Published: Places & Faces

Date: April 2011

Author:  Jeanette Dennis, Consultant Agricultural & Renewable Energies

With the cost of oil ever increasing, and the effects of pollution damaging our environment, renewable energy is a topic that is currently in the forefront of many people’s minds. By using the earth’s resources not only can we help the environment, we can also save money, and indeed even make it!

Solar panels, also known as photovoltaic (PV) panels, have been seen on roofs for a while but you may have noticed many more installations over the last few months. The increase in number is directly linked to Government initiatives promoting the activity, with guarantee Feed-in Tariffs (FiTs) payable via the various electricity operators.  Once agreed, these tariffs are normally guaranteed for twenty-five years.

The solar panels used in photovoltaic power generation are composed of a number of cells containing a photovoltaic material, and due to the growing demand for renewable energy sources, the manufacturing of these cells and has advanced considerably in recent years.

As well as the small-scale domestic PV installations, farmers and landowners have been applying to use their farm buildings and farmland to install panels. There have so far been over 19,000 domestic and business applications submitted - the lure of guaranteed returns and lower power bills being a big draw for all concerned.

So if you are thinking of joining this group of individuals and businesses, and want to embark on any renewable energy initiative, (not just PV) what legal aspects do you need to consider?

If you are looking at a large scale or land based installation here are some  ‘top legal tips’ to help you.
·    Consider carefully any existing leases on the land on which the project is to be based. If you are a tenant, you must get the landlord’s consent, and vice versa, if you are the landlord, your tenant’s consent will be required.
·    If you own the installation site, consider setting up a lease for the site to an electricity operator if you do not want to run it yourself. However, beware of the Landlord & Tenant Act 1954.
·    Ensure that all easements (i.e. the ability to get the electricity off your land) are carefully considered. It is worth planning ahead in case any changes or negotiations with neighbours are required.
·    Consider how you structure the deal and ensure you limit your liabilities. For example, there are tax implications on such items as business assets.
·    In a joint venture, ensure that you record clearly who owns which asset. This will avoid any misunderstanding further down the road.
·    At the outset, investigate the cost of removing the equipment at the end of the 25 year period. Get guidance on a decommissioning bond, as this could be the solution.
·    Beware of the possibility of future business rates – try to pass this to the ‘tenant’ and make sure any decommissioning bond picks up any shortfalls. Plant and machinery installed on or after 1 April 2010 will be excepted until 1 April 2015
·    Again, at the outset of any agreement, clearly record who is to pay for any repairs, maintenance and renewals. Ensure you know who is responsible.
·    The Feed-in-Tariff that you secure is all-important – make sure you do your sums and work out all the financial aspects very carefully.
·    Finally but very importantly, for the larger installations, speed is of the essence. The Government has recently reviewed the Feed-in-Tariffs, and from August 2011 the pre-determined tariffs are due to be reduced. Smaller residential properties and plants under 50KW will not be affected by this change in tariff.

There are many aspects to consider if you want to go ahead with a large scale PV installation. But the good news is that once installed, the panels and equipment can operate for many years with little maintenance or intervention. Hence after the initial cost of building the site, operating costs are extremely low and the revenues generated can begin to offer profits and tax benefits in the short to mid term……and you’re ‘doing your bit’ for the environment. Good results all round!

If you would like further information on renewable energy legal advice please contact either Toby Kramers or Jeanette Dennis