Rising demand for green energy is bringing a new wave of solar-related opportunities for farmers and landowners – but contracts need to be examined carefully.
Farmers are well placed to benefit from solar site demand and infrastructure upgrades mean that projects that have previously been thwarted by lack of grid capacity may now be able to go ahead, says Lauren Gibson-Green, of Strutt & Parker.
But it is vital that landowners put themselves in as strong a position as possible when dealing with a developer – right from the outset – because rental agreements can last for up to 40 years, explains Ms Gibson-Green.
“Contact details are often acquired via the Land Registry, which means enquiries don’t always go to the main decision maker, and even when they do, details about exactly what is being offered can be rather vague and somewhat speculative.
“Letters may suggest land is ‘suitable for a solar farm’ and ask that individuals sign an exclusivity agreement and/or letter of authority allowing them to apply for a connection to the local electricity grid.”
Landowners are being approached by developers or third party ‘site finders’ offering attractive deals in an attempt to secure sizeable parcels of land of typically 60-120ha (150-300 acres) to build large, up to typically 50MW arrays, which give developers economy of scale.
“Before agreeing to anything, it is essential to step back, think carefully about what is being offered and seek professional advice,” says Ms Gibson-Green. “It is all too easy to sign up to something that looks good on the outside, but then discover hidden caveats and costs.”
Some landowners have been offered a guaranteed, index-linked rent of £600/acre for 40 years, which may sound attractive compared with the £150-200/acre from a farm business tenancy. But Ms Gibson-Green says many solar rentals are nearer £950/acre or more.
“If it is the right option, avoid the temptation to sign up to the first person that comes knocking on the door. Landowners with suitable sites and close proximity of land to a local grid with available capacity are in a relatively strong negotiating position, so it pays to shop around.”