Solar photovoltaic panels

    Demand for renewable energy projects has doubled over the past year, with solar photovoltaic panels of particular interest to Scottish landowners.

    Savills manages 500,000 acres of land in Scotland, and has received more than twice as many enquiries from farmers and landowners looking to diversify into hydro, wind, solar or biomass than last year.

    “We had expected to see a dip in interest in Solar PV, following the reduction in Feed-in Tariffs, but this has not been the case,” says Nick Green of Savills Energy. “The reductions in installation costs have more than offset the drop in FIT payments, leading many developers to seek out sites that had previously been seen as unviable or marginal.”

    However, with the subsidy regime constantly under review, the window of opportunity for Scottish farmers may be short-lived, he warns. “It’s also important that, when comparing budgets to the agricultural alternative, farmers take account of good harvest years as well as the bad. Renewable energy schemes are a long term commitment, so you must ensure rents are favourable throughout.”

    Savills has well-established links with solar installers, and has successfully overseen retro fitting of existing agricultural buildings with PV panels, making use of a farm’s existing assets. A buyer’s group approach has enabled clients to benefit from discounted installation costs and attractive returns on capital of 5-10%.

    “Inevitably degression of the FIT scheme has stimulated the industry to move away from smaller scale systems towards larger roof-mounted or in-field schemes,” says Mr Green. “These fall under the Renewable Obligation Certification (ROC) initiative, which is generating considerable interest from ethical power investors and pension funds.”

    Large sites of about 5 acres or more are particularly attractive to investors, with good ground and roof rents being paid, either as a capital sum, a proportion of the FIT, or in the form of cheap or free electricity. Investors will also consider joint ventures with landlords.
    “After another difficult harvest, it’s unsurprising that farmers are continuing to look at renewable energy schemes,” says Mr Green. “With Savills help, landowners are achieving ground rents for PV which can be significantly in excess of conventional farm returns, particularly on marginal agricultural land. Renewable energy is an excellent diversification option for estate owners and farmers alike.”


    Key contacts

    Nick Green

    Nick Green

    Energy & Infrastructure

    Savills Perth

    +44 (0) 1738 477 518

    +44 (0) 1738 477 518