Solar and Farming – a natural balance

Many farmers are considering the installation of solar panels to reduce energy bills and remain profitable. However, discussions to extend the ban on solar farms to cover Grade 3b classified land may initiate a decline in solar popularity.   

Grants and subsidies

The UK is committed to a net zero carbon emission target by 2050. As a free and renewable source of energy, solar can play a key role in meeting UK targets for renewable energy and reducing carbon emissions. Solar is also comparatively popular to other sources of renewable energy as it is less noisy and visually disruptive.

In its Energy Security Strategy (published 7 April 2022) the Department for Business, Energy, and Industrial Strategy (BEIS) highlighted its support for co-located solar. This means that the use of solar panels on agricultural land, installed in a way to maximise efficiency of land use, is likely to be encouraged. Research has shown that agrivoltaic farms (where solar panels share fields with grazing animals and crops) can be beneficial for both the land and livestock. In particular, there are several examples of sheep grazing effectively alongside solar panels, which therefore uses the land to maximum efficiency.

The Spring Statement 2022 demonstrated further support for solar, by extending the VAT relief for the installation of energy-saving materials (ESM). VAT will continue at a zero rate for a further five years.  

However, government policy does not always support solar. The previously available Feed-in Tariffs (FITs), Renewable Obligations Certificates Scheme and Levy Exemption Certificates (LECs) have all now been withdrawn and since 2017 solar farms have been operating in the UK without subsidy.

While the reduction in grants and subsidies and talks for expanding the planning restrictions does not suggest growth for solar farms, there are clear examples where land has been used effectively alongside solar. This compromise between protecting land for growth and the need for more renewable energy sources may be the future for solar farms.

Agrivoltaic Farming

There are several further benefits to agrivoltaic farming that go hand in hand with maximising the efficiency of the solar panels and land use. Firstly, the solar panels protect any crops below from hazardous weather conditions such as heavy rainfall and/or heatwaves thus making the crops more productive. Agrivoltaic farming can also reduce water use by lowering evaporation which increases the solar yield by helping regulate the temperature of the solar panels by cooling them down.

Furthermore, there are government grant opportunities for landowners and farmers from diversification and the land can be used to its utmost revenue potential. 

Grade 3b classified land

The Best and Most Versatile Land (BMV) is land that falls within the Agricultural Land Classification (ALC) Grades 1 to 3a.

Grade 3b land is land that can produce moderate yields of crops, such as cereals and grass, and a lower yield of a slightly wider range of crops. Currently, Grade 3b land is largely targeted for solar farm development.

There have been recent discussions to extend the BMV definition to include Grade 3b land. This would create a negative planning presumption against solar across 41% of land in England which would drastically reduce the development of solar.

The Department of Environmental Food and Rural Affairs Committee have promised a more balanced view regarding solar farming in the UK. At present the stance is that 3b land will remain usable for solar farms, however, they have made it clear that land should be used for “best use”.

While a blanket ban may not be introduced any time soon, there remains a solid stance on ensuring that land is used for the best possible use. The cost-of-living crisis is putting ever more pressure on the Government to ensure that UK farming continues to be a growing market and so the trend towards solar may decline. 

Overview of ground-mounted solar projects

Ground-mounted solar farms can be built relatively quickly and are completely renewable. They generate power for up to forty years and can work efficiently even in the UK’s colder and wetter temperatures. Thirty year leases are standard within the solar industry, and it is well understood that the technology is likely to develop during that period. Solar is therefore an investment that will continue to develop and improve and with good quality legal advice, it can be a secure income for farmers.   

Structuring a solar farm development project requires careful legal consideration, with negotiation of option and lease agreements between the landowner and developer during the development stage.

A common structure is for a developer to enter into an Option to Lease with the landowner. The developer will be granted exclusivity over the site while the option is in place and initial title investigations are carried out. The developer will exercise the option and call for the lease once all necessary consents, including planning are obtained and due diligence has been completed.

A point not to be overlooked when negotiating an option and lease is whether there are any tenants on the land. The landowner must be able to give vacant possession when required and be able to access the land for things like surveys.

Another point for a landowner to consider is to make sure the land is not compromised and can be returned to its original use should the planning permission require it.

Conclusion

Ever growing awareness of the climate crisis and future government targets would suggest an increase in popularity in solar. The reduction in subsidies and grants and potential reduction of land accessible to solar farms is not promising news for developers and landowners. The new future for solar farms may be a balance between preserving the UK’s farmland and expanding renewable energy, by ensuring that the land can develop and be used with maximum efficiency.