What are the key considerations regarding solar options? Part 2
4 September 2024
Following our earlier article on key considerations to take into account when exploring a solar development, it should also be noted that beyond the option and lease there are likely to be additional documents to be entered into, including the following.
Planning agreements
As part of the planning process, which the landowner may be afforded the ability to approve the application prior to its submission – but more often only the opportunity to comment, local authorities are likely to require a planning agreement. Landowners are expected to enter into these, and specific wording is often adopted in order to both restrict their scope and protect the landowner. For example, provision tends to be made to only obligate landlords to enter into planning agreements provided certain factors are met; said factors include the developer observing and performing all obligations, the agreement being proportionate directly relevant and the planning agreement not becoming enforceable prior to the grant of the lease under which the land will be used for energy generation.
Sub-station leases, wayleaves and easements
As with a planning agreement, the landowner, as freeholder owner of the development site, is likely to be required to grant rights that the developer cannot. These are most commonly a direct lease of a sub-station site where the network operator requires a term of 99 years, meaning an underlease is not possible, or the grant of cable rights affecting the landlord’s retained land (which again the developer cannot grant out of their leasehold interest). A telecommunications operator or water company may however also require rights.
Many developers will seek an obligation on the part of the landowner to agree to enter into such lease, wayleave or easement as the network operator may require, on the basis that they typically have standard form documents. It is however possible for amendments to those documents to be made, and any developer should therefore be obligated to use reasonable endeavours to achieve such amendments. These could include:
- The receipt of open market consideration
- Landowner input on the location and depth of any service media
- The ability for the landowner to cross any service media
- The ability for the landowner to request the relocation of the service media.
It should be noted that where the developer does use reasonable endeavours but is not successful, such documents will still need to be granted in the form required by the network operator. Any relocation will also be at the landowner’s expense, and subject to indemnifying the developer for any loss of revenue from any associated operational downtime.
Direct agreements
Similarly, provision tends to be made in the option and lease to place an obligation on the landowner to enter into a direct agreement for the benefit of the developer’s funder. The primary purpose of this is to ensure that the funder will be given the opportunity to remedy a breach of the option or lease before the landowner/landlord can terminate, but the option may also require the landowner to agree to such amendments to the lease as the funder reasonably requires as a condition of providing the finance.
Contamination
Developers will often only be responsible for contamination that they bring onto the land and/or cause, and therefore will not stand liable for anything historic, even if they disturb it. Landowners will therefore need to consider whether or not there is any pre-existing contamination that could be disturbed by the proposed activities of the developer, including their initial assessment.
It is advisable for any apportionment of liability between the parties to be documented, and this is ordinarily within the option and lease. Such agreement will however be capable of being shared with the relevant enforcement authority should they take action in respect of contamination for which the other party has agreed to be liable.
Other
Of equal importance are the levels of option fee and rent, which may or may not include a top-up revenue and/or per megawatt rent for battery storage. We would however defer to the expertise of a rural surveyor specialising in renewable energy projects in respect of such matters and are happy to give recommendations if required.
The Birketts view
Embracing solar options is not just about taking steps to harness the power of our natural resources, but moreover it is about forging a sustainable future with not only legal rigour, but also foresight and thorough consideration. For a more in-depth exploration of these considerations, please get in contact.
Finally, keep an eye out for a follow up article on the different avenues available for proceeding with a solar option when land is subject to an Agricultural Holdings Act Tenancy.
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Simon Green
Sectors
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at September 2024.