Choosing a Solar Farm Developer: What to Consider

Topic: new solar projects Read Time: 11 mins
Landowner type:
Independent landowners | Institutional landowners
Energy: Solar
Back to Blog

Are you in the process of choosing a solar farm developer for a new project? If you need to figure out who’ll serve your site best, follow along as we explain everything you need to know.

If your land is suitable for solar power, several developers are probably reaching out to host a project there. But with these options comes a big decision – choosing a solar farm developer you want to work with (and feel confident about). And if you’re not sure where to start, this go-to guide has got you covered. In this rundown, we’ll run through a lot of different considerations, including:

  • What a solar farm developer is
  • Why you might want to work with one
  • The pros and cons of working with a developer
  • What a solar farm developer does
  • Things you should think about before choosing a solar farm developer

Let’s get right to it, as we’ve got a lot to get through.

If you’re entirely new to renewable energy, you may wonder what a solar farm developer is. In simple terms, a solar farm developer is a company or individual who builds and installs solar projects. These are typically large-scale projects (we’re talking multiple megawatts in size) that usually fall under “utility-scale solar.” These are solar farms specifically built to supply electricity to the Grid to run homes and businesses across the country.

A developer will be responsible for several things (which we’ll cover in more detail later on). However, their primary responsibilities are acquiring land, securing financing, setting up construction, and handing over management to a site operator if they are not acting as site operators themselves.

While you don’t strictly NEED a developer to host a renewable energy project, it’s undoubtedly the easiest option.

As a landowner, your options for having a project on your land are:

  1. Working with a developer
  2. Self-developing a site and running the project independently (including financing the project).

This is no surprise, but self-developing a project can be difficult and requires an enormous initial investment. Many landowners can cover this or fund a project through external investment or bank financing. However, not all landowners are willing to shoulder the burden of setting up the site and taking a financial hit while the project recoups its investment.

Of course, self-developing a site has significant benefits if you have the funds to do so. The main advantage is that you’ll reap all of the profits from the site once the initial investment is paid off. So, you’ll need to weigh up whether the extra time and investment are worth the potential reward.

But you’ll need to know that developing a solar project is incredibly hands-on. From securing finance to applying for Grid connection and planning permission, there’s a lot to do before your project is even up and running. For that reason, you’ll need to buckle down if you plan to self-develop. However, you won’t need to enter into option agreements or complicated leases to secure your land—and that’s because you already own it.

As we’ve briefly mentioned, working with a developer has its pros and cons. These mainly relate to time, effort, and money. But let’s examine those pros and cons in detail to decide whether you want to self-develop or outsource that responsibility to a developer.

Setup costs aren’t down to the landowner

One of the main reasons for choosing a solar farm developer is to remove the entire financial burden of setting up a project. In fact, working with a developer means you’ll get paid a rental fee per acre for leasing your land.

As the average solar farm costs around £375,000 per megawatt-hour (MWh) of electricity produced, NOT having to shell out is a huge benefit. This applies to large-scale solar farms, but smaller community farms still cost around £500,000 to set up.

And because the setup costs aren’t yours to bear? You’ll be able to sign an option agreement, receive a fee for leasing your land, and hold tight while your developer sorts permits and permissions. When the project is up and running, you’ll receive rent based on the payment arrangement you choose. So, the finance side is incredibly hands-off (unless you choose a payment arrangement calculated based on output).

It’s virtually risk-free

Okay, so there’s always the risk of some land damage if you have a large project on your land. But as you don’t need to pour money into starting the project, working with a developer is minimal.

For example, if adverse weather breaks panels, you won’t be responsible for replacing or fixing them. As monocrystalline panels can be costly, this is a huge cost you’re dodging if you work with a developer.

Although you might take a hit with a turnover-based or hybrid rental agreement, landowners with fixed arrangements won’t see any changes to their payments. Over the course of a lease, you’ll probably pull in a significant figure from rents (as they run for upwards of 30 years).

Developers are experienced

Landowners new to renewable energy probably don’t have much experience developing solar projects. But the developers wanting to lease your land will have done this countless times.

This isn’t always the case, as new developers may approach you with a smaller body of work to prove their capabilities. However, most large-scale solar developers will have a portfolio of successful projects you can review.

