Darragh McCullough: 'Solar could be the hot ticket for struggling suckler farmers - if Government does its bit'

Doing the sums: The ideal solar project in rural Ireland should be a 25-acre block close to a sub-station
Doing the sums: The ideal solar project in rural Ireland should be a 25-acre block close to a sub-station
Darragh McCullough

Darragh McCullough

one of the recurring questions that is on people's minds in the midst of this beef crisis is: what are the alternatives? I'd be first to admit that there aren't any silver bullets. It's one of the reasons that suckler farmers persist with trying to make the best of a bad lot in beef.

One of the ideas that crops up regularly is the notion of renewable energy. On paper, farmers are well positioned to carve out a niche for themselves here.

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Whether it's wind, solar or biomass, farmers have control of the key asset - the land.

Solar was the one brought to my attention this week.

The ideal solar project in rural Ireland should be a 25-acre block close to a sub-station. It needs to be close to a power connection to minimise the costs of tapping into the grid, which can run into the hundreds of thousands very easily.

The sweet spot in terms of the size of the development is about 25 acres, to justify the connection costs and work required during the application process.

So far so good. When you start to do the sums, it gets even better. If a 25-acre solar farm was getting the same price per unit as a wind farm, which is currently about 8.5c per kilowatt hour (kWh), it would generate about €425,000-510,000 annually.

To get to that point, a solar farm developer will probably invest about €4m. So you're looking at return on investment before including the value of the land or the cost of borrowings of about 8-10 years.

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That's not bad by any stretch, especially when you consider the security of the investment. There's hardly any wearing parts, and the panels are guaranteed for about 25-30 years. As with any investment there would be some management required but I bet it would be an easier gig than looking after any other farm enterprise.

The marketplace looks good. Energy demand is only expected to go one way, with projections of as much as a 20pc increase in peak demand over the coming years. Presumably a wholesale switch to electric vehicles will turbo-charge demand.

That's why pension funds and financiers have been queuing up to invest in solar developments. You would think that farmers would be clamouring for a piece of the action too, but farm organisations have been surprisingly quiet on this front.

Granted, solar installations are not going to be the answer for every farmer struggling to eke a wage out of their holding, but if it generated an income for 1,000 families it would be a start, wouldn't it?

The picture on the ground appears to be very different, however. Yes, there has been an avalanche of options taken on estimates of up to 25,000 acres of land by solar developers in the last couple of years.

But this has taken the ball out of farmers' hands. If a developer comes knocking at a drystock farmer's door dangling possibilities of an annual rental income of €25,000 a year for the rest of the farmer's career, it would be hard to resist.

And this is exactly what has happened. But the result is that developers control vast swathes of all the practical sites. Many of these developers only plan to flip the sites onto multi-national operators or pension funds when they've secured planning, connections and finance. This manoeuvre could see them net a sweet €1m per site.

Meanwhile, the farmer continues to get their rent, but has no control over who is operating their site. They're also missing out on the real juice in the deal: the income from energy sales.

Cheapest

The Government has been focused on minimising the subsidies that it commits itself to shelling out for renewable energy for the next 25 years. So it has moved to an auction system which ensures that the seller prepared to offer the energy at the cheapest rate gets the gig.

This makes economic sense but it also discourages small owner-operators getting involved since they will have neither the scale nor the financal fire-power to cope with missing out on supply contracts.

It may well result in a handful of 100-, 200- and 300-acre solar farms dominating Ireland's solar market, and owned by multinational companies.

These will effectively tie up all solar power opportunities for the next 20 to 30 years.

Even if it cost the Government extra in the form of subsidies to ring-fence a chunk of the energy market for small operators and community projects, could this be a sensible investment to start diversifying Irish agriculture away from its dependence on drystock farming?

Indo Farming


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