Helen Melling, senior energy specialist at Carter Jonas, says that landowners being approached by solar developers should seek professional advice in the first instance.
The market for solar energy development initially grew as a heavily-subsidised sector but 2016 saw the market stall following the closure of the governments Renewable Obligation & Feed in Tariff support schemes.
Since then, however, the technology that underpins the sector has come on leaps and bounds, increasing in efficiency and reducing in price. In addition, solar PV (photovoltaic) panels have become more reliable, meaning that maintenance is easier and cheaper, and their lifespan is much longer. Furthermore, their capacity to produce energy has been given a further boost with new tech such as tracking and bi-facial panels.
The longer lifespan of panels means that the cost of producing and installing the panels can be spread over a longer period (up to 40 years, rather than a 25-year period which was typical in the past).
All of this adds up to mean that large-scale solar now makes financial sense – even without subsidies – and is why the market is now awash with solar developers seeking grid connections and willing landowners to host projects.
A grid connection is still the key component required to unlock any development opportunity, and competition in the market means that landowners have to act quickly in order to mitigate the risk of any capacity being lost to competing sites. That said, advice should be sought on the terms being tabled before signing any documentation with a developer, in order to ensure that landowners have the best opportunity of securing market terms for any commercial arrangement.
The terms of the deal will be negotiated between the landowner and the developer, who will typically be looking for a lease that spans at least35 years. Land rental offers are generally on a rate per acre basis, index-linked annually, with some offering a percentage revenue share as a top up rent to help protect against rising energy costs.
Rental values have strengthened over the last 18 months on the back of increased demand and, whilst rates vary hugely depending on a sites size and location, offers upwards of £900/acre per annum are now achievable.
It is important that landowners are, however, aware of the additional value that a site may offer a developer if battery energy storage is co-located with the solar in future. Seeking professional advice early on will help ensure that adequate provision can be made in any agreements to capture this, whilst also seeking suitable comfort for items such as decommissioning.
The developer would normally be responsible for the restoration of the land at the end of the lease term and, during the lease, the developer may allow a landowner to graze sheep around the panels – and, in some cases, even pay for that service.
If you’re approached by a developer, we strongly advise that you take expert advice to ensure that you’re being offered a fair rent and reasonable terms.
Find out more by contacting Helen Melling on 07467 335587 or email@example.com.
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