On 14th July the Secretary of State for Transport announced that the sale of new diesel and petrol HGVs would be banned from 2040. The government also aims to decarbonise agriculture by 2040 – so we look at the reality of introducing electric vehicles into the food supply chain.
The transport announcement certainly adds an incentive for businesses in the food supply chain to begin thinking about how they introduce electric vehicles, plant and machinery to their organisations. However, what business really needs to stimulate the adoption of decarbonised transport is a good practical plan for dealing with the fundamentals of making the transition – infrastructure and costs.
Putting the right infrastructure in place
The electric utility vehicles, management cars and pick-ups already being used in some businesses can be charged easily within existing energy frameworks. However, delivering a full charge to a combine harvester or fleet of HGVs quickly is a different story. They need much bigger chargers and businesses will not be able to rely on the National Grid to meet their electricity requirements.
Peter Rolton, Chairman of Britishvolt advises, “Start planning your green infrastructure now, whether it be grid-based or blended. Creating the right infrastructure takes time and investment and needs government incentivisation. If you do not have the foundations in place, you will run into problems when you try and switch the vehicles”.
Farms and businesses will need to develop their own energy infrastructure at the local level; an ecosystem of renewable power generation from wind turbines or solar panels, charging points for vehicles and battery storage for surplus energy. You effectively create your own mini green power station to collect power, store it and charge your vehicles.
Of course, not all businesses have the same roof space for solar installations, spare land for wind turbines or cold stores to use as battery packs. The level of energy self-sufficiency will vary from business to business and with advances in AI algorithms, we should certainly see battery packs in rural settings capable of drawing on renewable energy sources and taking from the National Grid when it is optimal to do so.
The elephant in the room is that the UK tariff structure is wholly inappropriate. We are switching to a system where nature is in the driving seat in terms of power generation, yet the tariff structure is still based around time of day. We need to overhaul the whole structure so that when generation from nature is plentiful (lots of wind or lots of sunshine) we ought to be able to turn load on and fill up battery packs cheaply. At the moment the time of day tariff is completely divorced from generation and not delivering the cost efficiencies businesses will need when their power consumption rockets with the introduction of electric vehicles.
The falling costs of electric vehicles
The cost benefit of EV is starting to come to the fore. The price of batteries starts is coming down. Charging an electric vehicle is cheaper than fuelling a petrol or diesel equivalent even at full grid price, and if you have the means to generate and store your own power the costs drop further. Electric motors are simpler machines. They only have one moving part, which means reduced bills for repairs, servicing and maintenance and less downtime for the vehicle.
Solar power has come down dramatically in price. It may no longer attract the level of subsidies it once did, but some within the industry believe it does not need them. Sam Brown of Harvest Green Developments told us, “A few years ago, a 250 kilowatt solar system would have cost upwards of £250,000. Now it costs circa £175,000 and while the price of the product has nosedived, the sophistication of the technology has soared”.
He went on to explain, “We have been working with an apple packing facility in Kent, which sends 2.5 million boxes of apples into the supermarkets each year. Harvest funded the installation of a 220 kilowatt system on their roofs through a lease & solar power purchase agreement (PPA). It does not cost the farm a penny, and they are not responsible for the ongoing operation and maintenance of the system or insurance costs. It has been such a success that they recently installed an additional 161 kilowatt system under the same terms.
“In return, they commit to buying the power from that system for 25 years at a specified rate lower than what they pay to the National Grid. Every single unit of power consumed represents a cost saving. Lease & PPA is a route to market without having to use your own cash, which leaves money in the pot to invest in your core business, and a saving on electricity bills.
“The best systems are designed to self-consume as much power as possible to generate the higher return because the export rates are incredibly low. There are some very clever technologies to optimise the self-consumption rate. For example, for this Kent business we have submitted a planning application for another 500,00 kilowatts which will be installed alongside power management systems to manage the load of the chill rooms. Essentially the chill rooms become a battery storage unit”.
When investing in new technology, particularly green technologies, it definitely pays to look into the tax aspect. There are 100% tax deductions and even 130% ‘super deductions’ to incentivise the adoption of green business practices. However, the legislation supporting those tax breaks needs modernising to keep up with the emerging technologies and government’s policy ambitions. EV charge points and solar panels attract tax efficiencies; the bit in the middle, the electrical system supplying and storing power, may not qualify for the big deductions.
Tax legislation needs to be checked carefully to maximise the tax efficiency of any investment. Nigel Morris, Tax Director at MHA MacIntyre Hudson advises, “It is important to look carefully at infrastructure investments to make sure you are doing the right thing for your business and your property, while structuring the investment in such a way as to maximise the tax breaks that are out there”.
Mark Lumdson-Taylor, Founder & Chair of Rural Policy Group concurs, “Businesses need to make investments in their infrastructure to become more energy self-sufficient, not just for charging electric vehicles, but for cost savings and environmental gains throughout their organisations. Government innovation in tax policy so legislation keeps pace with sustainability goals and enables business owners to contribute to meeting those targets would be welcomed by the food and farming industry”.
RELATED TALKS
Energy & Industry. We investigate how rural businesses can reduce their emissions and opportunities in the renewable energy industry for landowners as part of the government’s strategy to decarbonise agriculture.
From CSR to Purpose-Driven Business. A stellar panel of speakers led by Natalie Bennett, Green Party Peer, discuss the role of business in creating a more sustainable and more just economy.
Agritech & The Future of Food. Neil Parish leads a discussion on the importance of agritech to a sustainable farming future for the UK.
Electric Vehicles in Food & Farming. A look into laying the foundations for and the costs of decarbonising transport within the food supply chain.
RELATED INFORMATION
Decarbonising transport: a better, greener Britain. The UK government’s plan to decarbonise the entire transport system in the UK. Published 14th July 2021.