Since its initial boom in 2011, and despite subsequent issues with subsidies in the years that followed, solar panel electricity generation technology (known as solar photovoltaics (or 'PV')), continues to be one of the UK's most important renewable energy sources. With prices of solar panels falling and subsidies continuing - albeit changing every few years - it remains an attractive option for 'solar farm' developers and landowners alike. Solar PV is an option both for owners of land, and for residential property owners and owners of commercial buildings with suitable roof space.
But as a landowner, what are some of the terms of a deal that you might want to consider?
1. What is the structure of the deal?
Most agreements are structured by first granting an Option Agreement to a developer. This gives the developer time to conduct their searches and surveys, obtain planning permission and negotiate a grid connection with a District Network Operator ('DNO').
A landowner may be offered a fee for granting the Option, and the length of agreements can range from one year to several. Term extensions may also be required, depending on planning appeals or connection difficulties. The major point for landowners to note is that, during the term, they will be restricted in their dealings with the land in question, and may be obliged to help obtain planning permission or allow access to their land, amongst other requirements.
If at the end of the period the site is not feasible, then the Option should be drafted so as to allow both parties to walk away and any damage caused reinstated.
2. Lease Terms
- Term
- Rent
- Reinstatement and decommissioning
- Contracting out
- Other terms
3. Other considerations
It is possible for land and building owners to purchase their own panels and undertake the works with the help of a management company.
Prior to entering into negotiations with a developer, it would be wise for landowners to consult with their legal advisers, accountants and mortgage companies, to establish whether a deal is appropriate both for their financial circumstances and in terms of their legal title to a land or building.
You should be careful what you sign. If you are not sure what you are being asked to sign or what its legal effect may be, professional advice should be sought from a legal adviser.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.