In focus: Land Reform (Scotland) Act 2025 and potential consequences for renewable energy projects (Part 5)

Following our examination of new transactional risks in Part 4, the fifth instalment of this series on the Land Reform (Scotland) Act 2025 turns to potential sector-specific consequences for renewable energy projects.

The Act is not directed at renewable energy projects, and in several places reflects net-zero and environmental objectives. However, its application to large land holdings may have unintended consequences for landowners and developers assembling, funding or disposing of renewable energy projects in Scotland.

In particular, the requirement for publicly available land management plans, together with the new community buy-out and lotting regimes, could affect confidentiality, timing, deal certainty and project bankability.

How are renewables exposed?

Renewable energy projects are particularly exposed because they often:

• require large or composite landholdings, including land assembled from multiple ownerships;

• depend on long‑term control of land through options, leases, servitudes, wayleaves and other project rights, rather than outright ownership alone; and

• are programme-driven, with delivery tied closely to planning, grid connection, procurement, financing and subsidy milestones.

Those characteristics make the sector particularly sensitive to statutory delay, loss of confidentiality, changes in land assembly strategy and third‑party intervention under the Act.

Community engagement and project confidentiality

Land Management Plans

The Act requires the Scottish Ministers to make regulations under which owners of in-scope large land holdings must ensure that a publicly available land management plan (LMP) is in place (see Part 3 for a full breakdown of this requirement). The Act provides that LMPs must include details of the land and ownership structure, the owner’s long-term vision and objectives for managing the land (including its potential sale), community and tenant engagement, and how land management will contribute to net-zero, climate adaptation and biodiversity. For renewable energy land, that could bring commercially sensitive information into public view during the option, planning, financing or disposal stages, particularly where repowering, extension, grid, battery storage or co-location proposals are still being assembled.

There may be scope for the regulations to apply the LMP obligation to only some of the land within a large land holding, but the detail has not yet been set. Until the regulations and guidance are available, important questions remain about the level of detail required, the publication mechanism and whether any practical protection will be available for confidential development plans or commercially sensitive negotiations.

LMPs must also address community and tenant engagement. Well-managed engagement may help de-risk a project by building an evidential record of consultation. Conversely, where local opposition to renewable energy development is strong, the LMP process could add pressure to project timetables, influence landowner appetite for development, or create further material for objectors to scrutinise during planning and consenting processes.

Community Requests to Lease

Separately, the Act requires the Scottish Ministers to make regulations requiring certain landowners to give consideration to a reasonable request from a community body to lease their land or any part of it, including any building on it. This is not an obligation to grant a lease, but in the absence of regulations there is currently little clarity on how landowners are expected to demonstrate that a request has been properly considered, or how competing commercial commitments should be weighed.

This regime could still create process and contractual tension where land is already committed to a renewables project. For example, a landowner may need to consider and respond to a community lease request even though the relevant land is already subject to an option, lease, exclusivity arrangement, servitude route, access strategy or funder/security structure which restricts the grant of third-party occupational rights without the developer’s consent. In that scenario, the practical risk is not that the request necessarily overrides existing project rights, but that it may introduce additional correspondence, consent analysis, funder scrutiny or delay at a point when the developer may already have incurred material planning, grid or survey costs.

Lotting and land assembly

The Act’s new lotting regime also raises questions about the interaction between land reform policy and Scotland’s renewable energy objectives. Large‑scale projects typically depend on a complex web of rights secured over many years to enable access, construction, cabling, grid connection, operation and decommissioning. It remains unclear how these arrangements will work in practice if the underlying land is subsequently divided and sold in multiple lots.

Further uncertainty arises from the public interest framework for lotting. The Scottish Ministers may require land to be transferred in specified lots only where they consider that doing so is in the public interest, and the statutory test looks in particular to whether ownership in lots would be more likely to make communities in the vicinity of the land more sustainable. Separately, the guidance on lotting decisions must address public interest considerations including the desirability of securing a greater proportion of community‑owned energy. That may create a policy tension where a large commercial project is capable of delivering substantial renewable capacity, but a smaller or community-led proposal is perceived to align more closely with the community ownership objectives of the Act. These risks are likely to affect project bankability and could lengthen developers’ and lenders’ due diligence processes.

Over time, lotting may also increase costs for developers. For example, a single landholding anticipated to accommodate cabling or access infrastructure could, following lotting, be replaced by several separate ownerships. If existing rights are not sufficiently robust against successors, or if additional rights are required after lotting, developers may need to negotiate with multiple owners, increasing the risk of delay, inconsistent terms and additional legal expense.

Practical implications for landowners and developers

A preliminary point for both landowners and developers is that determining whether land constitutes a large land holding is, as it stands, easier said than done. As explained in Part 1 of this series, the threshold is generally 1,000 hectares or more, but the rules on single and composite holdings, the 250-metre contiguity test, and the connected-persons aggregation rules can be difficult to apply, particularly where ownership structures involve trusts, partnerships, corporate groups or a combination of personal and corporate interests. Important detail also remains subject to commencement regulations, secondary legislation and guidance. Until that framework is in place, parties may need to take a cautious approach and consider the potential application of the Act even where large land holding status is not certain.

For landowners, the immediate task is to understand whether the relevant land may be a large land holding, either alone or when aggregated with connected holdings. Owners should start by mapping ownership and control structures, then review option, exclusivity, lease, servitude, wayleave and access arrangements so that they understand where a community lease request, transfer prohibition or lotting decision could cut across existing commitments.

For developers, the Act points towards earlier legal due diligence where projects may involve a large land holding. Before incurring significant planning, grid or survey expenditure, developers may want comfort on large land holding status, community engagement history, any LMP, any registered community interest, any community lease request, any extant or expired lotting decision, and the landowner’s ability to grant and perform the required project rights without triggering transfer restrictions or cutting across existing consent, title or security arrangements.

Where a large land holding is involved, project documents may also need targeted, practical drafting rather than wholesale revision. A general contractual obligation to comply with statute may require the landowner to comply with its obligations under the Act, but it may not deal expressly with the project-level consequences of that compliance. In particular, options, leases, servitudes and ancillary documents should supplement any general compliance obligation by setting out how the landowner will keep the developer informed if an LMP issue, community buy-out process, request to lease or lotting decision arises; when developer consent or funder input is required before the landowner takes related steps; how confidentiality is protected; and how long-stop dates, termination rights and costs are to be managed if a statutory process delays the project.

From a funding perspective, lenders are likely to focus on timing, enforceability and exit risk. If the statutory regime can delay a transfer, restrict pre-contract activity or require a sale in lots, that may affect valuation assumptions, drawdown conditions and the evidence required before financial close.

How can we help?

Although the Act pursues wider land reform and community empowerment objectives, its practical effect on renewable energy projects will depend heavily on commencement regulations, secondary legislation and guidance. In the meantime, landowners and developers should consider whether affected projects, disposals or financing arrangements can be progressed, structured or documented with these emerging risks in mind.

If you own land subject to renewable development, or are a developer operating in Scotland, please contact Darren Thomson or another member of our Estates and Land team to discuss any concerns.

This article was written by Darren Thomson and Bryn Davies.