Tough talking needed on cable supply routes

Farmers who own land on routes proposed for underground cables connecting new onshore and offshore renewable energy developments are in a strong position to negotiate deals, but must do so carefully, experts advise.

With private developers under increasing pressure to complete projects quickly, some landowners may feel they are in a “ransom position” and able to demand any price for cables to be laid, says Calum Innes of land agent CKD Galbraith.

But with financial margins on many projects getting tighter as support falls, there is a limit as to how much a developer will be willing to pay, he says.

“Ultimately it is a negotiation between the landowner and developer that depends on the size and returns of the project,” he adds. “Sometimes developers will offer a one-off lump sum payment, although it may be an annual payment for the lifetime of the project.”

See also: Rules aim to cut farmers’ grid connection cost

Lump sum offers ranging from a few hundred pounds up to six-figure sums can seem attractive, but property consultancy Fisher German’s Mark Newton advises landowners to think carefully about what works best for the business and to seek advice before accepting any offer, as a better deal can often be negotiated.

A lump sum could be used to pay off debt – or may be more tax-efficient; in other circumstances it may be better to have an annual return, which can be either fixed or, in some cases, linked to income from the project.

Availability of alternative cabling routes will influence any developer offer and the landowner’s bargaining power, Mr Newton adds. It may be possible to re-route cables around blocks of land or follow boundaries and roads instead – although this inevitably takes longer, incurs more cost and means more paperwork.

Drainage damage

The effect of underground cables on field drainage is one of the biggest concerns for any landowner, as is evident in the debate over the route of cables for the Triton Knoll offshore wind farm off the east coast.

In most cases there will be a minimum depth (typically 1m) at which cables must be laid, which is well below any deep cultivations such as mole draining.

There will be disruption during the laying of cables and all agreements should include provision for drains to be properly replaced, compensation paid and remedial work carried out in the event of a problem resulting from the works at any point in the future, says Mr Innes. Similar clauses also cover crop losses, soil damage, or other disruption caused at the time of cable installation or in the future.

“It can potentially be several years before a problem becomes evident, so contracts should cater for this.”

Most agreements include provision for the developer to access land in future if repair work is required on the cabling, he adds.

Mr Newton says agreements often include an “easement strip”, prohibiting development for a specified distance either side of the cable, so landowners should think carefully about future building plans before agreeing to a cable route.

It is possible to incorporate a “lift and shift” clause in agreements, allowing the landowner to request a cable is moved at a future date (for example, to construct a new farm building), but it is often a tough negotiation to agree who pays for this, he says.

Compulsory orders

Landowners can refuse to allow cables to be laid and if no financial settlement or alternative route can be found, developers can approach the Distribution Network Operator (DNO) and request compulsory powers to lay cables.

However, the cost, time and complexity of compulsory orders means this option is unlikely to be used in practice and to date has never been used by a renewable energy developer in the UK.

Depending on the point of connection (POC), the infrastructure installed is likely ultimately to form part of the utility company’s network, Mr Innes says. It will therefore be subject to its standard terms relating to payments made to compensate for the presence of the equipment (poles supporting overhead lines or underground cables), together with compensation for damage or losses incurred from installation or subsequent access.

“These payments are standard and relatively modest as they are designed to provide compensation for landowners accommodating infrastructure on their land that is there for the wider public benefit.”

Darren Edwards at Fisher German explains that there are typically two elements to the wayleave or easement payment. “First, the compensation for the effect of laying cables (crop loss, soil damage, general disruption, etc), which is valued as at the date of loss/damage; and second, the payment for allowing the cables to stay in the ground along the route agreed for either the term of the development (wayleave) or in perpetuity (easement).”

Where a developer seeks rights across land to enable connection for their development, they may negotiate separate commercial arrangements with the landowner on the basis they will subsequently grant the necessary rights to the utility company on their standard terms, says Mr Innes. This could result in the landowner receiving compensation from the developer and a standard payment from the utility company.