Farm Ireland

Tuesday 20 March 2018

Energy scheme to focus on ‘price certainty’ for farmers

A Government strategist for the proposed Renewable Heat Incentive (RHI) scheme says the scheme will focus on "price certainty" rather than direct supports to farmer growers.

"We are opening up a market for biomass, where farmers are assured that if they grow the crop there will be a market for it," said Frank Groome. Long-term contracts - up to 15 years - will be built into the scheme. "There is a bit of an onus on the farmers' side to make a decision and if they are willing to do that there will be assurance for them that there is a market there when they produce the crop."

However, an economic analysis of biomass production compared to other land use found it will require substantial increase in returns or state grant support to make it viable on many farms.

Teagasc economist Fiona Thorne compared biomass production with conacre letting, cereal growing, and beef production based on 2016 returns for each category.

Willow was based on a yield level of 7t/ha DM in the first year, with 10t/ha DM each year after that.

Without an establishment grant of €1,040, the gross margin of willow was estimated at around €220/ha, or €310/ha with an establishment grant.

Dr Thorne found that letting the land at the average 2016 return of €282/ha would leave a loss of €78/ha if converted without grant aid and €34/ha with aid.

In the case of winter wheat, it was found biomass would not be economical as the crop returned more.

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For beef finishing farms there was a benefit of €250/ha with grant aid and €150/ha without grant aid for land converted to willow.

"Purposely we did not include dairy farming in the study, because on average production for the bottom one-third of dairy farmers, the income would far surpass what they would get from willow," she said.

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