Renewables rollout – know the value of your land

Land values, whether for conacre, lease or sale, vary significantly from one region to another. Factors such as the land’s productivity, the types of farms in the area, whether the land is privately owned or commonage, proximity to towns or landmarks, suitability for residential or commercial use, and potential for forestry all play a role in determining farmland’s value.

However, the viability of your land for renewable energy developments is becoming an increasingly important factor in its value, and it’s not limited to wind or solar farms. The emergence of new renewable energy solutions like battery energy storage systems, anaerobic digestion plants, and various energy infrastructures such as substations present new opportunities for landowners. Each of these projects has specific site requirements, potentially increasing the value of your land beyond traditional agricultural considerations.

As you read this, developers are actively on the ground searching for viable sites. Regardless of the project, there are several criteria that developers will use to screen sites. Natura 2000 sites like SAC, SPA, and candidate sites are often excluded, and even sites close to these areas can pose additional challenges. Similarly, sites with known biodiversity and habitat features, such as winter bird populations, bats, or mammals, may be avoided.

Furthermore, sites with listed historical monuments can also present extra challenges, although they are not necessarily deal-breakers. Additionally, local development plans may contain specific stipulations regarding the location of renewable energy projects, particularly wind farms. For example, in Donegal, new wind farms must be situated at least 1km away from residences, double the state guideline. This rule has been contested by developers and adds extra time and expense?

Advice

When dealing with large-scale renewable developments, significant financial considerations are involved, whether it’s through leasing, selling, profit-sharing, or equity stakes. While this article serves to highlight values currently on the market, it’s crucial to seek appropriate legal, tax and investment advice before signing any agreements. While this advice might come at a cost, the expense is a worthwhile investment. Making uninformed decisions could result in substantial financial losses. In some cases, these expenses might be covered by the developers.

Wind farms

It goes without saying that a wind farm site needs to be in a windy location. Sites with average annual wind speeds above seven meters per second are typically considered viable and natural obstructions like hills or forests are all taken into account.

Proximity to grid connection points and the associated costs and delays of grid upgrades are crucial factors in assessing the commercial viability of the project. The distance to the grid influences the size and feasibility of the project, as does the need for new substations or cable infrastructure. Even if electricity lines are nearby, a suitable grid connection is not guaranteed due to potential issues like low voltage or insufficient network capacity. Access to the site is another critical factor, which may require upgrades to existing roads or the construction of new ones. The route for delivering turbine components must also be considered. Land type, topography, proximity to designated sites, planning zones, residential areas and county development plans are also factors in the site selection process. Sites are preferred if they are located outside areas of high scenic value or ecological importance. The impact of other wind farms, either existing or in the planning stages, is also a consideration, along with the visual impact and scenic value of the site.

For a wind turbine, landowners typically lease the site on a long-term basis, often 30 years or more. There are typically two ways this is done: on a per-turbine basis or per MW basis. Lease values of €36,000-€45,000 per turbine are not uncommon. However, it’s important to note that as turbines become larger and blade diameter increases, so does their footprint. If a turbine’s footprint crosses two landowners, the lease value will be split accordingly.

Alternatively, lease values can be calculated based on per MW of installed capacity. Values ranging from €4,500 to €6,500 per MW per year are typical. Payments for access tracks, areas for nature, or changes to roads to accommodate turbine delivery components and storage should be dealt with separately.

Solar farms

Selecting a suitable site for a solar farm involves much of the same assessments as wind farms, with grid capacity being the most critical factor. The viability of a potential solar farm largely depends on the local grid’s ability to take the electricity generated.

Naturally, solar farms perform best in sunnier parts of Ireland. Ideal sites are flat or have gentle south-facing slopes to maximise sunlight. Larger fields are preferable as they allow for more cost-effective panel installation, whereas smaller fields can mean higher cost. Tall trees, especially on the southern side, can cast shadows on the panels, making tree-free sites more desirable.

Naturally, sites need to be flood risk free. The visual impact, visibility, proximity to residential areas, and potential for glint and glare are also assessed for their impact on the surrounding community. The site’s proximity to airports and other sensitive locations are also taken into account. Finally, the local planning history, the presence of other solar farms and community acceptance play a significant role in determining a site’s suitability for a solar farm.

Land leases for solar farms are in the region of around €1,150-€1,250/ac for 30-40 years. On occasion, farmers have been able to develop a profit share arrangement with the developer.

Substations

Like any other energy project, selecting an appropriate site for a substation requires an approach that balances technical, environmental, economic and community factors, much like the developments above. For substations, other key considerations include proximity to demand and production sites and transmission lines, which they typically connect to.

The site should be flat, avoiding flood-prone or stagnant water areas, be easily accessible and have potential for future expansion. Substation sites are normally purchased from the landowner since their operational lifespan often exceeds that of the renewable energy project.

These sites are not particularly large, typically around five acres, but are valuable, with deals ranging between €60,000 and €100,000 per acre. It’s important to remember that you’re not selling farmland; you’re selling land for an industrial project, and it needs to be valued accordingly. It’s worth noting that long-term leases, around 99 years, for substation sites have also been secured in Ireland.

BESS

Battery Energy Storage Systems (BESS) collect energy from renewable sources such as wind and solar panels or from the electricity grid, storing it using battery storage technology. These batteries release the energy when needed, for instance, during peak demands or for when grid balancing is needed. Currently, around 17 BESS are connected to the grid, with many more in development.

BESS require relatively modest space in comparison to other projects. When planning to connect to the grid, developers often look for farmland near substations. Typically, a parcel of just four to five acres suffices for BESS projects, although larger projects are in development. Many of the same environmental considerations as the above apply when selecting a site.

Typically, BESS developments involve leasing land from landowners for upwards of 30 years or more, but the lease can be structured in several ways. Per acre lease agreements have been made on a number of projects and can range €20,000-€25,000 per acre per year.

Other lease agreements opt for a payment per MW of installed storage capacity. Lease values are usually valued at around €1,200 per MW.

If a four-acre site could accommodate an 80MW BESS, the farmer’s lease value would be €24,000 per acre per year for 30-40 years.

Another option would be for the land owner to secure a percentage of annual turnover and while less common, there are examples of this in Ireland.

Anaerobic digestion plant

Many of the previously mentioned site criteria are crucial when determining the location for an anaerobic digestion (AD) plant. These include factors such as land designation, ?roads, and proximity to residential areas.

However, there are additional key site criteria specific to AD plants. AD plants require a steady supply of feedstock to produce gas. Depending on the plant, this can range from food waste to agricultural slurries and crops. Particularly for the latter, AD plants should be situated close to their feedstock sources, meaning many new plants will likely be located in rural areas. As a general guideline, slurries should be sourced within a 10km radius of the site. It’s important to note that the volume of input, in terms of feedstock, nearly equals the volume of output as digestate. Therefore, access to nearby land for digestate management is essential.

The feasibility of connecting the AD plant to a gas grid is another important consideration, especially for larger projects. With current connection policies, the viability of a grid connection beyond 3-4km of an AD plant is questionable. Unfortunately, AD plants are often controversial, and projects near towns or villages typically face significant opposition from local communities. This makes finding an appropriate site challenging.

While some sites can be purchased, many projects in Ireland opt to lease the land from the landowner, some with and some without existing planning permission. These sites vary in size, ranging from five to 20 acres. Lease agreements for AD plants sites vary depending on the type of AD plant and its connectivity. Values of around €7,000-€10,000 per acre per year for 25-30 years have been quoted in Ireland but it’s still a developing area.