Solar photovoltaic assessment for dairy farm renovation in Somerset

Renewable Energy Project for Dairy Farm in Yeovil, Somerset

The objective of this project is to develop the assessment of the renewable energy resources for the renovation of an old dairy farm in Yeovil, Somerset. The paper assesses the solar PV, wind power and thermal solar to choose the best renewable energy source for the farm's renovation. The outcome of the assessment reveals that the solar PV is the best renewable energy system for the renovation of the farm. The detailed assessment of the solar PV using the discounted cash flow, carbon savings, IRR (internal rate of return), NPV and use of pictorial elements reveal that the solar PV will make the farm owner enjoying a cost decline from the farm operations, and increase the annual revenue over the next 25 years. The results of the assessment also reveal that the project is feasible based on the results of the NPV and IRR. Moreover, the project is sustainable because it will reduce 445 g carbon dioxide emission per year. The study recommends that the UK government should increase the subsidies allotted to the thermal solar power and other renewable energy sources to reduce the costs of the solar PV in the UK thereby encouraging the use of the solar PV across the dairy farms in the UK.

Introduction

The objective of the project is to renovate the old dairy farm located in Yeoviton, Somerset essential to take the advantages of cost reduction of the renewable energy since the government has encouraged the use of the renewable energy by introducing the FIT (Feed-in-tariff) subsidies for the solar power across the UK. In the last few years, there has been an increase of carbon emission from the use of the conventional electricity and methane from the cattle waste. Typically, the renewable energy resources have been identified as the effective power sources to reduce the carbon emission in the farms. The project intends to take the advantages of the benefits of the renewable energy resources to renovate and retrofit our old dairy farm. The project will carry out the cost-benefit analysis of different renewable energy resources to choose the best renewable energy source to renovate our dairy farm.

Project Aim

To retrofit and renovate an old Dairy Farm in Yeoviton, Somerset.

The project will evaluate three suitable renewable technologies to identify the best choice that will produce maximum benefits for our project that include reducing the farm carbon footprint, cost of the farm operation reduction and increase in the net revenues.

Project Structure

The project is structured as follows:

Section 1 discusses the storyline and baseline project scenario. Moreover, the section discusses the project location with the relevant images, photography, and maps. The project also discusses the assumption of the energy baseline.

Section 2 discusses the assessment of the renewable energy resources using the systematic approach to narrow down the renewable energy potential at Yeoviton, Somerset. This section also discusses the appropriate tools, techniques, and methods that can be used for the project implementation.

Section 3 assesses the feasibility of the renewable energy technology using financial techniques such as cash flow analysis, internal rate of return, annual carbon saving, energy analysis, elegant mathematics, and pictorial elements.

Section 4 discusses the critical reflection of the project feasibility assessment providing strength and weakness of the project approach. This section also discusses the quality of information collected and relevance of the methods and tools used to complete the projects. The project also discusses the validity of the findings.

Section 5 provides the conclusion and recommendations providing the overall summary of the project and a leeway for a future improvement.

Section 1: Description of the Storyline and Baseline Project Scenario

The old dairy farm is 250-acre dairy farm located at Yeoviton, Somerset. The farm produces fresh cow milk and fermented cow milk. However, the farm dairy owners intend to protect the environment from carbon emission to protect the present and future generations. Over the years, the farm owners have not integrated the renewable energy in the farm management since the conventional electricity has been the sources energy for the farm. However, the use of electricity increases the farm carbon emission and is not cost effective for the farm operations. More importantly, we constantly aware of the quantities of methane that the cattle produce, and an increase in the quantity of the methane increases the daily carbon footprint. Thus, the farm intends to abide by the environment law by reducing the carbon footprint, which requiring carrying out an effective renovation and retrofit to reduce the costs of production by changing the source of power from hydroelectricity to renewable energy resources. Effective renovation of the farm in Yeoviton, Somerset is to integrate the renewable energy in the project plan. Moreover, the renovation is necessary because it assists in reducing the climate change and pollution. (Courtney, 2012).

Project Assumption

After consulting with the project stakeholders, the project provides the following specifications and assumptions.

The economic feasibility of the project is based on the budget of £11,000

Interest rate is 4.15%

The choice of the renewable energy is to be economically and sustainable feasible.

The project will evaluate the combination of the following renewable energy resources: solar PV, solar thermal and wind energy.

Project Location

The project location is a dairy farm in Yeovil, Somerset.

The project has chosen the Yeovil as the location of the dairy farming because Yeovil is small town located in the southern part of Somerset in England as being revealed in Fig1.

