported to the grid. The cost of this system would be €40,000 plus VAT.
As the electricity is being exported to the grid, the farmer could only apply for the SEAI Better Energy Communities grant, which would cover 25-30% of the investment. Table 1 runs through the costs and returns for the solar PV system.
As 90% of the electricity produced from this system would be exported, there is little opportunity to displace expensive imported electricity. The farmer is making around €1,000 of income from the system, but is offsetting most of their electricity import requirements.
The payback for this system ranges from five to seven years, depending on level of grant aid. VAT could be claimed back in year one, which would amount to around €5,400.
The farmer could also be eligible for accelerated capital allowances relief on the system, which would allow them to write off the capital expenditure of the system against profits to 12.5%. Profits will dictate this figure, which could be up to €5,000.
Looking over a 10-year lifespan, the income generated from the panels decreases as the panel efficiency decreases.
However, an estimated 73t of CO2 would be offset by the farm over that 10-year period.