Agents fees

[jd6420s]

Hello I was approached by a man from a company a couple of months ago saying that my land was suitable for battery storage. I found him rather pushy and following discussions with a land agent experienced with this type of thing he recommended getting a promotion company involved. This company now has a letter of Authority to apply in my name. I haven't heard much since but they have sent their projected returns. The bit that sticks out is that the promotion company want 30% of the return. I usually thought that it was a 20% return. The other part is that the land agent is wanting me to sign an agreement with them. It clearly states in the agreement that the agent will get nearly £250,000 in various percentage kickbacks from the promotion company should I be successful. This would be roughly 10% of the total return should the project be successful which would account for the promotion company wanting a bigger slice of the cake. The agent will also be getting roughly £20,000 in fees from me in addition to this.
So what is the usual going rate for a promotion company?
How much of a cut does an agent usually take?
Is it usual for an agent to play both sides?

The land agent involved is from one of the larger well known companies.

Thanks in advance.

 

[Surgery]

tell I’m to shove it where the solar power dont shine , sounds like the agents are firmly tucked up in the same bed ,

 

[Steevo]

@Exfarmer might be a wise person to ask.

 

[curlietailz]

I’d suggest any company who is seriously interested will pay your Agents Fees
If they won’t then they’re not serious enough in my opinion

 

[jd6420s]

I’d suggest any company who is seriously interested will pay your Agents Fees
If they won’t then they’re not serious enough in my opinion

The promotion company should be paying my agents fees. It's just that they will be getting 10 times that amount back from the promotion company in other fees which makes we wonder who's interests they will be looking after best.

 

[Exfarmer]

@Exfarmer might be a wise person to ask.

Sorry I have no experience of that sort of thing. Would have thought a good land agent would be the way forward, sounds like this group are trying to take a cut for doing nothing.
I am not a fan of large scale battery storage, think if they catch fire the clean up costs could be near that of Chernobyl

 

[Tractorstant]

Very much also sounds like the agent is breaking the anti-bribery laws. I guess they are cleverly avoiding it by stating it upfront in the T's& C's

30% + + is ridiculous.

I think you are having the wool pulled over your eyes.

I would shop around. You have the asset, the land.

 

[jd6420s]

I have written an email to him to try and get an explanation but he hasn't replied. Just a bit surprised that this group of Land Agents are a very well known firm and I expected a little better from them. I've dealt a fair bit with the smaller agents and found honest ones to be few a far between.
It just seems that when it is a large project like this everyone wants a huge slice of the cake and get greedy. From my point of view I am the landowner so should be getting the lion's share. If it goes wrong I could lose out in a big way and everyone else involved will just disappear.

 

[puppet]

When you say a promotion company are they just another middle man trying to find a battery storage firm? The agent should be getting a fee not a percentage of future income. They should be working only for you. Currently it looks as if you are the one paying out and taking the risk. Please be careful what you sign as some companies will be trying to get planning at multiple sites and if yours is unsuccessful then the agreement may prevent any other companies applying.
You are out of pocket then with no further opportunity.
I have had similar with a renewable company who speculated with an agent too friendly with them and various others getting fees. I never got a penny when they pulled out.

 

[jd6420s]

I think this promotion company act in a similar way to a residential land promotion company. They go through all the planning stage paying for all the surveys etc and get the site "shovel ready" for battery storage to be placed on the land. They then put the site up for tender and sell it on to a battery storage company. Although they are risking some capital in all of this it was just the 30% share that I am querying. I always thought these companies work on 20%.. The agent seems best placed in all of this and cannot lose.

 

[Doing it for the kids]

Head the comments above.

You have the asset, they are two a penny.

If the site is that good you could do the leg work and sell it on, or approach a specialised land agent to sort it for you.

You should never pay a penny

 

[Steevo]

Would be worth speaking to a couple more agents I would think. When you find an honest one who tells you straight how things are/should be then the decision will become much easier.

There are some honest ones out there.

 

[Gary - Power and Gas]

My company always pays the land agent fees which have been around £1700 plus VAT. I don't know what a promotion company would have to do? are they the developer?

The numbers that your quoting seem extremely high for a business that isn't putting the money up to build the project. Also, stand alone battery sites have got a long timescale for turnaround so you could be out of pocket for sometime.

We are only running 2 battery storage projects which we expect are going to take a long time to get completed which is why we are primarily looking at solar sites.

