Renewable energy initiatives are becoming increasingly popular with landowners, particularly as the ventures are becoming more incentivised and usually require minimal landlord input once up and running – particularly in the case of solar. But while the benefits to being involved in such a scheme can be lucrative, they do come with an array of pitfalls that landowners, whether they are renting the land or taking it on themselves, should look to avoid.
As the renewable market continues to grow and the advancement of technology marches on, the profit from such schemes is likely to increase drastically. Avoid missing out on potential revenue by opting for a turnover rent which specifies a certain percentage of the income any schemes on your land make.
Major schemes such as solar farms need to be connected to the grid via a big cable that runs through adjoining land to the nearest grid connection. While this will run underground, make sure the route for such is specified and you do not grant general rights for cables to be run anywhere over your retained land as this could sterilise its future development potential. Developers will not want to build houses on land where there is threat of other exercising rights over it.
Even while another initiative is the primary project for your land, make sure you are considering any other options available to you to maximise the natural capital available. When renting out your land, don’t forget to reserve the right to utilise your land for any environmental credits it might be able to generate (for example nutrient neutrality or biodiversity net gain) so that it is clear to the tenant environmental benefits remain the property of the landlord to exploit.
If you are considering taking on a renewable project on your land, have a professional team look at what is being proposed before you finalise a deal or agree heads of terms for a scheme. At the very least, this should consist of legal, tax and environmental experts. Make sure they have the chance to review the deal and have their input as signing an agreement before getting advice can be more costly in the long run.
Agreements for renewable schemes such as solar farms and anaerobic digestion (AD) plants will eventually come to an end, with requirements often in place for the site to be restored back to its original condition. This is likely to be a costly process so make sure you are aware of what these requirements entail and that there is an adequate sinking fund for the landowner to resort to in order to pay for that restoration if the tenant fails to carry out its obligations in this respect.
The Thrings Renewable Energy lawyers consists of experienced specialists in all aspects of the built environment with many years of expertise acting specifically for landowners on clean energy projects, providing advice to achieve the best outcome for them and for their family or company’s longer term plans.
Download a PDF version of this guide.