Hosting a battery storage system – the potential risks and benefits for farmers

Blog updated June 2020

Kevin George, commercial property lawyer and Partner in Coodes Solicitors’ Rural Services team, advises farmers on the opportunities and potential pitfalls of hosting a battery storage system.

Farmers have always been good at looking for opportunities to diversify. Many of our clients in the South West responded to the fast growth of the renewable energy sector, by hosting solar farms or wind turbines. With uncertainty around the future of the Basic Payment Scheme, more farmers are investigating new and different business opportunities.

A number of developers are now seeking sites for battery storage systems. Battery storage could provide the solution to balancing supply and demand for energy in the future. This is an emerging industry, which has the potential to grow. Developers are now seeking to secure land for battery storage systems. Many landowners are being approached and our clients are starting to ask for legal advice on the issue.

What are the benefits of hosting a battery storage system on my land?

With leases for battery storage being typically between 20 and 25 years, there is potential for landowners to earn a long-term rental income. If you have been approached about hosting a site, this could become a profitable business venture for your farm. If battery storage does turn out to be the ‘next big thing’ your decision to host a site could turn out to be profitable.

What are the potential pitfalls of entering into an agreement to host a battery storage system?

Developers are now seeking to secure the best sites for battery storage. This means they may give you the ‘hard sell’, putting you under pressure to sign an agreement as quickly as possible. You should not feel pressurised into an agreement before getting expert legal advice and ensuring you understand, and are happy with, the developer’s offer.

The energy company may try to persuade you to sign an exclusivity agreement for the site. We would advise you not to do this as it prevents you from exploring any alternative options for the site.

Even if you do enter into an agreement, you could face a number of barriers, including planning issues and a negative response from neighbours who may not want a large and noisy installation nearby.

How can I ensure I get the best out of hosting a battery storage system on my land?

If you decide to host a battery storage system, you will need to enter into a full-scale business lease with the developer. Before entering into negotiations, speak to a surveyor who understands your needs and has expertise on this complex area.

We would advise you to consider the terms and conditions of your contract stating there would be an increase in rent if the capacity of the battery storage system increases in future. We would also recommend including rent review in your contract to ensure you get the best value out of the site for the full term of your lease. It is also important to have a decommissioning bond in place in case the developer does not clear the site if the lease comes to an end.

A developer may approach you with a request to authorise them to apply for a grid connection with an exclusivity agreement. You should refuse to do so and, in order to ensure you are in the best possible bargaining position, you should secure the rights independently.

Because battery storage is an emerging sector, it is not yet subject to specific Government regulations, so getting the right advice at the outset is the key to avoiding potential issues.

Here at Coodes Solicitors, our specialist Rural Services team includes five fellows of the Agricultural Law Association. We work with landowners across the South West and can help you get the best out of any diversification opportunities.

For more information, contact Kevin George in the Rural Services team on 01579 347600 or kevin.george@coodes.co.uk