Fig 1: Mao of Yeovil, Somerset

The Yeovil has the population of 45,000 situated 210 kilometers to London and has the annual mean temperature of approximately 50.0 °F (10 °C) with diurnal variation. However, January is the coldest in Yeovil with the mean temperature of between 1°C and 2 °C. However, July and August are the summer and are the warmest months with the daily mean temperature of 22 °C. Thus, the climatic condition of the Yeovil favors the dairy farming production. (Ekoogen, 2010).

Fig 2: Location of the Old Dairy Farm in Yeovil

Moreover, the carbon emission in Yeovil is 2.3 tons per person because of the combination of fuel mix and housing stock. Thus, the level of carbon emission in Somerset necessitates a sustainable choice of power for the dairy farming. Typically, the renewable energy technology has been identified as an effective strategy to reduce the carbon emission Thus, renovation of the dairy farm will assist in reducing the carbon emission and increase the productivity of the farm. A wide landmass of the Yeovil is another suitable factor to assist the dairy farm production which will be profitable for the farm owner. As being revealed in Fig 2, the Yeovil has a wide expanse of land that is suitable for dairy production.

Section 2: Assessment of Initial Renewable Energy Resources

This project identifies different potential renewable energy technologies that will be used to develop our dairy farm by assessing the environmental and economic feasibility of the solar thermal, solar PV and wind energy. A feasible analysis of the renewable energy includes technical feasibility and environmental impact that will influence the choice of the best renewable energy technology for the project. The feasibility of the chosen renewable energy is as follows:

Solar PV

The PV (Photovoltaic) uses the semiconductors, which is effective in converting the solar radiation into direct current electricity. The PV panel can be installed at the flat roof top of a building or on the ground. One of the benefits of the solar PV is that the panel produces electricity in the afternoon that can use on the farm. The strategy will assist our farm to offset the costs of electricity usage thereby reducing the cost of farm operations. Since solar radiation is available free of charge, the 50kw array of solar radiation will reduce our reliance on the conventional energy resources thereby minimizing a depletion of natural resources. Apart from collecting solar PV from solar radiation, the solar energy can also be collected from some electronic devices such as a solar cell. The cost of Solar PV in 2014 was £2,229 per kW and declined to £1,971 per kW in 2015 showing a decline in the costs of the solar panel year by year. In the last 10 years, there has been an annual decline in the price of solar PV by 40%. (DECC, 2015). Table 1 reveals the costs of PV solar panel per kW between 2014 and 2015 in the UK.

Year

Month

Table 1

£ per kW installed

Number of installations

Median

Mean

Lower CI

Upper CI

2014

April

3 342

2 079

2 229

2 204

2 253

May

4 151

2 050

2 193

2 172

2 215

June

4 837

1 998

2 141

2 121

2 161

July

5 448

2 000

2 117

2 097

2 138

August

4 984

2 000

2 103

2 082

2 123

September

6 565

1 931

2 056

2 038

2 074

October

6 806

1 958

2 057

2 039

2 074

November

6 656

1 875

2 004

1 987

2 021

December

8 284

1 834

1 982

1 967

1 996

2015

January

3 650

1 923

2 012

1 987

2 036

February

5 146

1 901

1 979

1 960

1 998

March

9 591

1 834

1 971

1 958

1 985

Total 2014/15

69 460

1 949

2 070

2 065

2 076

Wind Power

Wind power is an energy system using the turbine to produce energy. The big wind capacity can range from 1.97 MW to 7.5 MW sufficient to produce electric energy of 18 GWh that can be used by 5000 3-person households. However, small wind is an energy of between 100Kw, the small wind power system is effective in generating power for farm, homes, businesses and telecommunication sites. Thus, the small wind turbines can be installed at the top of the building and minimize the production of carbon emission. Similar to the solar PV, the wind power has become a source of renewable energy sources in the UK. Typically, 60% of onshore farms use the wind power to generate electricity, and cost of wind power has fallen from $70.20 ($108) per megawatt hour to $85 making it becoming cheaper and efficient to way to develop. Despite the benefits associated with wind power, the wind power is intermittent, and the application of the wind power depends on the wind speed since the wind does not blow at all time. Moreover, wind power is not as sustainable as solar power because wind turbines are noisy, and they can generate noise pollution. Although, a recent development of technology has improved the development of quieter blades, however, these type turbines may be more expensive. Moreover, the wind turbines are a threat to wildlife. For example, wind turbines can kill some exotic and law protected birds, which can make our farm break the environmental law.( Kraemer, Hu, Muto, Chen, et al. (2008).

