Income diversification is a growing priority amongst farmers and securing energy assets is a long-term option that many are increasingly considering
It’s long been the case that farmers generate income from non-farming activities. Land diversification isn’t anything new, but as farmers deal with soaring input costs within a competitive market space, it’s no surprise that they’re increasingly looking at how they could branch out into new ventures to enhance their farm’s income.
In fact, the government’s Farmer Opinion Tracker for England research from October 2022 found that 33% of farmers are already making changes to their business, and 44% believe they will need to make further changes in the next three to five years.
When asked what changes they are making or considering, almost half (48%) said they expect to stay in farming but diversify their business into non-farming areas. 90% of farmers said that the key reason why they need to make changes to their business is input price changes.
One of the ways that farmers or landowners can diversify their land is by leasing land for an energy project, like a co-located solar farm and battery storage asset. But what would this entail? Let’s breakdown what you need to know:
If you lease your land for a solar farm or battery storage asset, you'll earn a market-based rate of revenue per acre of land. The exact amount of money you’ll make will depend on where your land is located, and how much energy can be generated or stored there.
Most leases last for 30 to 40 years and your earnings will be index-linked, so it will rise with inflation. All this means you’ll have a predictable, long-term source of income from the land.
We’d recommend that you take independent legal advice on the legal and tax implications of diversifying your land into an energy project, as part of your usual estate planning process. We’d be happy to talk about supporting you with some of the costs for that.
Co-location of solar and battery storage means you’ll have both a solar farm and a battery storage asset located on your land. Renewable energy will be generated by the solar farm. Some of this will go straight into the grid to be used right away; and some of it will be stored in the battery storage asset, ready to be used when it’s needed.
In many areas of the UK, it’s not possible to build a large solar farm, as there’s not enough capacity on the grid. This means the grid cannot handle the amount of energy that the solar farm would produce. Even if you were happy to lease out a lot of land for a large solar farm, it would be impossible for any organisation to build it.
However, there are parts of the UK where the grid is somewhat constrained, but it could cope with a moderate sized solar installation alongside a battery storage asset, in this case co-location could be an ideal solution for you to diversify your land. This is a more compact solution, so ideal for any landowners or farmers who are looking to lease out a minimum of 50 acres of land.
You may also find that we’re able to repurpose and make better use of former buildings such as livestock sheds to locate batteries.
First things first, complete our form with some details about your land – where it’s located, how much you’d be interested in leasing out, and so on. We’ll be able to quickly check and let you know if your land fits the bill, and then we can begin a conversation about the next steps.
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