Growers operating combined heat and power (CHP) installations with a generating capacity of 5mW or less will be able to claim under the energy bill relief scheme against the cost of all the gas used, according to scheme guidance issued by the government in November.
Growers had been pressing for clarification on how the business energy relief would be applied to CHP because, when the scheme was announced, it was uncertain whether gas to generate electricity to sell back to the grid would be included.
The Department for Business, Energy & Industrial Strategy (BEIS) which administers the scheme says for installations greater than 5mW – including sites with several smaller CHP units that have a combined output higher than that – or where CHPs of any size are not registered under the CHP quality assurance scheme, growers will need to calculate the proportion of gas used that relates to electricity generated for the grid. They can then claim only for the proportion which generates heat and power used on site, for example to heat and light the crop.
“It’s a welcome clarification,” said horticultural energy consultant Tim Pratt. “Most growers with CHP will have installations within the 5mW threshold. Only the biggest will be above that and they will still get relief on the gas used for energy consumed on the nursery.”
BEIS says the discounts are available to business customers on all types of contract including fixed, flexible and variable price. The amount depends on the reference wholesale price in the contract and is the difference between that and the government’s support price for businesses, currently 21.1p per kWh for electricity and 7.5p per kWh for gas (£2.20 per therm), so customers with a high wholesale price will be entitled to a larger discount than those paying a lower wholesale price.
Consultancies such as Mr Pratt’s Now Then Energy, and NFU Energy, are pointing out that in practice calculations could be complex for some growers and the actual relief a grower receives could depend on a range of factors.
BEIS says provisions are in place to ensure businesses continue to manage their energy costs in a commercial manner and are not tempted to take steps with the aim of exploiting the scheme by increasing the amount of discounts available to them.
Long-term wholesale gas prices have fallen slightly since the relief scheme was first outlined in September, driven by the warm autumn, higher than expected volumes of gas in storage across Europe and the recommissioning of the UK’s largest storage facility. As this edition of The Commercial Greenhouse Grower closed to press, gas for summer 2023 stood at £2.81 per therm, and £2.98 for winter 2023/4.
“That’s a bit more palatable but still four times more than before the pandemic,” said Mr Pratt. “It’s also above the price the government has agreed to subsidise down to, but if it falls further it could be used as justification for not continuing the subsidy scheme beyond the initial six months.”
Meanwhile, day ahead prices for both gas and electricity have begun to rise again with the onset of colder weather and the realisation that gas supply could still be restricted by the time stores start to be refilled next spring.
“The fall in gas price hasn’t been enough to encourage growers to plant any earlier next year because they are still not in line with the low price increases offered for their produce,” said Lea Valley Growers Association secretary Lee Stiles.
“The energy support scheme remains a small sticking plaster for a fraction of the growing season,” he added. “Government should be concentrating on longer term assistance.”
Read more news and features from the protected crop industry in our monthly publication The Commercial Greenhouse Grower.