The future of British Energy

FERGUS RUSSELL, CHARTERED SURVEYOR AND SENIOR AGRICULTURAL CONSULTANT, SAC CONSULTING

The ongoing global energy crisis caused by the Russia-Ukraine war has highlighted the vulnerability of relying on imported fossil fuels and the importance of seeking energy independence to avoid wholesale pricing volatility.

In 2022, farmers renewing their energy contracts experienced increases of up to 400% - with high energy users, such as those running cold storage being affected the most.

While out on the farm, one Scottish vegetable grower reported that his electricity bill was set to increase from £140,000/year to over £800,000/year. Hearing this reminded me how access to affordable, reliable energy is fundamental to us being able to continue to reliably power rural businesses, heat our homes and allow the UK to maintain its competitive position in the global economy.

As we stand at an energy crossroads, driven by environmental urgency and the impacts of geopolitical uncertainty, we have a very clear goal: a self-powered nation with net-zero emissions by 2050. This is an ambitious target which is propelling the UK towards a future powered by renewable energy and will inevitably change the way our countryside looks and is managed.

To transition to a green energy grid, a diverse range of renewable energy technologies will be required. UK Government targets are to double onshore wind power, triple solar power and quadruple the amount of energy generated by offshore wind by 2030. Driving round the countryside visiting clients, the impact of these changes is becoming increasingly more apparent, with wind turbines now visible from all angles in parts of Scotland.

It has also brought a shift in the advice SAC Consulting provides, with a greater number of landowners now seeking help after being approached by renewable developers and utility companies looking to acquire legal rights over land.

Our unique natural geography provides opportunities to produce energy in many ways and, as a nation, we continue to push boundaries in renewable energy generation. The once futuristic designs of floating offshore wind farms are no longer just concepts, with the Kincardine Wind Farm (developed in 2021 off the coast of Aberdeen) remaining the world’s largest of its type. Floating offshore wind farms continue to develop, with larger projects planned for seas around Scotland.

Green hydrogen, produced using renewable energy from wind farms and solar schemes, holds huge promise and could revolutionise transportation, heating and industry. The UK plays a pivotal role in leveraging this technology, hosting the world’s first commercial-scale green hydrogen electrolyser in Teesside.

Solar power technology also continues to develop and become more efficient, with utility-scale developments becoming more viable in Scotland. Controversy still surrounds solar due to the amount of land required compared to other generating technologies, which often leads to discussions with landowners about the importance of food production and what is the best use for land.

It was reassuring to see the UK Government pledge its commitment to the energy transition by lifting the ban on new onshore wind farms in England and announcing plans to develop Great British Energy, a publicly owned holding company that will invest in green energy projects across the nation and provide further energy security.

In our current renewable energy projects, developers are generally looking to secure agreements for between 35 and 50 years with break clauses built into the terms. The contractual option to terminate early may suggest there is an expectation that the energy market could look different again in 20 years’ time.

There is continued investment in nuclear fusion for energy production and supporting the development of green hydrogen plants. Once these ‘switch on switch off’ generating technologies come forward - in particular, nuclear fusion - we could see a completely different energy mix in the future and the role the UK countryside has in delivering it.

Renewable energy projects can offer significant diversification opportunities to landowners with good, long-term and reliable returns and I would encourage any landowner to explore what options may be available to them. Alternative use of land often challenges our deep-rooted beliefs in what a family farm should be used for. However, the importance of food security and energy security should be considered when looking to the future.

For the UK to remain a popular destination for British and international capital, a robust and competitively priced supply of energy must be provided. In the same way food is vital to our existence, energy is vital to our economy - and it must remain affordable to ensure economic prosperity for those in both the countryside and city.

Get in touch: fergus.russell@sac.co.uk