Solar and battery projects provide landowners with exciting opportunities. However, it is important for landowners to carefully consider the impact on their land.
Demise
The rights granted to the developer under the option and lease could sterilise future use of the land and it is therefore important for landowners to consider limiting the area over which the developer has rights, especially if the landowner has plans for developing their neighbouring or adjoining land.
Schedule of Condition
The installation of solar panels involves works, which may disrupt the condition of the land, and in particular the soil.
A landowner may wish to consider preparing a Schedule of Condition before a Lease is entered into to act as evidence of the condition of the land and soil prior to installation. A Schedule of Condition can, amongst other things, include a set of photographs that would be annexed to the Lease. The Schedule of Condition acts to benchmark the state of the property with the effect that, under the Lease, the developer would be required to repair and reinstate the property to the condition as shown in the Schedule of Condition.
Lift and shift
A substation will be required to house the switch and transformer. It is important that the substation is not located in an area where it will cause disruption, interfere with rights or use of the land.
A right to relocate the substation or cabling, also known as a lift and shift clause, may be appropriate, depending on the circumstances of the transaction. Lift and shift would enable some flexibility and future proofing should a landowner wish to develop land in future. However, it can be extremely expensive as the relocation costs would be borne by the landowner.
Decommissioning
Decommissioning is the process undertaken at the end of the life of a solar farm, to remove equipment and return the land to its original condition.
Reinstatement can be expensive and developers are often new companies without an established covenant strength. It is therefore important to negotiate a form of security (e.g. decommissioning bond) to ensure that the developer can carry out its reinstatement obligations.
The amount of the decommissioning bond is usually determined by a third party surveyor, and the landowner can call on it to cover the cost of decommissioning should the developer become insolvent or fail to comply with its obligations.
Whether security is put in place will come down to negotiations between the parties, However, decommissioning bonds are typically reviewed between year 10 and 20 of the lease term.
Get in Touch
Please do get in touch with Clare Regan at clare.regan@mfgsolicitors.com or Lucy George lucy.george@mfgsolicitors.com to find out more.
Comments