Joint renewables project

Being asked to join a renewables project is a situation which is becoming more and more common.  You are a farmer who is looking to diversify or earn extra income on your farm or Estate and you have been approached by a developer to site some turbines or solar panels on your farmland.  This article covers some main points to be considered.

Do you have an Agent?  If not, it would be worth considering making contact with one to assist and advice on the negotiation of the rental and option sums to be agreed for the project.  Such sums can vary tremendously and if the developer is only offering a small option sum eg £100 for you to tie your land for an option period of 3 years, then you need to consider if this project is worth proceeding with, or could your Agent approach another developer who could pay more?  Obviously if you have already signed an exclusivity agreement with the developer then you would not be able to approach others.

Do you hold the title to the land?  This may seem a strange question; however some landowners think that they own the land and have farmed or used it for many years and when title to the property is investigated by the Developer’s solicitor they find that it is actually owned by another family member or a neighbour!  This would mean that the negotiations would then be made with this third party instead.  If your land is unregistered, it may be worth considering voluntary first registration at the Land Registry, but this is another topic!

Do you have a plan of the site?  Having a suitable plan of the site is important.  This is a matter usually for an Agent or Solicitor to deal with.  A plan will need to be to the right scale to be used at the Land Registry and will need to show not just the field, but surrounding features / locations so that the site can be easily identified.  It is surprising how difficult it can be to obtain a plan of the site and they can be costly to prepare.

Title issues.  Although you may hold the title to the property and all parties can be keen to proceed, there may be difficulties with your title.  These could be that a pipeline runs through the area where turbines are to be sited; there could be a restrictive covenant against the title setting out that there is to be no development of the site.  We have had a situation where part of the land had been already developed for a renewable project and the Lease provided that the Landowner could not grant other projects on their land to other developers.

What next?  Once the Option has been entered into by all parties, the Developer will then apply for planning permission to build the development whether it be a solar farm, or a wind farm.  This can take some time and the Developer will have arranged for the Option to provide them with rights to enter to survey etc in order for them to submit their planning application.  You may think that all has gone quiet, but it is likely that the Developer will be working hard behind the scenes.  You should have a provision that you will be kept updated.

During the planning process, the Developer may require additional agreements to be entered into to assist with planning conditions.  Once they have planning permission then the matter will arise up once more.   Unless the Developer is privately funded, they are likely to then seek funding to construct the development on the site.  Any funder will want to investigate the project, so although you may have already provided details on the site, these will probably be asked about once more, so that the funder’s solicitors can report on this to their client.  Only once all this is in place will the development proceed and then be constructed.

The Option will be usually exercised after planning permission has been obtained and then the parties will enter into the Lease.  Although a Lease will have been agreed as part of the Option Agreement, due to the time taken to obtain planning permission and due to funder’s solicitor’s requirements constantly altering it may be that alterations will need to be agreed to the Lease.

All this does take some time and such a project is not to be undertaken lightly.

If you need any further assistance, please contact Lucienne Sutton on [email protected] or 01244 312 166