The Road to Net Zero: What it means for farmers and landowners

by Rhona Booth, Senior Associate

In an era defined by the urgent need to address climate change, the UK and Scottish Governments have emerged as global leaders in the race towards a sustainable future. With a commitment to environmental responsibility, both governments have set ambitious Net Zero targets signalling a transformative shift towards a low-carbon, resilient economy.

In Scotland, farmers and landowners hold the key to delivering many of the sector targets, specifically around carbon offsetting, sustainable farming practices, afforestation projects and initiatives to enhance biodiversity.

The Scottish Government also continues to invest in and promote the development of renewable energy projects, aiming to generate a substantial portion of the country’s energy from clean sources.

In this article I explore the financial opportunities around the strategies and initiatives employed by the Scottish Government to fulfil its commitments to achieving Net Zero.

Solar Power: One of the most promising avenues for landowners is the integration of solar energy into the national grid. Scotland’s government has been actively encouraging the adoption of renewable energy, and solar power is no exception.

Developers are actively pursuing solar opportunities across Scotland with hotspots on the East Coast where irradiance levels are highest. Bell Ingram are acting for numerous land owners, negotiating exclusivity agreements, Heads of Terms and assisting landowners and their legal advisors during the option and lease process.  Lease terms are typically 40 years with rentals significantly greater than those generated from agriculture making hosting a solar development and attractive proposition. Bell Ingram will negotiate the best deal with our knowledge of the market and expertise on practical matters of development. The developer will meet the cost of professional fees. Although the connection date to the grid can be up to a decade away due to the constraints on the electricity network, developers are keen to secure land at the present time via an option agreement.

Battery Storage: While solar (and wind power) are integral to the renewable energy landscape, they come with inherent challenges related to intermittency and grid stability. This is where battery storage systems play a crucial role. By storing excess energy generated during peak times and releasing it when demand is high, battery storage helps balance the grid, ensuring a reliable and stable power supply.

Landowners can enter into lease agreements with energy developers for the use of their land to host battery storage facilities. These agreements typically involve regular rental payments, providing a steady income stream for landowners without requiring active involvement in the day-to-day operations.

The land take for battery storage is relatively small, four to 20 acres making this opportunity as an addition to the farming business and income stream. The proximity of a substation is a prerequisite to hosting a battery storage scheme.

Carbon Off Setting: The financial opportunities for landowners in the realm of carbon offsetting, particularly through woodland creation schemes, are vast. However, it is essential for stakeholders to approach this market with a commitment to sustainability and ethical practices. By carefully navigating the complexities of acquisition, market dynamics, and ecological considerations, landowners can play a pivotal role in combatting climate change while reaping the financial rewards of responsible carbon offset initiatives.

Electricity Infrastructure: SSE’s massive £10 billion investment in electricity infrastructure is geared towards enhancing and expanding Scotland’s electricity infrastructure. This includes the development of renewable energy projects, grid upgrades, and the deployment of cutting-edge technology. Landowners situated in proximity to these projects stand to benefit significantly.

One of the primary opportunities lies in leasing land for renewable energy projects such as wind farms or solar installations. SSE’s commitment to increasing renewable capacity provides an ideal environment for landowners to generate steady income through long-term leases.

Beyond renewable energy projects, SSE’s investment includes significant upgrades to the electricity grid. It is important for landowners to engage early with SSE to ensure that their views are taken into account as far as possible in the design of the scheme. New pylons are the unfortunate requirement to secure renewable opportunities across the country and SSE and the Scottish Government has strong statutory powers the roll out their infrastructure programme.

Low-Carbon Hydrogen Economy: The Acorn Project, based in North East Scotland, is a groundbreaking initiative that aims to deliver low-carbon energy solutions. At its core, the project focuses on repurposing existing oil and gas infrastructure to support the development of a low-carbon hydrogen economy.

One crucial aspect of the Acorn Project is the need for gas transportation to the St Fergus terminal and those landowners situated along the gas transportation route to St Fergus have a unique chance to play a crucial role in this transformative journey. By exploring servitude agreements, lease arrangements, and actively participating in community development, it is envisaged that landowners can maximise the financial benefits while contributing to a more sustainable and resilient energy future.

Top Tips:

• While the financial opportunities are abundant, it is crucial for landowners to navigate the regulatory landscape effectively.

• Understanding planning permissions, environmental impact assessments, and community engagement requirements is essential for a successful partnership with energy infrastructure developers.

• Seeking professional advice can help landowners make informed decisions and ensure compliance with regulations.

To find out how Bell Ingram can help your rural business make the most of these opportunities phone 01738 621 121 to speak to Rhona Booth or one of our Rural Land Management team.