How to make the most of solar farm prospects

Advances in technology mean that rural Yorkshire is these days a viable location for large scale solar farms – so yet another string is added to the diversification bow.

However, the scale and longevity of such schemes means that greater care needs to be taken to ensure an appropriate balance between benefitting from a new revenue stream versus the potential loss of flexibility for the next generation in the farming family. The stakes are high and the promoters and power companies on the other side of the transaction often have an agenda that is not neatly aligned with that of the farm business.

Currently the availability of grid connections and sub-stations is a limiting factor, putting some farm businesses are at a locational advantage relative to others; but assuming you are towards the front of that particular geographical queue, what to you need to do to make the most of the opportunity?

As many solar farms have agreements stretching over three or four decades, the starting point has to be your farm business succession plan. Do you have one? Is the next generation involved in the decision making about the solar proposal and have you sought advice on the potential tax position at such times as succession is likely to take place? You need answers to these questions before you can credibly evaluate whether the solar proposal makes sense to you, your family and your business.

In striking heads of terms, you need to pull several elements together at once. Who actually is the party on the other side? It is not always as clear as it might be at first sight. What do you get paid and when? Does the proposed agreement seek to lock you in even if the promoter encounters issues with their planning application or drags their heels concerning construction kick off?

On your side, legal detail matters. You need to be clear about relevant title deeds, mortgages, overages, access and easements. Any of these elements can present unexpected issues which could potentially compromise the solar scheme; early awareness means adjustments can be made or the scheme modified to accommodate.

Solar farms can be surprising heavy duty in terms of impact of construction footprint and the resulting infrastructure, so you need a clear view on who is responsible for restoring the land at the end of the contracted term and how to deal with possibilities such as the liquidation of the scheme promoter at some point in the decades ahead. There are solutions but they need to be negotiated at this point.

Inevitably in a column such as this, we cannot touch on all the potential issues but the overarching point is that substantial solar farms are essentially large scale commercial developments in a rural setting and so need to be treated as such. Pulling the family together to consider the various issues, in the right order, gives you the best chance to secure a deal that is right for your family farm business.

This article also appeared in the Yorkshire Post Farming supplement

Find out more about Matt Hayward and the Commercial Land and Property Development Team