Solar Thermal

Solar thermal systems are the energy system that captures heat water and energy for heating the building. The thermal power is different from solar PV because the process of converting solar power to heat is more twice efficient. Despite the efficiency of the thermal power in generating the power for the farm, the thermal power technology faces some constraints because its availability is limited. Moreover, solar thermal may not provide the energy suitable for our dairy farm. Thus, analysis of the Solar PV, wind power, and thermal reveals that PV solar power is the best choice for our dairy farm because of its availability, cost-efficient and sustainable efficiency. (Akhigbe, Belaief, Gursoy, 2011).

Section 3: Detailed Feasibility Assessment of Solar PV

The section develops the feasibility plan for the project using discounted cash flow, energy analysis, annual carbon savings and pictorial elements. Table 2 provides the setup costs and general information for the solar PV power. The appendix 1 reveals the solar PV panel.

Table 2: General Information for PV Solar

Setup Cost

Currency

British Pounds

Price (per kWp)

Divisor

1

Running cost

Useful Years

25

Lease (£/year)

0

Nominal Power (kWp)

5

Insurance prem. (%)

0.5

Annual Yield per kWp

Inflation rate (%/year)

2

Degradation % per year

0.5

Financing

Feed in Tariff

% of Own Fund

25%

Years

20

Loan type

Redeemable

Price per kWh

1.1874

Redemption Schedule

Uniform

Index Linked

Years

20

Own Consumption

Interest rate 4.5%

4.15%

FIT subsidy (£/kWh)

0

Disagio %

3

Own consumption (kWh/year)

0

Investment Yield %

3.5%

Electricity price projection

Price now per kWh

0.18

Tax rate

0

Energy Price Inflation % per year

3

The project uses the Excel software for the calculation, and IRR (internal rate of return) of the project is 7.3% and the NPV (Net Present Value) of the project is £5,004. The results of the NPV and IRR reveal that the project is feasible. The study also develops the discounted cash flow, and the results of the cash flow reveal that the project is feasible because our farm will enjoy an increase in the net income with the use of Solar PV as being revealed in fig 3, 4 and 5. The Appendix 2 provides the outcome of the discounted cash flow.

Moreover, the solar power is effective is reducing the carbon emission thereby enhance carbon saving. The normal amount of sunshine for solar PV is 3.5 kW (14 x 250W panels), which will produce 3,000 kWh annually. Thus, the solar PV will be able to save 445g of carbon emission from the 3,000 kWh solar power annually. (Kraemer, Hu, Muto, Chen,. et al. (2008).

Project Summary:

Nominal power (kWp)

5

Purchase value (£)

11000

Own Funds (£)

Loan amount (£)

Present value of net income1 (£)

Levelised energy cost (€/kWh)

0.173

Loan type

Redeemable

Amortization time (y)

15.2

Dividend (GBP)

Dividend (%)

4.9

IRR before tax (%)

7.3

Eff. tax rate (%)

0.0

IRR (%)

7.3

Fig 3: Income allocation (£)

Fig 4: Income Before Tax

Fig 5: Net Income After Tax

Section 4: Critical reflection on the Feasibility Assessment

A renewable energy source has become an effective source of energy that can be used to reduce the carbon emission in the UK. This project carries out the feasibility plan for the renewable energy for our dairy farm located in Yeovil, Somerset. The finding of the feasibility plan reveals that solar PV is an effective renewable energy that can increase revenue decline cost of operation for the project. The project assessment delivers several strengths. First, the project has been able to evaluate the PV solar, thermal solar and wind power energy. The study has chosen the solar PV as the best renewable energy for the dairy farm. The findings of the project will assist a potential investor of the dairy farming to choose the PV solar for the farm operation. Moreover, the assessment provides the discounted cash flow of the solar PV showing the revenue that the farm owner will generate over the next 25 years. Despite the identified strengths of the assessment, the weakness of the assessment is that the project has not yet being implemented, and the macroeconomic factors such as inflation, and an increase in the interest rates can affect the proposed revenue to be realized from the project. Despite the shortcomings identified in the project, the project collects information from the quality sources that enhances the validity of the research outcomes. Moreover, the method of arriving at the research findings also enhances the reliability and validity of the research findings. For example, the writer uses different financial tools such as discounted cash flow, IRR, NPV and carbon savings to develop the research findings. The outcome of the research will be useful for prospective dairy farmers when attempting to renovate their farms in Yeovil, Somerset.