In light of growing demand for renewable energy, we are often contacted by landowners who have been approached by solar companies looking to acquire new sites or extend current tenancy agreements.
Solar leases are typically for 25 years but landlords are being approached for extensions from year five or even earlier in some cases. Solar companies are offering anything between £2,500 and £5,000/MW as a one-off payment to add 15 years to a 25-year lease. In addition, solar companies often try to insert a clause in the renewal agreement whereby they will have the option to install battery technology on the solar site if they desire. However, if landowners agreed to the above-mentioned clause, then they could be missing out on up to an additional £3,000 per MW per annum (RPI indexed) for battery storage.
Likewise, where new solar sites are being proposed a similar additional rent of about £2,500 per annum should be factored in if a battery option is to be included. This is in addition to the £1,000 per acre per annum rent which is easily achievable for new solar sites. Moreover, its worth bearing in mind that our fees as agents are commonly paid for by the solar company so representation for tenancy renewal or creation can come free of charge. However, its not all sunshine and rainbows (!) as landowners need to be aware of the potential Inheritance Tax and Capital Gains Tax implications of letting the land for solar development.
It is clear that the need for clean electricity is not going to diminish and accordingly the UK will need to see the repowering of many of the existing installations, especially given all the infrastructure is already in place. Therefore, if you are contacted by a solar firm and require expert advice, please do not hesitate to contact our specialist Rural Professional team on 01392 908 137 or 01548 857 474.
