Syndicate option for landowners on solar
SOLAR farming is rapidly expanding, as the number of sites in Queensland increases from the five currently operating to the 34 now listed by the Department of Energy as having secured development approval, and many more can be expected, if the Federal Government takes on the recommendations of Australia’s Chief Scientist, Alan Finkel.
Seven of these solar farms are west of Toowoomba, along the Gore and Warrego Highways, at places like Columboola, Oakey, Yarranlea, Chinchilla and Darling Downs where construction will begin in July on a 110MW facility that was recently sold by Origin Energy for $220 million.
We’ve all known for a long time that Queensland has the sunlight necessary to produce solar energy, but the Darling Downs region, in particular, is ideally suited to solar farming because it rests in a “sweet spot” of sunlight iridescence that produces 19 to 20 mega joules of average daily solar exposure that is close enough to major centres to connect easily with major transmission lines and into the National Grid.
The rapid uptake in solar farming is also happening elsewhere, but it’s in Queensland where the greater number of facilities are planned.
Clearly, farmers and pastoralists realise that generating extra revenue is a no brainer from land that would otherwise only be productive seasonally and less reliably.
And all of this is great news, but it’s important that anyone who is approached or who is considering negotiating a lease recognise that there are pitfalls to be wary about so as to make sure energy companies aren’t getting the better end of a deal.
Probably the most worthwhile approach is to take the time to form syndicate with neighbours and talk about the advantages that are possible when you work together.
As a group, landowners have more negotiating power than they do as individuals and this will help stop energy companies from picking off individuals and driving down the cost of leasing arrangements.
I have seen examples of leases negotiated where landowners ended up locked into deals that were worth one quarter what they could have received had they worked as a group.
It is vital to appreciate there will usually be two very diverse activities happening on the same piece of land, and a situation like this allows for plenty of scope for disruption and disagreement, most of which can be sorted out by getting the right document in place, up front.
It’s not hard to realise that the developers need to generate revenue for their shareholders and healthy competition from other energy developers.
However, often times, developers will also negotiate an inexpensive lease on a property and park it, a process known as “Land Banking”, so as to shut competitors out of the market in that area.
When a land owner is presented with a contract from an energy company there are plenty of hidden risks they should be aware of that aren’t made obvious by the developers because it’s simply not in their interest to do so.
This includes responsibility for weed control, agreements on sharing use of the land for grazing animals, the question of who has responsibility for fire prevention, where and what sort of access to the site is required and the like.
Often it’s more important to understand what it is that’s missing from a contract document than what you see there at first.
At times, farming neighbours may find themselves able to work together to share the sale of parts of land or leasing of a facility that makes use of adjoining blocks in an area ideal for a solar farm.
The rapid growth in solar farming is in its early stages and is going on in similar locations all around the world.
It’s in Australia though, where our climate and limited cloud cover mean that global solar exposure is much higher, that some of the best solar resources occur.
And, sure, solar power depends heavily on the continued development of battery technology, but there are facilities in other parts of Australia, including a facility called the Lakeland Solar and Storage Project 70 kilometres west of Cooktown, that show us how this technology is keeping pace with solar farm development because it also includes battery storage. Other sites have combined wind and solar.
Energy developers know this and are out doing what they can to secure contractual arrangements cheaply in expectation of improvements in technology. In the meantime, landowners should get together, get professional advice and work toward securing a better deal when they come knocking.
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It’s in Australia though, where our climate and limited cloud cover mean that global solar exposure is much higher, that some of the best solar resources occur.