In response to Ian Tinkler’s letter “Big chance for crofters”. Yes, theoretically he is right and there could be a valuable opportunity here. His vision is one which is shared by the Scottish Crofting Federation, which has, over the past year, done an enormous amount of work on this topic. However there are many hurdles which must be overcome.
Firstly, Mr Tinkler has done well to persuade his bank to offer funding at all, others have been much less fortunate. The Shetland Development Trust was looking at how it could help financially, but the cost of legal charges for this size of loan made it unviable.
Locally, Scottish and Southern Energy is now restricting grid connections. It is legally obliged to allow a connection of up to 3.6kw, but this is far less attractive financially than the 5-6kw machines which most households would need and seek to install. The other major problem is the feed-in tariff scheme itself, payments under which are subject to state aid and de minimis rules. SCF has for the past year sought clarity on which level of de minimis would apply to crofters. The agricultural level is 7,500 euros over three years. Most other industries have a level of 200,000 over the same period. This allows them to benefit from cumulative funding, such as grants, or the zero per cent interest loans available from the Energy Savings Trust.
Guidance has now finally been made available, which, if I’m interpreting it correctly, means that any person engaged in the primary production of agricultural products, ie crofters, are restricted to the 7,500 limit. This means that if Mr Tinkler, or any crofter, were to use the power produced for agricultural activity, such as to supply out-buildings, and then claim more than 7,500 euros, they would be in breach of the rules. They would be ineligible to receive further payments and would be required to pay back funds already received. In Mr Tinkler’s case, I would urge caution, supplying power to a “croft house” may be deemed agricultural activity.
SCF will continue to raise with the government all issues which we see as preventing crofters from turning this vision into reality.