A trend continues: rural landowners looking to host a renewable energy project are now more likely than ever to find not one but several interested developers ready to negotiate.
The challenge to secure the best deal is heightened by the long-term nature of the commitments expected by developers, being 80+ years in the case of most wind farms, for example.
We wrote in November last year about criteria against which competing proposals could be assessed by landowners.
Increasingly since then, Thynne + Macartney’s rural clients are adopting competitive “expressions of interest” processes to invite prospective developers to submit their best offers across a range of criteria. This allows a like-for-like assessment of the commercial terms of competing proposals before a preferred proponent is selected and negotiations begin on the detail of the legal documentation.
At the same time, other emerging issues in the fledgling regulation of renewable energy projects threaten to affect host landowner’s returns.
First, to address negative sentiment towards renewable energy projects, developers will likely be increasingly compelled, through regulation or their own sense of “social licence”, to financially reward not only host landowners but also their neighbours and the surrounding community. The more a developer (and ultimately project operator) must pay to others—for example, to meet planning approval conditions, in local government rates or to neighbours—the less it might be willing to pay in rent to the host landowner.
Second, the Queensland Government, regardless of the outcome of October’s election, will likely at some stage introduce a ‘financial provisioning’ scheme for renewable energy projects, requiring developers to contribute to a government-managed fund to cover estimated decommissioning and rehabilitation costs. At present, security for such costs is negotiated between landowners and project developers on a case-by-case basis but government intervention seems inevitable given the existence of a similar scheme already in place for mining projects.
Thynne + Macartney’s agriculture lawyers exclusively advise landowners in negotiations with renewable energy project developers and are ready to be part of the team that helps each of our clients to secure the best deal.
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