Farming Matters: Landowners’ considerations amidst the rise in solar & battery development

Farmers in Lincolnshire have heard from agricultural business experts about important issues related to solar energy generation.

At our annual agricultural networking event, Farming Matters, a series of expert speakers took to the stage to give talks on the future of the agriculture industry, as big decisions are set to be made on plans for large solar and battery development projects on agricultural land.

Co-hosted by Wilkin Chapman, Duncan & Toplis and Brown&Co, the event at Harlaxton Manor was chaired by Andrew Holt, a partner in our dispute resolution team.

The speakers acknowledged that it’s been a significant 12 months for farmers and the agricultural sector, with a change of government prompting fresh plans for tax thresholds, and an influx of plans for large-scale solar developments on farmland — especially in the Lincolnshire area.

At least five large solar developments have been approved on Lincolnshire farmland, and there are reportedly as many as ten more ‘nationally significant infrastructure projects’ of this type prepared for the county in the coming years.

Katie Jacques, a senior associate in our real estate team, gave a presentation on the development of large scale solar and battery technologies in farming, offering guidance for farmers on what needs to be known about special purpose vehicles, reinstatement obligations and other terms. 

Special purpose vehicles (“SPVs”)

A separate legal entity designed specifically for acquiring assets, a special purpose vehicle is often introduced to mitigate financial risk for a developer. It involves separating a specific project from other projects and assets the developer may run, which in itself can cause concerns for farmers agreeing to lease their land for these solar and battery developments.

She said: “You might be dealing with a big name developer, but legal documentation almost invariably goes in the name of a special purpose vehicle, so the contract isn’t necessarily in the name of this big developer you can Google. That company name is often taken out of the equation.”

The fact that developers often take their options and leases in the name of an SPV feeds into the other areas Katie discussed. 

Reinstatement and indemnities: what should be a given right and the  potential risk?

A key aspect of agreeing to solar or battery development is the recognised contract term that farmland must be reinstated to its original form once the work is done, and the lease comes to an end. However, given the long timeframe attached to these developments, often running over the course of a number of decades, the documentation must take steps to secure this. 

Katie Jacques said: “The special purpose vehicle could potentially wind up before the land is reinstated, so there will be nobody there to claim the reinstatement costs back from.”

“The documentation should ensure that you have security options in place, and a pot of money to be put to one side at the relevant time for the landowner to access if the developer fails to reinstate. As time goes on, costs could change also for example statutory changes may alter the costs and requirement for disposing of the panels, they could be very valuable or they could be very expensive to dispose of (like asbestos is now), so it’s important to consider how those costs may should be reviewed from time to time.”

Grid connection reform: What does this mean for farmland?

With the government’s plans for grid reform, the speed the developers want landowners to sign up appears to be accelerating. However, it is important for farmers and landowners to be aware of all their options before signing on the dotted line.

“Deadlines are coming up and developers are really keen to get option leases in place quickly, but people need to be thorough,” Katie said. “Nothing comes without risk, but it is our job as legal experts to minimise those risks as far as possible and to ensure that our clients  are fully aware of what they are signing up to.”

If you’re a farmer or landowner concerned about these evolving issues, get in touch with our expert team of agricultural law experts today.