Biodiversity net gain will play a crucial role in the development of UK renewable energy

Renewable developers and funders are increasingly recognising the links between natural capital and energy generation: the health and diversity of natural capital are essential for ecosystems and the absorption and storage of carbon while renewable energy generation is crucial for global decarbonisation.

The UK government's Clean Power 2030 Action Plan published in December 2024 opens the way for these synergies to enhance biodiversity and natural capital. Developers and funders of renewables are exploring ways in which clean energy development can be aligned with nature enhancement. This focus can help secure local community acceptance and planning permission for projects, create natural infrastructure resilience and, potentially, benefit from the emerging opportunities presented by the generation and trading of biodiversity credits.

Biodiversity net gain

A key factor in this trend is biodiversity net gain (BNG). A statutory environmental policy introduced in England under the Environment Act 2021, BNG requires that the natural environment is left in a measurably better state than before a development projects started. Specifically, new developments must achieve a minimum 10% increase in biodiversity compared to pre-development levels, ensuring projects actively improve biodiversity conservation and ecosystem health rather than just reducing harm.

BNG applies broadly and, since 2024, has covered both major and small developers. From May 2026, it will expand to include nationally significant infrastructure projects (NSIPs), such as large-scale renewable energy developments (pending legislation).

Developers must first prioritise onsite habitat improvements; if these are insufficient, they will need to secure offsite biodiversity units, either on land they own elsewhere or by purchasing biodiversity units from a third party. As a last resort, statutory biodiversity credits can be bought from the government.

Landowners and developers can monetise BNG units by setting aside land for BNG and entering into a legal agreement (either a section 106 agreement with the local planning authority or a conservation covenant with a responsible body). These agreements must be registered on the biodiversity gain site register. They aim to secure habitat improvements and must be in place for at least 30 years. In the 12 months to February 2025, statutory credit sales had reached a modest £247,416, but significant growth in this emerging market is expected, particularly as NSIPs come under the BNG regime.

Natural infrastructure resilience

Co-locating renewable energy infrastructure with natural capital developments can enhance natural resilience and biodiversity in several ways:

• Solar farms. Integrating solar photovoltaic (PV) infrastructure with agricultural land provides shade that can reduce water evaporation, improving soil moisture and crop yields. Solar PV farms managed for biodiversity can also boost bird populations and overall ecosystem health. Rainwater harvesting from solar-panel runoff can supplement irrigation, further supporting sustainable land use.
• Wind farms. Where sited on degraded land, wind farms can support habitat restoration efforts. For example, the Pen y Cymoedd wind farm in South Wales includes peatland restoration to boost carbon capture and biodiversity. Some Scottish wind farms also focus on peatland and habitat management.

Planning frameworks

The UK regulatory environment to promote the alignment of natural capital with renewable energy development is evolving. Developers must now consider:

• Nature Restoration Fund (NRF) and environmental delivery plans. These initiatives, proposed under the Planning and Infrastructure Bill, would require developers to integrate nature restoration and biodiversity enhancement into their projects. The NRF introduces the Nature Restoration Levy that allows developers to discharge environmental obligations by paying into the fund, simplifying the development process.
• Marine Restoration Fund (MRF). Due to be operational by the end of 2025, the MRF will provide industry-funded compensatory measures for the adverse effects of offshore wind developments on marine protected areas (MPAs). Measures include MPA designation or extension, offshore artificial seabird nesting structures, and predator reduction. The MRF is sector-specific, while the NRF is broader in scope.

These frameworks are intended to streamline planning consent while aiming to meet environmental and biodiversity targets, particularly for large-scale renewable energy projects.

Challenges remain in the planning process which need to be addressed to help realise the full potential of co-located natural capital and renewable energy developments. Effective spatial planning, thorough environmental assessments and BNG are essential to protect habitats. Public engagement through transparent communication and community involvement is also vital for social acceptance and sustainability.

Osborne Clarke comment

The synergies between natural capital enhancement and suitable renewable energy projects can offer a compelling model for sustainable infrastructure that supports environmental restoration and contributes sensitively to the achievement of the UK's ambitious targets for renewable energy deployment.

Renewables developers are increasingly recognising this potential in the design and development of their projects. "Sticks and carrots" in the evolving regulatory regime are starting to create momentum towards realising this potential.

Challenges do remain. These include uncertainty around how the market for biodiversity credits will develop, the additional upfront and operational costs and long-term responsibilities of implementing and maintaining nature enhancement projects, and the risk that nature enhancement could be viewed as a distraction by some investors from the main investment case.

However, with the increasing recognition of nature-based economic incentives, it is an ambitious but realistic vision that the integration of long-term nature enhancement will be seen as the gold standard of renewable energy development in the UK.

Tomi Agbonifo, a paralegal at Osborne Clarke, assisted in the preparation of this Insight.