The Micro-generation Support Scheme will help farms and homes develop renewable energy, but how will it work, how much is it worth and who is eligible? And what will happen to other solar power grants? We put the key questions to Eamon Ryan’s Department
With farmers braced for further electricity price hikes this year, it is timely that the Government has introduced new supports to assist farms, homes and businesses in developing renewable energy for self-consumption through solar systems.
At big-picture level, the Micro-generation Support Scheme (MSS), announced last month by Minister for Environment, Climate and Communications Eamon Ryan, aims to establish 380MW of installed micro-generation capacity, to contribute to a target of up to 2.5GW of solar renewables under the Climate Action Plan.
Depending on panel size, that ambition essentially equates to more than one million solar panels on the roofs of around 70,000 buildings.
At farm level, the scheme presents opportunities for electricity-heavy holdings to offset surging bills and increased usage, while also introducing payments for surplus electricity that farmers can opt to export to the grid for the first time.
However, after speaking to industry sources, several caveats remain about the long-term potential of the MSS scheme — which will gradually reduce grant supports from 2024, with support for new installs to be phased out from 2028.
So the Farming Independent put the following questions to Minister Ryan’s Department regarding the design and goals of the scheme.
A spokesperson responded with the answers below, adding that the Department reviewed seven schemes from six countries as part of its analysis.
Q: Who is the MSS for?
A: The scheme is targeted at domestic (homes) and non-domestic sites generating up to 5.9kW. For example, this might equate to around 18 typical solar panels on the roof of a house.
It is also aimed at larger, non-domestic sites, farms, business properties, community buildings, generating between 6kW and 50kW.
This might equate to between 18 and 150 typical solar panels on the roof of sheds or a small factory.
Q: What supports are available?
A: For applicants generating up to 5.9kW the available supports are threefold:
■ Payment per kWh for surplus electricity exported to the grid — this is known as the Clean Export Guarantee (CEG);
■ Home-owners will continue to be able to apply to the SEAI (Sustainable Energy Authority of Ireland) for a grant towards the cost of installing equipment.
In 2022, the grants will be at the same level per kW as the current SEAI solar PV grant scheme (maximum €2,400).
■ Businesses, farms, community buildings will be eligible for an SEAI grant at the same levels as domestic customers. This specific grant will be available later in 2022.
Meanwhile, for applicants on larger non-domestic sites, generating between 6kW and 50kW, there will be a set payment per kWh for surplus electricity exported to the grid paid by suppliers for a set period of 15 years — this is known as the Clean Export Premium (CEP).
This payment will typically be higher than the CEG, replacing grant support for these applicants.
Q: When are the supports available?
A: For applicants generating up to 5.9kW, access to the CEG will commence early in 2022. SEAI grants are currently available for home-owners, under the existing supports.
For the larger applicants, generating between 6kW and 50kW, the payment support will be operational in quarter three of this year.
Q: Why will MSS supports be reduced from 2024?
A: It is intended that grant levels will taper off as the micro-generation ‘market’ becomes functional in its own right, in line with the approach in other European member states.
Grant levels will be reviewed, and revised if needed, using the latest input data — during a planned review of the scheme after two years.
Q: Will the current grant support for battery storage of €600 for domestic installs be maintained?
A: The spokesperson said the maximum grant support for installations approved by Government is €2,400.
Q: As the new business supports will not be introduced until later in 2022, will existing solar grants continue to underpin investment until then?
A: The existing arrangements for the Better Energy Communities (BEC) and other SEAI grant supports will continue in 2022.
Transitional arrangements will come into place once the extension of the MSS grant to farms, businesses and community organisations is complete later in 2022.
Q: Will the CEP payment be available in addition to the CEG?
A: The spokesperson said all existing micro-generators and all new micro-generators generating up to 5.9kW (whether in receipt of a capital grant or not) will be eligible for the CEG tariff for all residual electricity exported to the grid.
This will be paid to them by their electricity supplier at a CEG market rate, which will likely be reflective of the price of electricity on the wholesale market.
All new micro-generators in receipt of the (CEP) tariff will not receive the CEG in addition.
Q: Is the CEP separate to any of the existing grant options for businesses?
A: The CEP is an alternative funding support to a capital grant from the MSS, TAMS, BEC, EXCEED or other grant schemes and, therefore, additional supports, including grant supports, are not available for the same renewable installation.
The CEG is available for all micro-generators, whether in receipt of a grant of not.
Q: Will the maintenance support grant continue for farm solar PV projects who cannot qualify for the export premium payment of 13.5c/kWh?
A: Payments for both the CEG and the CEP apply only to exported electricity. Maximising self-consumption is a key principle of the MSS and is the optimum way to minimise the payback period for the micro-generation installation cost and, therefore, the cost of supports.
Larger farms with a three-phase energy connection and their own electrical transformer will benefit most from the Government’s new Micro-generation Support Scheme, Pat Smith has stated.
The chairman of the Micro Renewable Energy Federation (MREF) cautiously welcomed the move.
He urged that other grants for solar installation — via TAMS, the SEAI, the LEADER programme etc — “must be maintained” to make the switch truly attractive to farmers.
Without retaining existing grants, the former secretary general of the IFA says the scheme would be “a significantly regressive rather than progressive step” in the country’s transition towards renewable energy generation.
Summarising the new grid support structure — based on electricity prices at 20c/kWh and accepting average premium price of 12.5c per kWh over payback periods — Mr Smith (pictured), who also managing director of Local Power, assessed that it would break down as follows:
“Single-phase connections with 80pc export to the grid and 20pc self-consumption will take up to 11/12 years to payback with no grant and 7-8 years with a 30pc capital grant,” he said.
“Single-phase connections with 80pc self-consumption and 20pc export to the grid will take circa 8-9 years to payback with no grant and 5-6 years with a 30pc capital grant.
“Three-phase connections with 80pc export to the grid and 20pc self-consumption will take 9-10 years to payback with no grant and 6-7 years with a 30pc capital grant.
“Three-phase connections with 80pc self-consumption and 20pc export to the grid will take circa 6-7 years to payback with no grant and 4-5 years with a 30pc capital grant.
“These paybacks are average and may be slightly longer or shorter depending on variables used.
“For example, if the money is borrowed, the paybacks will be up to a year longer, and if the generation is higher than average, the paybacks will be shorter.”
The key message from Mr Smith, who has penned his concerns in a letter to Minister Eamon Ryan, is that significant grants must support the feed-in tariff to justify the investment.
The above calculations do not factor in tax benefits that accrue to a renewable investment as it remains unclear if the 100pc accelerated capital allowances continue to apply.
If they do apply, Mr Smith said this will potentially cut the payback time by 50pc for sole traders and 12.5pc for companies.
“The long answer is that for the bigger operator with three-phase connections and 50kW, plus transformers feeding the farm or business, the economics of the MSS scheme do appear to make more sense,” he said.
“The amount of energy being consume on the farm will basically dictate the financial attractiveness of it.
“We don’t want to be negative, but we have to be realistic, and we need clarity on these issues.
“Our message is to treat whatever Minister Ryan and his officials promise with a grain of salt until it’s written down with deadlines and timelines and there is somebody held to account to deliver on those targets.
“At the moment, the Government’s ambition is not being matched by action and urgency.”