OPINION: Region is primed for a new solar farm boom
- Credit: Archant Norfolk
There has been a renewed surge of interest in large and lucrative solar energy projects in East Anglia – but landowners should be wary of the potential pitfalls says JAMIE SEAMAN, a land agent in the Norwich office of Brown and Co.
We are seeing renewed enthusiasm for large-scale solar projects in the area on the back of lower equipment costs, rising energy prices, some short-term grid capacity and technological improvements – coupled with the government’s continued drive for renewable energy production.
This is all quite exciting but there remain quite stringent requirements, and there is a switch in focus to large sites of more than 20 megawatts (40 hectares plus) allowing for greater economies of scale than in the previous boom running up to 2015. A 20MW solar farm should generate enough power for around 6,000 homes.
Apart from the need for capacity in the local network a site must be in close to proximity to a 33kV (kilovolt) line or substation. An 11kV line cannot generally handle the capacity and 132kV are generally too large for connection. Obviously the closer the better to a point of grid connection and it always best not to have to cross third-party land if it can be avoided.
On the back of renewed optimism there are numerous developers approaching landowners and before engaging with them you should ask at least the following questions: Who are they and what is their track record? And are they a site finder, a developer with backing (who will develop and sell on) or a fully-funded developer who will build and operate the site?
We would recommend avoiding a repeat of history where “fly by night” developers locked up many thousands of acres of land under exclusivity and option agreements with no real intention of developing and then cherry-picked the best, rendering many owners unable to discuss their site with another party. You should also be aware that any successful grid connection will generally be in the name of the developer, not the landowner, so take advice before signing this away.
The returns are still quite lucrative, although down from the £1,000-plus per acre rents of 2015. Generally we would expect rates between £750-900 per acre dependent on the site specifics. There can be extras for battery storage and it is quite common for the landowner to try and take a “top-up” rent based on the revenue generated from the site. These rates should be linked to inflation and tend to be on 30-year terms. The cost of solar installations has generally halved from around £1.4m per MW in 2011.
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Other pertinent terms to consider include:
• Confirmation of a contribution to professional fees.
• Local opinion and planning constraints (such as Areas of Outstanding Natural Beauty).
• Avoiding exclusivity until terms have been agreed.
• Decommissioning of the site and reinstatement (generally via an insurance policy or security bond).
• Tax implications, impact on future development potential, and practicalities for construction.
Jamie Seaman is a land agent and divisional partner in the Norwich office of Brown and Co.