Irish land use is unquestionably poised for change. However, where do the immediate and future opportunities for farmers lie within this change, and what challenges must be overcome to realise them? This was a key theme of last week’s ‘Future of Farming, Land Use, and Renewables’ event in Cork, organised by the accounting, financial, and tax services cooperative FDC Group, in which the Irish Farmers Journal took part.
A throwback to the past
The discussion began with a stark reminder of the unfortunate experience Irish farmers had with willow and miscanthus crops, along with the lasting impact of that failure on discouraging future attempts at bioenergy crop cultivation.
Furthermore, it was pointed out that bioenergy, as an energy source, faced significant hurdles over the past decade, marked by a period of exceptionally low energy prices in western Europe from 2010 to 2020.
However, this has now been flipped on its head due to soaring energy costs, signalling the end of the era of cheap energy and the rise of renewables.
As a result, the next decade could usher in a new era of bioenergy, as forecasted by John Reilly, the Head of Renewable Energy at Bord na Móna.
He emphasised the importance of access to local raw materials and pointed out that the only remaining former peat power station in the country owes its survival to the availability of biomass as a replacement fuel source.
Role of forestry
Bord na Móna mostly use forestry thinnings and residue from sawmills as fuel in the power station, and the semi-state company could use twice the amount of biomass it currently uses. However, as John Reilly noted, local supply falls short.
Therefore, planting new forests to secure future biomass supply will be crucial. Ray Ó Foghlú, the Wild Atlantic Rainforest Project Lead & Farm Programs Coordinator at Hometree, highlighted the challenges posed by Ireland’s forestry policy.
He said that confidence in forestry has steadily waned over the past decade, with the country now managing to plant only around 2,000ha per year, a far cry from the 8,000ha target. Confidence, especially among farmers, is notably low, given that much of the recent forestry planting has been carried out by non-farming landowners.
A dairy farmer in the audience made the comment that seeing vast stretches of land being planted with forestry feels like a bereavement for the community as they realise that they will likely never have an opportunity to farm that land for themselves in the future.
Ray stated that farmers will be essential to meet targets, but a lack of knowledge and clarity about the schemes, their requirements and the types of forest which can be planted is a big problem here.
Anaerobic digestion (AD) was, as expected, a lively topic of discussion. Once more, the fact that biomethane gas costs were perceived as high due to competition with inexpensive gas from Russia flowing into Europe over the past decade was highlighted.
However, this situation has largely gone, clearing the path for the rollout of AD with government support. Barry Caslin, Bioenergy Specialist at Teagasc, outlined that almost 300,000 acres of Ireland’s landbase would be required for grass silage feedstock production in order to produce enough biomethane to meet the country’s 2030 biomethane target.
The main opportunities for most farmers are to either supply feedstock to the AD market or become part of a community-based AD plant. All agreed that our 2030 target would be extremely difficult to meet.
The rollout of solar farms is well underway, with even more expansion on the horizon. According to Caslin, achieving the government’s ambitious 8GW target for solar PV in the Climate Action Plan could lead to the development of 30,000 to 40,000ac of solar farms.
On the smaller scale, installing rooftop solar panels now makes sense for most farmers who have a consistent demand for electricity, including their farmhouses. This is due to factors such as high energy prices, available grant aid, the opportunity to sell excess energy back to the grid, and the removal of the requirement for planning permission.
Nonetheless, the significant commercial potential for farmers lies within the upcoming small-scale renewable electricity support scheme.
This scheme will enable farmers to secure a fixed price for selling electricity to the grid for commercial and community projects larger than 50kWh in size for 15 years. It is anticipated that various technologies, including rooftop solar, solar farms, and wind turbines will be eligible for support.
However, a critical challenge in the development of these projects is the vulnerability of Ireland’s electricity grid. As highlighted by Caslin, 90% of rural Ireland is connected to a 15kVA single-phase line, which severely restricts the system size that can be installed.
Moreover, in energy production, economies of scale are important. For example, John pointed out that the expense of connecting a 200MW wind farm would likely be similar to that of connecting a 50MW wind farm on the same site.
When financing farmers for periods of up to 20 years, Eoin Lowry, Head of Agri at Bank of Ireland (BOI), explained that banks are aware the agricultural sector will undergo fundamental changes in terms of farming practices and land use.
Banks are regulated in terms of the carbon intensity of their lending and the allocation of their funds. As a bank, BOI intends to double its green lending targets from €7 billion to €15 billion over the coming years.
However, he posed the question: What qualifies as a green lending? For instance, is a farmer’s journey towards adopting environmentally friendly practices considered a green investment? Can a loan given to a dairy farmer for a new milking parlour be classified as a green loan, he asked.
He clarified that BOI considers it as such if a farmer is undertaking sustainable actions, such as following the MACC curve, leading to the designation of their farm as “green” and contributing to emission reductions.
A crucial aspect of the energy transition puzzle is securing affordable finance, spanning from small-scale self-consumption projects to large-scale commercial projects.
Lowry pointed out that they are seeing a significant number of on-farm renewable developments focused on cost reduction. These include solar PV and biomass projects, with a clear business case supported by a range of discounted green lending products.
Nevertheless, he noted that commercial projects present greater challenges. What banks require, he emphasised, is a solid investment plan and a clear outline of the steps the farmer will take to mitigate commercial risks.
In the case of an AD plant, essential questions need to be answered around the supply and cost stability of feedstock, risks associated with project construction, skill-related risks during project operation, offtake agreement terms and how will revenue streams sustain loan repayment.
“We haven’t seen many large-scale AD projects up to now” Eoin said. “I expect we will but those are some of the challenges and concerns we have and which need to be boxed off before we are able to provide finance” he said.