The Pitfalls of Solar Farm Development for Farmers and Landowners

It is no surprise that solar farms generating guaranteed ground rents in the region of £1,000 per acre over 20+ years remain attractive to farmers and landowners. Growth in the field-scale solar market is currently running at 600% per year and a large number of developers are entering the market, bringing mounting competition for viable sites.

Here at Energy Assets, part of the EnergyMyWay Group, we are regularly contacted by farmers and landowners who have been approached by prospectors and pressured into signing exclusivity agreements in return for very favourable terms. Knowing how to avoid the common pitfalls, pushing forwards as quickly as possible, and maintaining control of the process gives landowners the best chances of success.

What is a Solar Farm Developer?

Solar farm ?developers? are not usually the party that will actually build and manage the solar farm. Rather, their main role is to achieve the necessary ?permissions? for a site, namely the grid connection offer, planning consent and option to lease. Only then do they sell the option to an infrastructure fund, which executes the lease agreement and pays the guaranteed ground rents to the landowner.

What are the Risks to the Farmer or Landowner?

  • The developer has neither the skills, experience nor sufficient capital to secure the grid or planning permissions needed to progress the site as a solar farm
  • Many are likely to have promised the landowner unsustainable ground rents to persuade them to sign the exclusivity agreement. However, if the ground rents are too high, the site will not offer attractive returns and the developer will be unable to sell it to an infrastructure fund, who then goes on to build and commission the solar farm and pay the ground rent
  • Some developers sign-up large numbers of potential sites in an area and then cherry-pick those they feel have the strongest chance of progressing. The other sites are then simply ?land-banked? indefinitely

However, once the landowner has signed an exclusivity agreement, he cannot go elsewhere. If the prospector does not then progress the site, the landowner will have forfeited any opportunity he may have had.

Energy Assets Will Help Reduce Uncertainty

To avoid these common pitfalls, landowners need to take specialist, independent renewables advice at the very beginning of the process, before they commit to any single developer. The Energy Assets team provides such advice, and helps guide landowners to the most suitable developer for their site, and ensure that the process runs smoothly and the landowner maintains control throughout.

Landowners must take a very close look at what is being offered to them. Moving fast to secure vital grid capacity, and avoiding negotiating from a position of weakness, is critical as other sites may be competing for the finite grid capacity in your area. Developments cannot proceed without permission to connect to the grid, and there are no prizes for second place once the grid is full.

Energy Assets have a highly qualified, complete and seamless delivery partnership in place, at any point in time:

  • An extended professional team covering the legal, tax and financial modelling issues that affect all parties
  • Credible and specialist developers, with proven track records in achieving grid connection and planning permissions in the solar farming industry
  • Infrastructure funds, who ultimately sign the option to lease, build the site, and begin payment of ground rent to the landowner

Expert Solar Farm Advice from Energy Assets

With changes to ROCs and Contracts for Differences (the Government tariffs for renewable energy) now confirmed for March 2015, time is becoming a major pressure in the solar farming industry.

If you are a landowner and would like expert help in realising the large scale renewable energy potential on your farm, the Energy Assets team can help you.

Please contact Hugh Taylor in confidence by email or call 01993 830571 or 07979 647294.

Hugh Taylor

By: Hugh Taylor

Hugh is an expert on utility-scale renewables development, particularly solar farms. He is always happy to speak to farmers, landowners and their agents in confidence about potential renewables opportunities.