Irish farmers are increasingly turning to solar energy, but 48% still believe financial investment or return is the biggest barrier to considering renewable diversification, according to the Irish Farm Report 2024 published today (Thursday, January 18) by Ifac.
The report highlights that 13.6% of the country’s electricity demand came from solar energy in 2022, however 21% of farmers still don’t know where to start with renewables.
Calculating the costs and payback period remain “essential considerations” according to Ifac.
Commercial manager at Ifac, Martin Clarke said that investing in solar energy requires a “comprehensive analysis” to determine an accurate pay back period.
Financial return
Clarke said that installation costs can be determined by analysing the farm’s electricity consumption over the last 12 months.
Installation costs typically range from €1,000 to €1,500 per kW, with larger installations being more cost effective, according to Clarke.
With reputable manufacturers, the life time of solar panels can exceed 25 years, therefore payback involves considering the duration of the investment, Clarke said.
Clarke added that the choice between glass-glass and glass-foil panels impact costs and quality.
Glass-glass panels are more expensive, but offer better warranties, lasting up to 87% performance after 30 years.
In terms of energy, Clarke recommended calculating potential savings involves assessing previous consumption, local sunlight conditions, and system efficiency.
“A 6.6kWp system generating around 5,800 kWh per year typically yields a 20% net return on investment,” Clarke said.
Support
Clarke said that as solar technology advances and government support increases, the payback period is expected to become more favourable.
Farmers can apply for grant aid to install solar PV under the Targeted Agricultural Modernisation Scheme (TAMS 3).
Grant aid under the solar capital investment scheme (SCIS) will be paid at a rate of 60% with a ceiling of €90,000.
The Non-Domestic Microgen Grant and Sustainable Energy Authority of Ireland (SEAI) Solar PV grant aid offer financial assistance for solar panel installations.
A flat rate farmer can also claim back the VAT incurred on the purchase of a solar PV system, which is designed to be used mainly or solely in his or her farming business.
Farmers can also deduct the full cost of solar equipment from profits in the year of purchase under the Accelerated Capital Allowance scheme.