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  • Overview

    Article first published in South East Farmer in May 2014.

    Investment

    The best energy development for you or your business will depend on whether you own or lease a building, farm or estate, whether there are any legal or practical restrictions and how the project impacts on your business. Wind and solar farms tie up land for up to 25 – 30 years, but make better use of low grade agricultural land. Biomass or anaerobic digestion plants create sustainable heat sources from farm and timber waste. The costs of ground and air source heat pumps can be offset by incentive payments and lower energy bills over a period of time.

    Risk

    The capital outlay for energy schemes can be prohibitive. For high cost wind and solar farms, the alternative is to lease land to specialist developers who bear the costs, keep the incentive payments, but pay a rent and/or provide a free or discounted supply of electricity.

    Developers commonly require an option over the land, to obtain the necessary consents before committing to a project. The rush to acquire land for the less risky solar farm has lead to problems with intermittent grid capacity, but the trend looks as strong as ever.

    What happens if the developer goes bust - will their funder step in, will they provide a financial bond to ensure that the project is decommissioned and land properly reinstated? Tenants may not be able to sublease e.g. roof space for solar panels. Farmers should be careful about tax consequences if an agricultural tenancy needs to be replaced by a commercial energy lease. These are just some of the points that should be considered.

    If an energy developer knocks on your door, resist signing up to any agreement until you’ve taken expert advice from a surveyor, and your solicitor has checked the legal position.

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Sue Lister
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Jargon Buster