Bonds can help farmers avoid solar clean up costs

The cost of clearing up farmland following the construction of a solar farm can run to tens of thousands of pounds. Landowners considering such ventures are being urged to ensure they are not left to foot the bill.

The installation and subsequent decommissioning of solar arrays can cause considerable damage to soil structure, field drains, tracks and other farm infrastructure (see “Potential damage”, below), so it is vital an agreement for the clear-up is in place before any lease is signed, says Wiltshire consultant George Paton of WebbPaton.

Most of the main solar developers offer so-called clear-up bonds, where they set money aside to cover any associated costs of clearing/ reinstating the site, but there is a minority that do not and these should be avoided, he warns.

“Unfortunately some solar developers are reluctant to offer clear-up bonds and some want them to start in year 20, which can cause problems for the site owner if the tenant goes into receivership before year 20.

“Farmers should also be aware of the mess made to their land during construction, which needs accounting for. They should not let solar developers persuade them the damage is minimal.”

Counting the cost

Solar bonds should include a provision for making-good the site after panel installation and also after it is decommissioned, he says.

The valuation of bonds is usually a joint decision between developer and landlord (such as a farmer), but quantity surveyors, civil engineers and soil scientists may also be involved. Bonds can be revalued after set periods (for example, every five years) to ensure they reflect current costs.

If no mutual agreement can be reached, the matter can go to an arbitrator – often a quantity surveyor.

Bond value varies considerably depending on the site, type of array and how competently construction work is carried out, but can be £30,000-40,000, Mr Paton says.

Money is typically held by a third party in what is known as an Escrow bank account, or by a solicitor, and remains there to cover site clear-up at any time during the lease. Any remaining surplus is only released when the landowner is happy that land has been returned to a satisfactory condition.

“If you ever have to employ a contractor to move earth or reinstate land it is an expensive job. Land drainage typically costs around £1,000/acre and topsoil is about £15/t, which soon adds up if you need to make up several inches across a large area,” says Mr Paton.