LANDOWNER OPTIONS
RENEWABLE ENERGY
A WINDFALL FOR LANDOWNERS
Despite a decrease in the level of feed-in tariffs available for onshore windfarms, and an increase in the capacity of offshore windfarms over recent years, onshore windfarms remain an attractive prospect for landowners. If a site is viable, wind energy can still represent a reliable source of income for a landowner for a number of years.
BENEFITS
One of the main benefits of an onshore windfarm development is that landowners can continue to farm or use the land and so there is minimal reduction in other income streams. Farming, for example, can continue around the turbines.
If a landowner is committed to proceeding with the development of a windfarm, and has established a relationship with the developer, it is important to consider how best to structure this investment. This will likely largely depend to what extent the landowner wants to be involved in the windfarm’s activity.
OPTIONS 1 The most straightforward option is to grant a lease to the developer. The developer will then take sole responsibility for the development and will often assume all of the risk, deal with members of the public and pay legal fees. The landowner will simply be the recipient of rental income. Clearly this represents the most hassle-free and lowest risk option for a landowner.
2 Another option is to consider structuring the windfarm as a joint venture (JV) with the developer. This allows the landowner a much greater share in the profits. There are different tax consequences and, for example, relief from inheritance tax (known as business property relief) could be available. Similarly, entrepreneurs' relief could be available for capital gains tax purposes (although rules were introduced in Finance Bill 2015 restricting this relief for JVs in certain circumstances). A JV, while financially rewarding, can be complex, and careful consideration of the structure is needed for the type of entity to be used (for example a company, an LLP, etc) and the tax consequences that follow.
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www.windenergynetwork.co.uk
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