Not only will they provide you with proof of finances for a project, but you’ll also be able to see their current projects (and how they’re faring). If you’re anxious and unsure about leasing your land, working with an experienced developer should put you at ease.

Plus, their experience will mean that they’ll construct the project as quickly as possible. They’ll already have construction teams and links with local authorities and may have applied for Grid connection in advance. This proactiveness will get money into your pocket quicker than going alone.

You can carry on with your usual activities

One major advantage of using a developer is that you can essentially continue with your usual activities. Construction will happen around you, but the solar panels will take up less of your land than expected. So, you should still be able to farm or tend to your land during construction.

The only consideration here is that some of your land will be blocked off for the project. During the option and lease period, you won’t be able to make changes to this land.

A solar farm developer checking the solar farm plan

You’re unlikely to make as much income from your project

While the initial investment for a project can be huge, NOT choosing a solar farm developer means you get to keep all the profits. If you can shoulder the costs (and stresses) of self-development, the payouts down the line can stretch into the millions. However, if you choose this route, you’ll need to ensure that you can secure funding, repay investors, and manage the site.

The decisions about the project won’t be in your hands

Although many landowners are happy to have a hands-off experience, you might feel “out of the loop” with decision-making. And that’s mainly because the decisions won’t be yours to make. If you work with a developer, everything from construction to finance decisions will be theirs. Plus, the developers will be looking out for their financial interests ahead of yours. So, they may choose to set up Power Purchase Agreements (PPAs) to secure reliable customers for the energy the site produces. While this is good, developers can sell these PPAs for less than market value.

They can be inexperienced or the relationship can be poor

You’ll rarely encounter a seriously inexperienced developer, but it does happen. If they don’t have a solid portfolio, they might make mistakes during the project’s lifetime that can be detrimental. Most developers are professional and cordial but others may be slightly too busy to answer your questions. As a result, you may rarely deal with them personally, which can make you feel out of the loop.

When choosing a developer, you need to ensure they have time for you. Answering questions about leasing your land, creating option agreements, and securing contracts should be standard for them. So, don’t let them make you feel like an annoyance as you’re talking through terms.

Solar farm developers arguing about a solar farm contract

A solar developer does many things, but they’re mainly responsible for:

  • Doing site scans and carrying out feasibility studies
  • Drawing up option agreements and contracts
  • Securing adequate financing for the project
  • Seeking planning permission
  • Installing solar panels and monitoring equipment (with a construction team). This involves finding the most competitive prices for the panels and mounting equipment.
  • Negotiating contracts with off-takers
  • Keeping the site running smoothly (usually with the help of a site operator)

If you need more clarification on what YOUR developer will be responsible for, it’s always best to ask them for a rundown of their duties. Any good developer should be happy to discuss this with you in detail.

Past the construction point, the developer will rarely be a landowner’s first point of contact. Once the construction contract is complete, the operational contract is passed on to the site operator if different from the project developer. From here, landowners will directly raise any concerns or queries to the site operator.

One of the most important things to consider when choosing a solar farm developer is who you’re actually dealing with.

It’s important to avoid middlemen where you can, so make sure you can track your solar developer and know exactly who you’re working with. Some developers employ middlemen who offer a very appealing contract but ultimately leave you with less potential income on the table.

To try and mitigate this, ask the developer to run through their finances and offer a clear idea of what you’re getting. It’s also always worth prioritising established developers who can show you a varied portfolio. This way, you’re more likely to see a pattern of suitable sites and aren’t taking more of a chance.

A farm owner checking a solar farm developer's background using an ipad

However, smaller developers might seek slightly better payment rates, so bear this in mind. Larger solar developers don’t have as much to prove and lean on their established brand name rather than offers of high payments. Additionally, some developers have experience with small or medium-scale solar but don’t have much experience with large-scale operations. Conversely, some only work with large projects, not smaller ones. So, you’ll want to make sure you’re choosing a developer that suits the project size you’re getting on your land.

Income should be a significant consideration for any landowner choosing a solar farm developer. Solar developers don’t technically need to follow any professional standards. Instead, they’ll approach landowners and attempt to get the best deal possible for renting their land. Realistically, the better the deal a developer can get, the more they’ll make from the project.

