Business and Policy October 2025 – Sector Focus: Renewables Update

On-farm renewables: Year ahead outlook 

Interest in renewable energy on farms has surged in recent years, as energy prices have climbed and businesses have looked for ways to cut costs and emissions.  The picture for 2025 looks rather different to the peaks of the energy crisis in 2021–23.  Prices have eased back, policies have shifted, and connection queues have lengthened.  So, what does this mean for the viability and profitability of farm-scale renewables in the coming year? 

Energy prices relaxing, but still high 

Wholesale electricity and gas prices are no longer at crisis levels, but they remain well above the pre-2021 baseline.  For farmers, this means that while the “gold rush” export tariffs of the crisis are gone, self-generation still brings significant savings compared with buying electricity in from the grid. 

Export tariffs under the Smart Export Guarantee (SEG) remain modest, and the real value of new installations often lies in displacing bought-in electricity. This makes on-farm self-consumption—whether directly or via battery storage, the cornerstone of most new projects. 

Weather and climate variability 

2024 has reminded us that weather is never entirely predictable.  Renewables depend directly on sun and wind, and output can vary substantially from year to year.  Climate change is expected to add further shifts, with stronger winter winds in some regions and changing summer patterns. 

For farmers and crofters, this underlines the need to use local data, not national averages, when forecasting yields.  It also makes sense to “stress test” business cases against poor resource years — so that the project remains viable, even when conditions are less favourable. 

Capital costs, policy and incentives 

Another shift since the early 2020s is the cost of capital.  Higher interest rates push up payback times, while supply chain pressures mean some technologies remain more expensive to install.  On the other hand, technologies such as Solar Photovoltaics (PV) systems and battery storage continue to fall in price over the long term, and competition in the installer market helps keep costs manageable. 

The closure of the Feed-in Tariff in 2019 removed the simplest support mechanism for small-scale projects. While the Smart Export Guarantee (SEG) provides an export route; the rates are relatively low.  Although the Scottish Government has signalled interest in expanding low-carbon generation; new targeted incentives for farm-scale renewables are not yet in place. 

That means the policy environment for 2025 remains stable but unspectacular.  However, it is worth keeping a close eye on announcements around energy security, community renewables, and carbon markets, all of which could open up new revenue streams for land-based businesses. 

Grid connections are biggest barrier 

Ask almost any developer today and you’ll hear the same complaint: grid capacity.  In many rural areas, networks are constrained, connection times stretch into years, and costs can be prohibitive. 

For farms and land managers, this means export-led projects are more difficult.  Smaller systems focused on self-use, or installations paired with storage, are often more achievable than large export-oriented schemes.  Always check grid connection options and costs early, before committing significant resources. 

New opportunities: Aggregation and flexibility  

Beyond simple self-generation, new markets are emerging.  Aggregators are beginning to bundle together small generators and batteries to provide services to the grid, from local flexibility to frequency response.  While still relatively complex, these opportunities are expected to grow over the next three to five years.  Farmers and land managers willing to partner with an aggregator may be able to unlock extra value from their systems. 

Brady Stevens, brady.stevens@sac.co.uk