Steps For Securing a Solar Project as a Developer
|Topic: new solar projects
|Read Time: 8 mins
| Landowner type:
Independent landowners | Institutional landowners
Are you in the process of securing a solar project as a developer? If you’re narrowing down potential sites, consider these points before optioning any land.
If you’ve been looking for a go-to guide on securing a solar project as a developer, we’ve got you covered. This detailed rundown will cover everything from planning permission woes to local approval and dispute resolution. Oh, and everything in between, of course.
An excellent relationship is always the best place to start when securing a solar project as a developer. But if you play your cards right (and can offer a competitive initial payment for the land in question), you’re far more likely to close the deal.
Now, let’s explore exactly how you can improve your odds of securing the perfect plot of land for your next solar farm development.
Things to Think About When Securing a Solar Project as a Developer
Planning permission and research
If you’re securing a solar project as a developer, planning permission is one of the major hurdles you’ll face.
Once you’ve assessed whether a site is suitable for solar development, you’ll want to look more closely at:
- Average sunlight
- The feelings of the local community towards new projects
And if a site gets a green flag for all of these points, you’ll need to wade into the planning permission minefield. Now, this isn’t quite as terrifying as you might think. However, developers must run applications for larger solar farms past Local Planning Authorities before construction occurs.
The number of applications for solar farms with a capacity of over 1 MW increased yearly between 2010 and 2015. However, the reduction of subsidies caused a significant drop in 2016 and 2017. While applications are slowly increasing, 29 solar farms have been refused planning since 2021.
Although around 20 of these will go to appeal, there’s no guarantee that local authorities will grant planning permission for these projects. It’s also important to note that planning permission for 23 solar farms was refused across the UK between January 2021 and July 2022 alone. So, you’ll need to be ready to appeal your project if it is outside an area with several existing projects.
A note on the removal of Renewables Obligation Certificates (ROCs)
In our book, it’s also important to consider how the removal of Renewables Obligation Certificates (ROCs) may impact your project’s profitability. Many developers are looking for far larger land areas to mitigate the loss of ROC income. This may impact how much cash you’ll need to set aside for option agreements and income payments during a project’s lifetime.
You can make up much of the income lost from this subsidy with improved technology. However, the new Contracts for Differences scheme is significantly less lucrative than the current ROC scheme. So, you may wish to use land from an existing project to save yourself the hassle of securing planning permission for a newer site.
If this interests you, think about landfill gas sites that are coming to the end of their life. These are often excellent sites for solar farms and give “new life” to land that’s otherwise tough to develop.
Getting a solid commitment from landowners
A project isn’t likely to go anywhere without a solid, legal commitment from a landowner. So, developers must draw up a valid option agreement that clearly outlines terms for reserving the land. These are typically signed by both parties and mean that the land is bookmarked for a project while the developer performs checks and tests.
Checks can take the form of:
- Wildlife Impact Assessments
- Feasibility studies
- Tests on solar irradiation levels
- Assessments on the surrounding land for shading issues
- Obtaining planning permission for the site
All of these factors can take years to figure out, and that’s why the minimum term for option agreements is typically around five years. However, option agreements can run for up to ten years for some projects as investigations often drag on.
Although most landowners wanting a project on their land will sign an option agreement, it’s worth sweetening the deal. Whether that’s with a great payment arrangement promise for the final lease or a larger upfront payment, it’ll keep a landowner on your side.
CLARITY is the most important thing to remember when getting a commitment from a landowner. Can you outline how long things may take, payment terms, and what you’ll carry out during an option period? You’re far more likely to establish a successful and fruitful relationship with a landowner. Plus, several developers may be looking to secure a particular site for a project. This is especially true if the land is ideal for solar development (flat and south-facing). So, the last thing you want to do is over-complicate the process and lose the landowner’s trust.
Getting approval from the community and keeping the project local
Where you can, it’s a good idea to keep the local community in your corner by hiring local contractors and community workers. We completely understand that this isn’t always going to be feasible. However, hiring local contractors and consulting with local businesses for construction work should be relatively easy.
- If you’re building a project in Wales, work with Welsh consulting and construction firms. You can even sign off your correspondence with the local language for an extra friendly touch.
It won’t necessarily make or break a project, but offering extra income to the local community will only make them view a new project more favourably. And that’s always worth getting on board with.
When it comes to local landowners, starting on the right foot and getting on a first-name basis with them is essential. This way, they’ll feel more comfortable approaching you about any issues that might cause the project to falter later. Plus, it’ll show that you have a genuine interest in the project (and who you’re working with). Just make sure that this interest IS genuine – most landowners can see right through developers who are after a quick buck or two.
