The bright idea with income potential for many farmers
Published 26/08/2015 | 02:30
Standing in the bog of Allen near Lullymore recently, I was struck by the vast potential on the cutaway sections for the installation of solar panels.
No doubt Bord na Mona is thinking along the same lines. Burning fossil fuels from our bogs to generate electricity is being phased out and our increasing need for power requires better systems that won't pollute the atmosphere or use up finite resources.
Even our co-fired power stations will require vast amounts of wood chip, but this will have to be imported from the US and elsewhere.
Solar panels are in the news these days with advertisements appearing in the farming press, encouraging landowners to sign up for what is an interesting and potentially attractive alternative land use.
Signing leases is a complex affair and one must tread carefully before committing to such a long-term agreement. Having seen a few of the proposed agreements, in general the term involved is for an initial 25 years, with the tenant reserving the right to renew the lease for a further 25 year period.
The agreements on offer seem to, more or less, replicate similar offers to lease land for wind turbines and are undoubtedly financially attractive. Much depends on the financial strength and track record of the proposed tenant company.
The IFA should consider producing an appropriate contract for use by members similar to the standard Law Society Conveyance used for house purchase. Long-term contracts of this kind should perhaps be backed by a bond to protect the landowner if the tenant goes bankrupt.
Considering the lease is potentially for 50 years, this is one heck of a long time to tie up 20 acres or more, so one needs to be sure that every aspect of such an agreement has been carefully read and all potential loopholes examined.
Solar farming is new to Ireland but in Britain and Germany large areas have already been adapted to utilise what does seem to be the ultimate clean, green power source.
Ireland was not formerly considered suitable for solar farming due to our lack of sunlight, but technology has advanced to the point where the photovoltaic cells used for converting the heat of the sun in to electricity are now far more efficient.
Much of the eastern side of Ireland is currently considered viable and the only other cost factor is the distance from a substation which can add to or reduce the capital cost of connection.
Unlike wind turbines, solar farms are relatively unobtrusive as they consist of rows of panels, raised off the ground and supported by small pillars.
The panels themselves vary between 1m and 2.5m in height and are sloped to face the sun. One large bonus is that it is possible to graze sheep in the same area.
This is in fact necessary to keep vegetation down and prevent shading. Due to the lack of sunlight under the panels, it is estimated that grass production is approximately 30pc less than in an open field.
This seems a small penalty to pay, considering the lease income on offer is substantially greater than any alternative agricultural enterprise and the income is also index linked.
This will appeal to landowners in suitable areas with perhaps an out-farm that could be used for sheep grazing alone. I have also heard that some concerns are offering small sums to secure the option of taking out a lease later.
Their intention may then be to sell on the lease at a profit to a company with the resources to complete the development, provided the coming budget contains the anticipated incentives for alternative energy production.
It would appear prudent to only deal directly with a strong and reputable company with a good track record in the business. All that glitters is not gold and the largest offer might not be the best one in the long-term.
You should also explore what the company that leases your land proposes to do with the equipment on site when the lease expires.
It should be a relatively straightforward affair to remove all the hardware but some piping might remain underground. All of this must be assessed thoroughly.
Also examine the potential changes that having a solar farm might make to your single farm payment and the possible transition from agricultural to industrial use.
For more information, check out www.irishsolarenergy.org
Farming alongside solar
Farming can continue between and underneath solar PV panels by grazing small livestock such as sheep along with the possibility of cultivating high-value crops such as lavender or bee-keeping.
Unlike that other alternative long term land use, forestry, the grass remains and can still be utilised profitably.
The potential income is also far higher than the comparable return from forestry but does not carry the same tax advantages and solar farming may possibly affect the single farm payment. The next budget should bring clarity as to how revenue will treat such income. Grants may well become available and there might also be changes in the rate of the feed-in tariff, which pays a premium on the electricity generated.