Sustainability and renewable energy – land access agreements

The agricultural industry has a long history of striving for sustainability. Generations have benefitted from learning and improving the historical practices of their predecessors to ensure the land remains productive and continues to support generations and communities.

More recently, the renewable energy sector’s need for access to land, particularly for renewable energy projects, has increased significantly.

This has created opportunity for both sectors to work more closely together, which requires a commitment to open and transparent communication, as well as formalities including land access agreements.

For many years, the mining, petroleum and gas industries have negotiated with landowners for access to agricultural land. The success of these endeavours often depends on the willingness of the party seeking the access to honour the interests and values of the landowner.

Land access agreements, in theory should facilitate a mutually beneficial relationship, such benefits including:

1.  Access

Locations are often carefully selected for optimal renewable energy generation, such as areas with ample sunlight for solar or strong, consistent winds for wind farms. By securing access to these sites, providers can maximize the efficiency and output of their renewable energy installations.

2.  Stability

Renewable energy projects often require long-term commitments to be financially viable; land access agreements can provide that stability, while guaranteeing a steady income for landowners.

3.  Economic Benefits

Land access agreements offer substantial benefits to landowners and the potential to evolve and diversify their farming practices. These agreements often include lease payments or royalties, providing landowners with a consistent source of income that may supplement earnings and mitigate risks associated with fluctuations in commodity prices or crop yields.

For agricultural land that may no longer be as profitable (e.g. salt affected or marginal country), hosting renewable energy infrastructure can be a lucrative alternative and consistent stream of income which is not dependant on the weather or climate.

However, many landowners are still wary. There are always enterprises who fail to understand the relationship with the land, or the interests of the landowners. Issues which commonly arise and require particular attention include:

1.  Loss of Land Use

For some, dedicating land to renewable energy projects means sacrificing areas that could be used for agriculture or other purposes. This can impact livelihoods and disrupt longstanding practices.

2.  Property Value

Hosting renewable energy infrastructure can impact the value of surrounding properties. Some studies suggest that the proximity of wind turbines or solar farms can decrease property values and deter potential buyers. This impact may be long term and irreversible.

3.  Visual and Aesthetic Impact

Renewable energy projects, particularly wind farms or vast solar arrays, can alter and compromise the natural beauty of land, potentially affecting tourism and local businesses reliant on aesthetics, and the overall ambiance of the region.

Wind turbines can generate noise as the blades rotate; this, together with construction/ maintenance activities, can be disruptive and may impact other users of the land.

4.  Limited Flexibility

Long-term agreements for renewable energy projects can limit flexibility of land use. These agreements often span several decades, restricting the landowner's ability to make changes or developments on their property. This can be challenging, particularly when contemplating succession planning and changed circumstances in the farming enterprise.

5.  Maintenance and Liability

While renewable energy companies are responsible for the maintenance of their installations, landowners may still bear some liability and face disruption issues such as damage to equipment, accidents, impacts on workers, etc. Environmental impacts could result in legal complications and where a company goes out of business or ceases operations, landowners may be left with decommissioned infrastructure to manage and potentially remove at their own expense.

6.  Interference with Agricultural Practices

The presence of renewable energy infrastructure can interfere with farming practices. The challenges for farmers can include shadow from solar panels or the placement of wind turbines which may disrupt airflow and create microclimates that impact farming operations.

While there are clear benefits to hosting renewable energy projects, landowners must carefully weigh the disadvantages and potential challenges. Land access agreements should be thoroughly reviewed and negotiated to address these issues, build in flexibility and manage risk and land use equitably.

The content discussed here is general in nature, seeking advice tailored to your situation and needs is crucial.  Our Agribusiness team have extensive experience in this area.  Should you wish to explore this topic in more detail, please contact our agribusiness team who would be delighted to assist you.