Most developers offer an option agreement to secure your land right at the beginning of a project. At this stage, they’ll have done a simple desktop study on the site and know it’s suitable for hosting solar panels. However, if your site is close to ideal, you could push for a large upfront payment during the option agreement period.

Photo of GBP coins

Some developers tend to pay below market rate for the long-term lease, while others offer non-negotiable terms. But in our book, every plot of land is different and should be treated as such. So, it’s always worth discussing the lease terms for both the option agreement and the final lease to get a more bespoke contract. At the end of the day, the main thing is to make sure you’re getting a fair market rate.

Now, a site operator usually handles the day-to-day running of a site. However, a developer should always aim to keep the site running as efficiently as possible during its lifetime.

It’s not always possible to track this, but you can ask yourself things like:

  • Are they willing to replace broken panels quickly?
  • Do they perform regular maintenance checks to keep the project running smoothly?
  • Is the site operator aware of the ins and outs of the site?

Having a developer willing to maximise profit by keeping the site in good condition is worth their weight in gold. After all, landowners not on a fixed rental contract will lose income if the site is down for maintenance. So, problems should be fixed as quickly as possible.

We’ll be the first to say that a good relationship dynamic is essential for any project. You’ll want to know whether the developer comes across as aggressive or whether they’re more flexible and open. If they’re aggressive and pushing for a deal from the outset, they’re unlikely to change their tune at any point. It’s also worth knowing whether the developer treats you more like an equal or whether they try to avoid speaking to you. This will say a lot about how the project will operate during its lifetime.

picture of a solar farm

Experience matters when mounting a solar project. So, it’s a good idea to ask for references on previous projects that have gone well. If they have entire portfolios, that’s a great sign that they know how to finance and set up large-scale projects. But if they have nothing to show they’re experienced, you’ll naturally want to tread more carefully.

You can’t skip past proof of finance before signing over your land. As mentioned earlier, solar projects are costly to set up, and developers can rarely fund them alone. Whether they choose angel investors, bank financing, or other means, you’ll want clear proof of their plans. Don’t be afraid to ask about their plans for funding the project (and proof that they’ve secured this before signing a lease).

Grid connection applications stall a LOT of solar projects. By applying for connection right after the option stage, your developer is far more likely to get a successful project running quickly. And with Grid backlogs reaching the 10-year mark, it’s a serious consideration. You may want to discuss this with your developer.

In the solar industry, PPAs are a standard part of the running of a large-scale solar project. They are essentially a plan to sell energy to an off-taker, who is the “customer” that takes the energy produced by a project and sells it on.

Although landowners aren’t privy to these PPA agreements with a fixed payment arrangement, they’re worth enquiring about. Equally, having a PPA in place can greatly benefit a landowner, as it lets you accurately forecast your income. Plus, having a guaranteed customer for the energy a site produces doesn’t hurt.

Before choosing a solar farm developer, you’ll want to do the following things to set yourself up for success.

  • Talk to experts like solicitors and land agents to understand your land’s worth. You can also work with independent accountants to better understand how much you should be getting in rent.
SiteScan GIF

Compare the rents at hundreds of wind farms across the UK.

Access the best contractual terms written by the UK’s top solicitors to attain your ideal lease

100% of the landowners that we work with increase their rent negotiation offers

  • Check your developer’s credentials and financial sourcing to ensure you’re comfortable with them.
  • Get an idea of their approachability. Are they willing to discuss their concerns with you, or are they dismissive?
  • Discuss the details of your rental payments and how your land will be impacted during the lease’s life.
  • Ask whether tenants are expected to change during the lease’s life. Although this is hard to predict, it’s unlikely that a site operator will stay with the project for its entire lifetime.
  • Does the developer offer support post-installation? Any good developer will provide maintenance, monitoring, and troubleshooting.

As you can see, choosing a solar farm developer is a complicated task. But with the correct information, you should be able to make an informed decision that suits you. Realistically, if your developer is financially sound, willing to answer your queries, and has a decent portfolio, you’ll be in a solid position to move forward.

If you’re still concerned about choosing a solar developer for a new project, get in touch. Our expert team will happily guide you through the process and give you a few top tips for securing the right developer. We can even compare your potential project to similar sites nationwide to ensure you get fair rental figures for leasing your land. So, what are you waiting for?