Legal guide to considering a solar development on farmland

As more farmers turn to solar and battery storage development projects, these legal insights could prove very useful

The growing energy crisis coupled with the government’s plan to be carbon neutral has seen an increasing number of farming clients diversifying to solar and battery storage development projects.

Usually on schemes of this nature it is common for a developer to be granted an option to lease subject to receipt of satisfactory planning permission for the development.

Katie Wright, a partner within the agriculture department based in Wilkin Chapman’s Beverley office, summaries the key aspects that a landowner needs to consider when considering a project like these.

Length of the option agreement

From crop loss to tax implications, there are a number of points to consider

Option agreements are entered into between landowners and developers and essentially grant the developer an option to purchase or lease the land by exercising the right at any time during an agreed ‘option period’ in return for an ‘option fee’.

The developer will naturally seek an option period which is as long as possible to exercise the option. The landowner should consider carefully the length of time they are willing to tie up their land for. Also, often agreements can contain clauses whereby developers can extend the initial option period if planning permission has been submitted but the decision is awaited. In these circumstances it can be beneficial for landowners to negotiate a further option fee.

Use of the land and crop loss

Careful consideration needs to be given to the cropping schedule on the land and what would happen if the developer sought to exercise the option part way through a cropping cycle. The agreement needs to contain sufficient compensation provisions and also cover potential recovery for future payments such as green credits. Consideration should also be given to tenancy arrangements or contract farming agreements, as notice provisions may affect when works can begin.

Extent of the developer’s rights

The landowner needs to be careful to limit the extent of the rights being granted to the developer over the landowners retained land (the land not directly affected by the development, but which is owned by the landowner) so as not to detriment its future use. Solar developments involve many cables and wires, but consideration needs to given as to where these can be laid, so as not to affect the landowners development and future use of their retained land.

Tax implications

Upon the change of use of land certain tax reliefs may be lost so this needs to be considered carefully with your tax advisors prior to entering in to any such schemes.

Planning application

The developer will seek agreement from the landowner not to object to the planning application. The option agreement needs to be clear as to the finer points of the developer’s application such as the layout of the development and to consider and minimise the impact on any retained land to ensure that any planning application submitted is satisfactory to the landowner.

Reinstatement of the land upon completion of the lease

It is important that the lease contains sufficient reinstatement provisions and also the necessary surety and bonds to protect the landowner if something goes wrong.

Here at Wilkin Chapman, we have a specialist energy and renewables sector team based in all of our offices to assist you with specific requirements.

If you would like further advice on the above please give Katie Wright a call on 01482 398376 , email [email protected] or visit www.wilkinchapman.co.uk/sectors/energy-and-renewables