Key Legal issues when considering a renewable energy project
Renewable energy projects can very
easily soak up time and money – paying
attention to some of the key legal issues
can save on both.
One of the first things to establish
before embarking on a renewable
energy project is the status of the land or
building which will be used, says Simon
Campbell-Davies, Head of Marketing
& Business Development of Red Kite
Law.
Questions which need to be asked
include who owns the land – it is not
unusual for land in farming families to
pass between family members without
documentation or for it to be unclear
whether land is held as a personal or a
partnership asset.
So, any land-related documents should
be found and checked – for example
the deeds, tenancy agreements and
loan agreements which may involve
security. If the land is unregistered, then
registering at an early stage may prevent
delays later in the process, suggests Mr
Campbell-Davies.
If a third party, such as a lender or a
landlord, has an interest in the land then
their permission for the project is likely
to be needed. “Also, check whether
there are any covenants relating to the
land or property which might restrict its
use other than for agriculture,” he says.
“You need to do some due diligence,
not only on their financial standing
by checking their accounts but their
reputation too – what type of business
are they - is there any bad press about
them, what do other customers say?”
Financial risk can be reduced by
insisting that deposits or other monies
paid over are held in a bond or backed
by insurance guarantees to cover
financial or other performance failure,
suggests Mr Campbell-Davies.
Option agreements are often offered
by developers to secure sites prior
to planning being granted but these
can tie the landowner or occupier up
unnecessarily as sometimes they are
simply a blocking procedure to stop
sites being developed by others, he
warns.
“Options can also be positive because
they formally bind the developer but be
wary – as you can be left languishing.”
So, consider time-limited options which
lapse and leave the land free if the
development does not take place by a
certain date, suggests Mr CampbellDavies.
For those considering a leasing or joint
venture development, knowing who
you are dealing with is once again very
important – are they in it for the life
of the project or are they developing
it to sell on? For example, many solar
developments are installed and then sold
to pension funds and other investors
once they are up and running.
Third party interests will also come
into play from an insurance angle – it
is important to check with any project
who is responsible for insurance both
during construction and once the project
is complete.
The farm’s current insurer may need
to be informed of work being carried
out by others on the holding and where
structures are involved it covers them
being materially altered, for example
by the installation of a roof mounted
solar scheme on existing buildings on
the land.
Any contracts, warranties, guarantees
and maintenance agreements should
be checked from both the legal and
technical angles, advises Mr CampbellDavies.
“Who will dismantle the scheme at the
end of its life? Many projects have a
fixed term in their planning permission
which often also requires the site to
be restored to its condition prior to the
installation, and there can be a lot of
concrete involved!”
If a contract guarantees to have a
scheme up and running by a certain
date, what penalties or compensation
are due for failure to meet such a date?
Given the digression of Feed-in-Tariff
rates it is important to make sure you
don’t lose out in this respect, says Mr
Campbell-Davies.
When it comes to establishing the
technical performance of equipment,
this should also be checked out by
qualified and competent independent
assessment, he says.
legal tips for landowners
•
Check the status of the land
– who owns it, is it legally free to be
developed with a renewable energy
project – who else might need to give
their permission?
•
Inform your insurer of what is
happening in relation to the project so
that any new risks can be taken into
account and/or passed to others
•
Who is responsible for health
and safety during construction?
•
Get an independent assessment
of the equipment involved to establish
whether it will perform to the promised
standard
•
How will you be compensated
if deadlines are not met?
•
Have the legal and technical
documents checked
The Red Kite Law team have
considerable experience and expertise
in all these areas and would be
delighted to hear from you if you are
considering such a project. Please call
01267 239 000 and ask to speak to
Partner Lucy Morris or Associate Alun
Price or email ruraladvice@redkitelaw.
co.uk