So, keep your landowner in the loop of how the project progresses and ensure the local community is on board. Trust us when we say that this can save you a major headache down the line.
Respect the land (as it’s likely to work in your favour)
This probably goes without saying, but respecting the land you’re working on is essential. Solar projects are enormous and can take over more land than typical wind projects, so you must be extremely careful with equipment.
To avoid any disputes down the line, outline the potential impact on the land CLEARLY before starting.
Although it’s not a sure thing with a solar project, any site may experience:
- Soil compaction
- Increased erosion
- Increased runoff
- Potential alterations to drainage channels during the life of a project
These changes to the land are largely down to the clearing and grading that needs to happen to make room for large rows of panels. So, it’s essential to outline the acreage that the panels will reserve and how the panels may affect a landowner. This way, expectations will be clear before an option agreement is signed. Plus, any landowner you work with will know you respect their land from the start.
A landowner is likely to have a few questions about the impact on their day-to-day operations. For that reason, it’s also crucial to have the answers to these (and proof from other projects). It’s important to mention to a landowner that they can still use the land for grazing and farming. However, they should understand that the land use will be reduced for the entire option period.
In short, the more precise you can be about the day-to-day impact of the project, the better.
Avoid disputes by having open communication
As you’ve probably learned from what we’ve already discussed, having a good relationship with a landowner is vital to a healthy project.
If you’re an established developer and struggle to communicate one-on-one with landowners, it’s worth assigning them to a dedicated member of your team. Not only can this save you a lot of time during high-pressure periods, but it will quickly resolve issues that a landowner may have.
It’s also worth trying to get landowners involved in the site’s upkeep throughout its life. Doing this will make a landowner feel like an equal partner and encourage them to raise issues they notice day-to-day.
Open communication also makes you less likely to fall into a nasty dispute. As these can cost hundreds of thousands of pounds in the worst instances (up to £300,000 in some cases), a good relationship is worth its weight in gold.
Have conversations with landowners about their thoughts on developers
If you’re securing a solar project as a developer, there will be competition if the site is particularly promising. So, get in on the ground floor and talk to landowners about their views on developers who have already approached them.
You’ll want to be respectful and subtle when doing this. But it should give you an idea of how committed a landowner is to starting a project. If a project is already up and running with an existing developer, you may have an immediate “in” if the relationship starts sour.
Should a project be nearing the end of its lease, put yourself forward as an option to a landowner. The landowner may wish to have the project decommissioned at the end of its life, but they may want the project to change hands. If so, you can take ownership of the site at a decent rate.
Just be careful not to push too hard – overly pushy developers usually aren’t seen in a good light, so tread lightly.
Lay out a maintenance and decommissioning plan that will clear things up for the landowner
Landowners will always be worried about what happens once a solar farm is up and running. So, they’re likely to want a “lay of the land” about the construction, maintenance, and decommissioning phases.
The maintenance period for a solar farm should be relatively relaxed, as solar panels require little upkeep to function correctly. The site will require semi-regular cleanings and vegetation management to handle dust and potential shading over the panels. However, these maintenance tasks aren’t intrusive and won’t impact a landowner’s day-to-day activities.
But one crucial thing that leases can occasionally leave out is clear decommissioning terms (that should always be in writing). While decommissioning a project is technically a landowner’s responsibility, this task usually falls to the developer or current site operator. So, developers should always make their decommissioning plans as straightforward as possible to give landowners peace of mind. By getting a clear exit plan in writing, both parties will save a significant amount of money if there are any disagreements at the end of a project’s life.
So, set aside time to discuss decommissioning before signing the final project lease.
Don’t be afraid to showcase your portfolio and build trust from the get-go
In any landowner-developer relationship, there’s nothing more important than building trust. So, if you’re securing a solar project as a developer, you’ll want to showcase an excellent portfolio.
Of course, this only applies if you’ve previously run large-scale solar projects that you can demonstrate. But if you can show how financially viable previous projects have been, landowners are far more likely to sign a long-term contract. After all, there’s nothing better than solid proof.
And if you have a POOR reputation from previous projects, word about you will have already made its way around local landowners. You’ll want to remember this if you’re trying to kickstart a new project.
When securing a solar project as a developer, getting on a landowner’s good side is always the best place to start. If you pair an excellent working relationship with solid lease terms and a viable decommissioning plan, landowners will be even more impressed.
Securing a solar project as a developer will take a lot of work. After all, you need to find suitable land, lock it down with an option agreement, build the project, and keep a landowner sweet for around 30 years. However, with open communication and local support, you’ll have a far easier time during a project’s lifecycle.
If you’re seeking specific advice on securing a solar project as a developer, get in touch. Our expert team will happily guide you through the ins and outs of pinning down the most suitable land for your next project.
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