Author: Barry Caslin, Teagasc Investing in renewable energy should be a logical first step to help further alleviate input costs and ensure a secure future for the poultry business. All businesses have costs some which you can mitigate against and some you can’t, but electricity is one base cost which can be reduced. Solar Photo Voltaics (PV) is one of a number of renewable technologies which will help us meet our renewable electricity targets RES-E for 2020. Ireland has set a target of 40 per cent renewable electricity by 2020. The majority will come from wind but wind will not help us fully reach our target. There is widespread expectation within industry that a Renewable Energy Feed in Tariff (REFIT) will soon be announced by government to support the development of large-scale (five megawatt MW) projects. This has led to what only can be described as a feeding frenzy among PV project developers who are pursuing suitable sites of 10 – 12 ha (25 – 30 acres) ideally which are within a short distance of a grid connected substation. There are also possibilities of roof-mounted PV arrays which may suit poultry or pig units with high electricity demand. Farmers need to be cautious in signing any exclusivity deals with potential developers and they should only do so if the terms are beneficial. In most situations an exclusivity agreement is not legally binding unless a letter of intent or memorandum of understanding has been included in the agreement.aabarry3

Options and lease agreements

Options and lease agreements should provide as much protection as possible for farmers. The following areas should be covered in such agreements: no developer in their right mind will seek an option agreement for any period of less than five years. Some developers are offering exclusivity agreements or letters of comfort to farmers for perhaps a one-year period. Furnishing a letter like this will not cost the developer anything. They are short one- to two-page letters with no legal advice on either side. They do not indicate any commitment from the developer that they mean business and they do not demonstrate that the developer has the technical knowledge to complete such a project. It would be extremely risky to rely on planning authorities or ESB networks on grid connection to give a turnaround decision within one year. This exposes the promoter to a very serious risk at the end of a one-year period in that the land owner may be no longer be agreeable to proceed while the developer may be carrying very substantial fees and losses with no right to build the project. A typical option agreement would run for up to five years and would give the project developer the right to enter into a 25-year lease once all consents are lined up. At the option signing, there is typically an agreed option fee, and independent legal costs for the farmer, which would typically be paid by the promoter. The presence of an option fee and legal representation keeps all concerned honest in terms of giving the site the proper time and attention needed to develop a solar park.aabarry2
  • Terms and conditions for making payments which include the timing of payments and any conditionalities which would occur if grid connection is somehow delayed;
  • Construction consequences for the farm business which refers to access to the land and likely implications for soil structure;
  • Maps and routes through the farm where cables will run;
  • Future site extension. This will normally be subject to further negotiation;
  • An access right to the land after the construction is completed. These sites could easily be vandalised and will most likely be fenced off with a lockable gate. The frequency and route of access will have to be negotiated between the developer and the farmer;
  • Site management and maintenance;
  • Responsibility for insurance and any legal costs;
  • Decommissioning of the project after the agreement period. This includes the removal and disposal of the existing panels together with the reconstitution of the land for agricultural activity.

Personal risk

There are three options available for development: lease, joint venture or self-development. Identify what you want before embarking on a route. Remember that even if you get planning permission, you don’t need to develop the project yourself. The planning consent has a value to it depending on size and other factors. Most farmers will opt to lease the land on a long-term agreement to a developer who is familiar with obtaining such planning permissions and power purchase agreements.

Long-term leasing

I am aware of some developers who are offering farmers a long-term lease on which the developer will engage with an agricultural activity. The latest Agri Taxation Review introduced a fourth threshold for lease periods of 15 years or more with a tax exemption for the first €40,000 per annum. If the developer has a herd number or is carrying out an agricultural activity then the farmer would be eligible for the tax-free income in such circumstances. It is important that such agreements are included in the lease agreement and that advice from an accountant is sought before finalising such agreements.

Is the land eligible for BPS going forward from 2015 to 2019?

This is a very common question which I am being asked. The Department of Agriculture is being very proactive on this and is currently preparing a dossier to present to DG Agri in the European Commission in order to get clarification on this.

Agricultural activity

Across Europe it is very often included in planning applications for solar PV farms that both the land between and underneath the rows of PV modules should be made available for grazing of small livestock. Larger farm animals such as horses and cattle are considered unsuitable since they have the weight and strength to dislodge standard mounting systems, while pigs or goats may cause damage to cabling, but sheep and free-ranging poultry have already been successfully employed to manage grassland in solar farms while demonstrating dual-purpose land use. Opportunities for cutting hay or silage, or strip cropping of high-value vegetables or non-food crops such as lavender or cereals are thought to be fairly limited and would need careful layout with regard to the proposed size of machinery and its required turning space. However, other productive options such as bee keeping have already been demonstrated. It is desirable that the terms of a solar farm agreement should include a grazing plan that ensures the continuation of access to the land by the farmer, ideally in a form that that enables the claiming of the Basic Payment Scheme. The general calculation for PV demonstrates that 25 per cent of the utilisable agricultural area is removed due to the presence of the panels.

Ground mounted

For ground-mounted PV systems it is crucial to soil test proposed development areas in order to indicate how the mountings will be made safe and secure. In a good deal of situations the S-shaped metal legs are pile driven, however in the very light soils or on very rocky sites other technology types may be needed. Warranty periods must be determined for ground-mounted PV systems.

Roof-mounted PV

Ideally PV arrays should be put on a new building, which should allow for weight and wind influences. In the case of older buildings it is advisable to use a chartered structural surveyor so as to assess the roof’s load-bearing ability and potential life expectancy of the roof. Roofs made from fibre cement and which are already more than 20 years old, are very unlikely to be suitable to secure a solar PV array which will most likely be there for another 25 years.

Roof collapse

In Germany and the UK, roof-mounted PV has proven to be a very popular choice for farmers, most notably those with a high electricity demand, such as poultry units and with grain drying facilities. In a worst-case scenario where your roof collapses with your PV array system in place, safety will be paramount. All suitably qualified competent installers will ensure that your electrical connection should simply fuse if the roof collapses. If incorrect fuses or cables have been installed, hotspots can emerge, which could generate enough heat to set fire to any flammable materials or fuels in the shed and cause an emergency situation. This would be  a very rare event with PV solar arrays but has been documented in several countries. The cause is inevitably always a faulty electrical installation.

PV insurance

PV insurance should cover any reinstallation costs and downtime but this is not the case with all insurance policies. Prior to installation, it is important to check the warranty on your farm building roof. The PV installation may invalidate this. Insurance companies in Ireland are moving in the direction of renewables similar to what’s happening in the insurance industry in the UK and mainland Europe.

Conclusion

At present there is no subsidy or support available for solar PV. In anticipation of a subsidy many developers are engaging with farmers and taking options on the most suitable sites for development. Developers will have to consider whether sufficient subsidy will be available when bringing forward projects.