Small-scale energy production pays: Austria is a world leader when it comes to producing energy from renewable resources. Martin Davies discovers how its farmers are benefiting, and why UK producers could follow suit.(YOUR BUSINESS)

Austria's renewable energy credentials are beyond question. In 2005, more than 20% of energy used, and an amazing 70% of electricity, came from renewable resources.

There are several reasons for this. The country has to import 90% of its coal and oil requirements, and 80% of its natural gas. It has no nuclear capacity. The importance of energy security and the environment mean renewable energy has always featured.

Hydroelectric projects were first built in World War II to supply the war machine of the Third Reich. And Austria also has plenty of trees. Almost half the country's land area is woodland, mostly coniferous.

It's not surprising that Austria is at the heart of renewable energy technology in Europe. In 2005, over 11% of energy and 21% of heat production came from biomass alone.

But it didn't all come from wood. Crops and animal manures are also used to produce energy, an important diversification for farmers. With an average farm size of 34ha, additional income is needed to survive.

As part of my Nuffield Scholarship, I went to see what else has driven this renewable revolution and how farmers have become energy producers.

Small-scale energy production received a big boost with the 2002 Eco-electricity Act, which paid suppliers guaranteed feed-in tariffs for 10 years and compensated the regional grid operators to offset the higher prices.