 

[jd6420s]

My company always pays the land agent fees which have been around £1700 plus VAT. I don't know what a promotion company would have to do? are they the developer?

The numbers that your quoting seem extremely high for a business that isn't putting the money up to build the project. Also, stand alone battery sites have got a long timescale for turnaround so you could be out of pocket for sometime.

We are only running 2 battery storage projects which we expect are going to take a long time to get completed which is why we are primarily looking at solar sites.

I shouldn't be paying any money upfront and the promoter says they will pay all reasonable land agents fees and this is capped at £20,000. The promoter says that they will get it through the planning stage involving borehole tests and surveys etc. The agreement would be for 3 years with an option to extend to 5 years. Although they won't be doing any building work themselves they say that it's total costs in promoting the site will be £345,963 in getting it to the "shovel ready" stage. We then sell the site and split the proceeds 70/30%. They of course take the costs of promotion back on top of this.

Nothing is signed yet the only thing that is is the letter of Authority. The figures are for a 50w battery storage scheme.

I take it in your experience the agent isn't usually getting a share of the proceeds?

 

[Gary - Power and Gas]

I've never come across a site which pays land agents a percentage of the site sale profit. Land agents are there to make sure that the landowner gets the maximum benefit from their land and then a solicitor to check the heads of terms to make sure that the offer is protected.

We don't work on a prepare for sale approach, we develop the sites to operate them, so I don't know how that style of business works but grid connection for a 50meg site will need a 100 meg swing on the power from charge to discharge which could incur major connection fees.

It sounds a bit smash and grab but if your selling the site it could be a fair one off payment for you but if you leased it to a developer you could get forecastable income for the next 30 years.

 

[Gary - Power and Gas]

This is a very low chance, as a ready to go battery storage site would be an attractive option, but what happens if the site doesn't sell?

 

[MrNoo]

My company always pays the land agent fees which have been around £1700 plus VAT. I don't know what a promotion company would have to do? are they the developer?

The numbers that your quoting seem extremely high for a business that isn't putting the money up to build the project. Also, stand alone battery sites have got a long timescale for turnaround so you could be out of pocket for sometime.

We are only running 2 battery storage projects which we expect are going to take a long time to get completed which is why we are primarily looking at solar sites.

We couldn't even get HOT'S signed with you, land agent fees you quote are not in the real world, you lump them as professional fees, these would include the solicitor as well. Lets just say you wouldn't be getting any change out of £10k for a project. Think our Gridserve one ended up around £12500 plus some extras right at the end, which they covered in their entirety with no qualms. But agreed re promotion company, why the hell would anyone use one.
If a Co wants your land they will do everything to make it happen, they should be frank and straight with you, should pay all fees, if anything at all seems fishy, walk. Plenty of other Co's would be interested.
I'm dealing with another Co here currently and quite honestly I'm amazed how they are actually in business, messing about, delays responding, acting like they're doing me a favour, I've got my agent involved because I was about to tell them to FO, we've made our massively inflated demands (because the bloke has been an utter tool) and if they're not met then I'm walking.
A lot of these projects, the rent is actually less than the business rates they pay so one of the cheapest items on their outgoing list, solar farm here cost £50m total to build (£20m of that is batteries) (24Mw solar and 49Mw battery) and yet they haggle over an extra £50/ac rent!! I would say don't sell yourself short.

 

[jd6420s]

In the residential development market you have to pretty wary of signing an option agreement with a developer. This is mainly because although they will get permission they will say it is only worth 50p an acre when they get it and you can't go to anyone else for a better price. I thought promotion companies were better because they get permission and then can sell it on the open market for a small percentage of the sale price.
Is this not the same in the green energy world?

 

[Tractorstant]

In the residential development market you have to pretty wary of signing an option agreement with a developer. This is mainly because although they will get permission they will say it is only worth 50p an acre when they get it and you can't go to anyone else for a better price. I thought promotion companies were better because they get permission and then can sell it on the open market for a small percentage of the sale price.
Is this not the same in the green energy world?

But at 30%????

I sell some pretty big ticket items, and the max industry standard even in my Gin Palace world is 10%+Vat and that includes all the promotion, marketing etc.

 

[jd6420s]

Yes the 30% part seems really high. I cannot find any evidence of other promotion companies asking for that. I have seen between 10-20% depending on how much risk the project represents. I was just wondering if anyone else has found similar in what is a new market.
I have been polite to the agent but also blunt about this high amount and I am still waiting for a response. They should really have replied straight away if I have got my wires crossed.