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Top tips to make solar deals a real success

But many projects never get off the ground, so it is important farmers consider what they need to know before signing on the dotted line.

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When a would-be solar developer comes knocking at your door, do not be dazzled by the size of the cheque book.

 

There is a limit above which the financial model will not work, so while it may be tempting to enter into a deal based on the highest rental offer, never do so without finding out about the strength of the developer’s covenant.

 

How long has the company been in business and what is its track record?

 

Have they screened the site properly at a practical level, assessing vehicular access and proximity to a grid connection?

 

If the nearest point of connection to the grid is some distance away, or situated on somebody else’s land, this usually makes the development unviable.

 

Just as important a point to consider is whether there any heritage designations on the site, or if the site is adjacent to some listed buildings which could limit the likelihood of planning.

 

It is worth noting the Solar Trade Association recently published its ‘10 Commitments’ detailing best practice guidance for solar developers. One point relates to ‘Avoiding conflict with food production’ so land grade is also now a major consideration

 

Ask for evidence of previous successful schemes. Can you visit the development and speak to the landowner? Ask about failed schemes and why they failed.

 

It is worthwhile asking the developer what level of development capital they have available for the proposed project.

 

When all the associated fees are accounted for, it can easily cost £100,000–£150,000 to fund a single application for a larger scale solar farm. And if planning permission is granted, what does your developer intend to do with the site?

 

It is common for a developer to sell the planning consent to a fund in order to finance the build costs, which on average are £1 million or more per MW, but does your developer have existing arrangements with a fund or are they planning to go out to tender?

 

A tender can be time consuming because of the due diligence required to complete the process, which can delay the build by some months.

 

Will the developer you have been dealing with stay on board to install and thereafter maintain the site, or do they aim to exit from the scheme and is there any implications for you? Is there a clear framework in place?

 

What is the developer’s relationship with Distribution Network Operators (DNOs)?

 

Have they dealt with a particular DNO in the past?

 

Having a good relationship is crucial to facilitating the grid connection process.

 

Scrutinise the timeline. In order for the developer to qualify for the highest level of payment and, in turn, the highest level of rental, sites must be producing electricity by March 31, 2014.

 

Taking into account the build time, the planning process and the many reports which need to be produced for a planning application, the timescale can be very tight. Does your developer have all the necessary experts and financial strength to move quickly?

 

There is currently a 20-week lead-in time for some equipment, so to complete a scheme by March 31, the switch gear, for example, will need to be ordered before the planning decision is made. Does the developer have the financial strength for this?

 

A full-site appraisal of all the potential risks to a proposed PV development is essential to minimise the risk of planning being rejected.

 

If you have already entered into an exclusivity deal but have seen no progress so far, consider whether you are able to break your contract for non-performance. Equally, has your exclusivity come to an end?

 

This is a growth industry and there are a lot of developers. It pays for landowners to make sure they have chosen the right partner so the scheme stands the best chance of reaching fruition.

 

Never be afraid to ask searching questions, the most pertinent of which concern the strength of the developer and proof of their past success.

 

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