Adverts offering earnings up to £20,000 a year for photovoltaic solar panels to be installed on the roof of a purpose built barn are highly tempting but farmers are well advised to seek professional advice before entering into a lease, warns Buss Murton Law LLP.
With its better total sunlilght hours, southern England offers the greatest opportunities for solar energy in the UK. And energy suppliers who want to sell the electricity generated back to the national grid are knocking on the doors of farmers and land owners offering them the opportunity to diversify and make some easy money.
But as Daldeep Jaswal, partner at Buss Murton LLP explains, it is vital farmers and land owners keep their guard up as deals for solar barns could be unfairly stacked in the favour of the energy companies.
Daldeep Jaswal comments: "Entering into a lucrative and environmentally friendly deal is an exciting prospect. It is particularly important, however, for farmers and land owners who require the energy company to construct the barn on their land and lease back the roof for their panels, to take account of a range of issues before they sign on the dotted line."
"Firstly, in some circumstances, a third party that has tie-ins with the energy company is employed to build the barn. This can mean that the farmer has no guarantees in relation to its construction. With a lease agreement obliging the owner to keep the building in a good state of repair, people need to be wary of their responsibilities. If the builder is in financial difficulty, for example, there would be no equivalent to the National House-Building Council to provide protection."
"Recent reductions in Government support for feed-in-tariffs could reduce demand and companies providing the services may struggle in this financial climate. These firms may also suffer because, although up until now the market has been quite stable, cheaply produced solar panels from China are becoming increasingly available and could have a destabilising effect."
"Twenty-five year lease agreements are usually agreed for the panels which can last up to 50 years. Some farmers may wish to keep the equipment at the end of the agreement but if the shelf life of any of the panels or cabling is limited they could seek through the lease to ensure its removal."
"People move on average every five years, so a 25-year commitment is substantial and could possibly make a property more difficult to sell. If this is a concern, farmers should seek a shorter term lease or consider solar panels on existing buildings."
And what if another company makes a better offer, prices of solar panels plummet or better technology exists in 5 years time – could farmers simply enter into a fresh deal?
"It’s unlikely that a farmer would be able to escape a solar barn lease," warns Daldeep. "Consumers could consider lodging a claim under consumer law that the terms of a lease are unfair especially where no advice was sought by the consumer but there is little protection under a commercial agreement."
Daldeep sums up: "Our overall advice to farmers and consumers alike is to carefully weigh up the long term benefits of a solar barn scheme and take advice. Solicitors specialising in this area can help consider and reduce the risks and significantly increase the chances of a better deal."
