Renewable Energy Leases
Renewable energy leases allow landowners to lease their land to developers for the installation and operation of renewable energy projects, such as solar panels or wind turbines.
It is imperative that landowners seek legal advice at a very early stage of negotiations with any renewable energy developer. Due to the complex and long-term nature of the arrangements, landowners need to ensure that their interests are protected and that there is clarity in the agreement reached by the parties.
Further, once some documents are signed by the parties, it may be that a landowner inadvertently agrees to a term that is not in the best interests of the landowner, but also restricts the landowner’s ability to negotiate better terms in the future.
The following are some key aspects of renewable energy leases that should be given particular attention when considering whether to enter into an arrangement with a developer:
Land Use and Access: clear and appropriate legal controls over the developer’s use of and access to the land should be established, especially in respect to any development and construction activities, to ensure that the developer manages the land appropriately but also to ensure the landowner can continue farming operations.
Rights of Access: it is important to ensure that the landowner retains the right to access and utilise the land for farming operations as well as activities associated with farming operations.
Rates and Taxes: the carrying out of a renewable energy project on the whole or a significant part of the land may cause a rise in rates and taxes. The landowner should ensure that the developer assumes responsibility for any increases in rates and taxes.
Insurance: the presence of energy project infrastructure on the land may lead to higher insurance costs. The landowner should ensure that the developer is responsible for payment of any increase in insurance premiums, but also that the necessary insurances are in place by the developer in respect to any risks associated with the infrastructure.
Rent Review: a rent review clause should be implemented to ensure that the rental income received from the developer reflects changes in market conditions over time and to ensure that the rent remains adequate and competitive during the term of the lease.
Decommissioning of the Project: the landowner should ensure that the developer is obliged to decommission the project (i.e. remove infrastructure and dispose of waste) and rehabilitate the land on conclusion of the project.
There are many other terms of renewable energy leases that should be considered before finalising any agreement. If you require assistance in negotiations with a developer or have queries regarding renewable energy leases generally, we can assist.