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The government has committed the UK to achieving net zero by 2050 which means that energy from renewable sources and the infrastructure for its production and storage must play an increasingly important role in powering the UK, supporting the grid network and speeding up the replacement of fossil fuels.
As such, many landowners and developers are assessing ways in which to realise opportunities to generate often valuable income streams. You may be considering suitable sites for different or smaller schemes – solar farms, battery energy storage, anaerobic digesters, or perhaps one or two wind turbines or a biomass generator.
Whatever the nature of the scheme that you or a developer propose to install on your land, the same issues apply. You need independent advice on the commercial terms and the practical and legal implications of any developer’s proposal – the developer will be seeking to prioritise its interests; there may be some conflict between those and yours over the period of any scheme and the period can be for as much as forty years.
If it is your scheme you should take independent advice on the terms and conditions attaching to the contracts for the provision of the kit and the contractor’s installation works.
A developer will propose documentation which allows it to scope and survey the site, apply for planning permission and construct, operate and use the equipment e.g. solar panels, battery energy storage system or turbines and infrastructure – cables, access, laydown and construction compounds – with limited reference to you and your farming activities. You need to ensure that this documentation – exclusivity and option agreement and lease – is modified as necessary to safeguard against any unanticipated losses or costs, to procure that rights and restrictions to be given and accepted by you are reasonable and to ensure that any development/diversification by you in the future is not unreasonably prejudiced.
In the case of your own scheme you need to ensure that the site is capable both legally and physically to accommodate it and that the relevant supply contracts afford reasonable safeguards for your interests and long term investment – no “nasties” in the small print.
We would recommend that you consider with your accountants and in liaison with us the status of any proposed scheme in view of your concern to ensure that the land/farm and relevant family members benefit in the long term. This asset management process needs careful consideration – you need to take tax advice to cater for these issues and legal advice to document whatever corporate or trust schemes may be considered appropriate in view of the circumstances of your particular family.
Any scheme therefore needs a two tier approach – first, in the case of a developer’s scheme, advice on the commercial terms and the legal documents which will bind the farm over the long term or, in the case of your own scheme, advice on the legal and practical aspects and the relevant supply contracts; secondly, consideration of and advice on how the long term benefits which are to accrue should be managed effectively and tax efficiently for the family.
Embarking on a renewable energy scheme can be an attractive and rewarding project, however, the development process is not straight forward, and it is vital to seek advice at the earliest opportunity.