Managing Energy Costs on UK Farms: A Practical Guide

Energy is one of the largest variable costs on a modern UK farm. Electricity for milking parlours, grain drying, irrigation, and cold storage — combined with gas or oil for heating and processing — can represent a significant proportion of total farm expenditure.

Yet many farming businesses are on poor-value energy contracts, often because the renewal process gets overlooked during busy seasons.

The average UK dairy farm spends £30,000–£80,000 per year on electricity alone. Arable farms with grain drying operations can see similar figures during harvest. Yet research consistently shows that farms that actively manage their energy procurement save 15–25% compared to those that don't.

Farms have access to the same commercial energy market as other businesses, but there are some specific considerations:

Many farms benefit from time-of-use (Economy 7 or Economy 10 equivalent) tariffs that offer cheaper rates during off-peak hours. If your grain drying, irrigation pumping, or refrigeration can be scheduled overnight, these tariffs can deliver significant savings.

Farms with peak demand above 100kW will have half-hourly meters. This data can be used to identify consumption patterns and optimise operations to reduce peak demand charges.

Many farms are well-positioned for renewable energy generation:

• Solar PV — Barn roofs and open land offer excellent solar potential. Feed-in tariffs have ended, but export payments through the Smart Export Guarantee (SEG) still apply
• Wind turbines — Rural locations often have good wind resource; planning permission is the main constraint
• Anaerobic digestion — Farms with significant organic waste streams can generate biogas for electricity and heat

Milking parlours, milk cooling, water heating, and ventilation are the main energy consumers. Milk cooling alone typically accounts for 25–30% of a dairy farm's electricity use.

Key opportunities:

• Heat recovery from milk cooling to pre-heat water (can reduce water heating costs by 50–70%)
• Variable speed drives on vacuum pumps
• LED lighting in parlours and buildings
• Optimising milking times to avoid peak demand periods

Grain drying is the dominant energy cost for most arable operations, particularly in wet harvest years.

Key opportunities:

• Continuous flow driers are generally more efficient than batch driers
• Monitoring grain moisture carefully to avoid over-drying
• Scheduling drying during off-peak tariff periods where possible
• Maintaining drier efficiency through regular servicing

Heated glasshouses and polytunnels, irrigation, and cold storage create significant energy demands.

Key opportunities:

• Thermal screens to reduce overnight heat loss
• LED grow lights (significant improvement over HPS in recent years)
• Heat pumps for space heating
• Rainwater harvesting to reduce pumping costs

Begin the renewal process at least 6 months before your contract ends. Energy prices can be volatile, and starting early gives you flexibility to time your purchase.

Agricultural energy procurement has specific nuances — seasonal consumption patterns, multiple meters across different buildings, and the potential for renewable generation all affect the optimal contract structure. A broker with agricultural experience will understand these factors.

In a volatile market, the right contract length depends on your view of future prices and your appetite for risk. A broker can explain the current market outlook and help you decide between 1, 2, or 3-year contracts.

Water is increasingly a significant cost for farms, particularly those with irrigation. Water procurement can also be compared and switched, often delivering savings of 10–20%.

Our team has extensive experience working with farms across Hampshire and the wider UK. We understand the seasonal nature of agricultural energy use and can structure contracts accordingly.

Get a free agricultural energy quote or call 01256 844048.