How are Land Agreements for Energy Projects changing?

The dust is beginning to settle on the connection reform process, as Gate 2 offers are now being received. Early indications suggest that grid costs are higher than many anticipated, and there remains ongoing uncertainty around project delivery due to grid constraints.

The situation isn’t perfect but we’re starting to see the future of solar and wind development in the UK become a little clearer. Grid is likely to remain a long-term play, but there are still development opportunities for certain types of renewable projects in specific regions.

This effects deal structuring with landowners as there is far more uncertainty surrounding a developers ability to secure a grid connection. In addition, it is likely to take much longer to obtain confirmation that grid capacity is available.

How does this affect  agreements with landowners?

1. Long option periods to reflect grid delays.

Prior to connection reform, solar and wind developers typically instructed us to secure option agreements of three to five years, with small extensions to accommodate potential delays in grid connection dates and to allow time to secure construction funding. However, following Clean Power 2030 and the connection reform process, developers have faced significant challenges, including substantial increases in grid costs and connection dates being pushed out to 2036 and beyond their original option periods. As a result, unless agreements can be renegotiated with landowners, many projects risk expiring due to a lack of secured land rights.

Going forward, most clients are now instructing us to negotiate option agreements with much longer long-stop dates—potentially up to 13 years—to provide greater certainty around the grid connection window. This approach is particularly relevant for very large-scale wind projects, but is generally less critical for smaller-scale schemes (sub-5MW), including grid-connected or private wire/PPA projects.

2. Option Payments

With these longer option periods, landowners are increasingly seeking higher option fees; however, such increases are not always justified. In some cases, landowners tend to focus primarily on maximising returns during the option period, rather than considering the overall value and long-term success of the project once constructed. Large-scale wind projects, in particular, require millions of pounds of upfront investment to progress through the planning system, and while demand for suitable sites remains strong, it is critical to partner with a developer that has the necessary capital and risk appetite.

In our experience, the most successful projects are those where landowners and their agents recognise the developer as a long-term partner, with a shared objective of securing planning consent and grid connection, rather than treating the project as an opportunity to extract excessive option fees or upfront exclusivity payments. There is, of course, a place for higher payments on exceptional sites – particularly those with strong grid proximity – but such opportunities are increasingly rare. The reality is that most large-scale sites, particularly for wind, are becoming more limited, and developers are being required to take on greater planning risk in more marginal locations.

3. Grid is Key

Grid costs are no longer an afterthought; they are now a key consideration in developers’ decision-making at an early stage. Many projects are yet to receive their Gate 2 offers and lack clear visibility on their eventual point of connection, especially where the construction of new super grid transformers may be required.

4. Co-location

Co-location is now standard. Even where a solar or battery project doesn’t have an immediate requirement for storage we are increasingly seeing the inclusion of battery within the heads of terms as a matter of course-  something that is far more common than it was two or three years ago.

The main picture is that there are still plenty of developers out there looking to acquire land, however, some of the best sites are already under option. The market remains fast-moving, and opportunities still exist, but both landowners and developers need to be prepared for a long-term commitment and ready to navigate the uncertainties associated with the grid connection process.

If you wish to discuss anything from the above article with our team, please do not hesitate to contact us on 01743 404925