The new rules relating to nitrate vulnerable zones (NVZs) will be phased in for existing NVZs on 1 January 2009 and for new NVZs on 1 January 2010.
The new rules are onerous and could have a significant impact on livestock farmers in the UK, particularly those in the dairy and pig sectors who have a significant amount of slurry to dispose of during the year. Not only are there restrictions on when slurry and poultry manure can be spread on the land but many farmers will have to invest in expensive storage vessels to ensure they can hold six months capacity for pig slurry and poultry manure and five months for cattle and other slurries.
Farmers’ problems are further exacerbated by the imposition of a maximum 170kg of N per hectare of livestock manure to be spread averaged over the farm area during the calendar year. The additional costs associated with the new rules will be paid for out of dwindling profits as DEFRA is offering no financial support by way of grant funding. However, these strict new rules could be the catalyst to encourage livestock farmers to think laterally about their business and in particular what opportunities they have to exploit the waste material that is becoming increasingly difficult to dispose of.
Stephen Rice a renewables energy expert at Fisher German advises farmers and landowners who are diversifying into renewable energy production including anaerobic digestion (AD) comments: “The Europeans have exploited AD technology for years converting waste products such as slurry and manure into methane which is then used to drive a Combined Heat and Power (CHP) plant generating heat and electricity. There is a wealth of tried and tested technology in particular from Germany, Austria and Holland that can be used to take a liquid animal waste product and convert it into methane by way of anaerobic digestion.”
The scale of the power plant can be tailored to the amount of digestate available on an annual basis. This could range from a small plant costing in the region of £150-200,000, taking slurry from say 150 dairy cows and producing sufficient electricity for the farm itself, to a large scale plant generating 2 MW of electricity that may cost in the region of £6-7 million.
As such a plant is unlikely to be fuelled from the waste material from one farm, this is an ideal opportunity for farmers to cooperate through the creation of a Joint Venture company set up to solely run the AD plant. The return on capital is extremely good with electricity generated by way of anaerobic digestion attracting a potential of two Renewable Obligation Certificates (ROCs) per Megawatt generated. The ROCs have been guaranteed by the UK government to be in place until at least 2029 and every indication is that they will extend after that date. The potential return on capital could be somewhere in the region of 20%. Furthermore, there is a significant amount of grant funding and the banks have also indicated that this type of project is likely to be looked upon favourably due to the strength of the covenant in signing up to a supply agreement with the National Grid.
It is vital that professional advice is sought before embarking upon a venture of this type and the Fisher German renewables team are well placed to advise. For further information, contact Stephen Rice on 01295 226297 email stephen.rice@fishergerman.co.uk or visit the website at www.fishergerman.co.uk
