Ownergy

Option agreements

Many solar farm developers are now contacting landowners and trying to secure options to lease land for solar parks

Should I sign an option for a solar farm on my land?

If you have a good site for a solar farm or solar park then there are several ways in which you can benefit - the main alternatives are shown here.

One of the options is to lease the land to a third party project developer, who will construct the solar park, receive the income from the tariffs and pay you a rent for the land as described here.

There are now many project developers scouring the country for good sites and trying to sign option agreements with the landowners. These usually prevent the landowner from dealing with any other developers for a period of time. Before signing such an agreement, the owner should satisfy himself that the developer has a commitment to complete the project.

In what is commonly known as a 'land grab', some developers are closing as many option agreements as they can in order to keep their competitors out. They may then cherry-pick the best ones to pursue and others would get sidelined. The problem from the landowner's perspective, therefore, is that his land may be locked up in a way that prevents it from being developed by anyone else (at least for the few months until the tariffs go down, and the project becomes no longer viable).

For this reason, we advise landowners whenever they can, to take the project to planning consent themselves. If they want to pursue a land lease option once they have consent, they can enter an agreement which obliges the developer to complete the project. With consent granted, landowners can also pursue other options where they keep a share of the project.

This does commit the landowner to some initial cost (and Ownergy often offers terms to share part of this). But if the project is later sold to a third party developer, these costs can be recovered (at a profit).

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If you have a good site for a solar farm or solar park then there are several ways in which you can benefit - the main alternatives are shown here.

One of the options is to lease the land to a third party project developer, who will construct the solar park, receive the income from the tariffs and pay you a rent for the land as described here.

There are now many project developers scouring the country for good sites and trying to sign option agreements with the landowners. These usually prevent the landowner from dealing with any other developers for a period of time. Before signing such an agreement, the owner should satisfy himself that the developer has a commitment to complete the project.

In what is commonly known as a 'land grab', some developers are closing as many option agreements as they can in order to keep their competitors out. They may then cherry-pick the best ones to pursue and others would get sidelined. The problem from the landowner's perspective, therefore, is that his land may be locked up in a way that prevents it from being developed by anyone else (at least for the few months until the tariffs go down, and the project becomes no longer viable).

For this reason, we advise landowners whenever they can, to take the project to planning consent themselves. If they want to pursue a land lease option once they have consent, they can enter an agreement which obliges the developer to complete the project. With consent granted, landowners can also pursue other options where they keep a share of the project.

This does commit the landowner to some initial cost (and Ownergy often offers terms to share part of this). But if the project is later sold to a third party developer, these costs can be recovered (at a profit).

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