Solar farm vs growing crops

Ok to lease to a solar operator the going rate is £900/acre. Say a site of 50 acres means £45,000/year x 25 yr term = £1,125,000.

What can the land earn growing crops over the same term?

Growing a rotation of 3 crops, which might change admittedly but we need a comparison somehow so the 3 main crops would be wheat, oilseed rape and barley?

ww, 3.5t/ac x £150/t - £180 inputs - £150 contractor = £195
£195/ac + average sfp over the next 25 years say £50/ac? = £245/acre
£245/ac x 50ac x 8.3 wheat crops = £101,675

wosr, 1.5t/ac x £300/t - £180/ac inputs - £150/ac contractor = £120/ac
£120/ac + average sfp over the next 25 years say £50/ac? = £170/acre
£170/ac x 50ac x 8.3 wheat crops = £70,550

wbarley 3t/ac x £150/t - £180/acre input - £150/ac contractor = £120/ac
£120/ac + average sfp over the next 25 years say £50/ac? = £170/acre
£170/ac x 50ac x 8.3 wheat crops = £70,550

Total earning off crops £242,775

Feel free to tweak the figures as the above is merely a starting point. Plently of people are doing the machinery bit a lot less than a contractor and plenty will be getting better yields.

What are the tax implications of leasing the land to a solar operator?
 

sleepy

Member
Location
Devon, UK
Any idea how much and who pays them generally - landlord or solar operator?

Just trying to build a 'complete' picture to get a decent comparison for people interested.

Seems a complete no brainer, but why don't more people do it??

Is the business model for these companies still to set the solar farms up and then flog them to pension companies and the like?
 

Exfarmer

Member
Location
Bury St Edmunds
Quite obviously a no brainier if you have the right spot.
But you must get the deal sorted properly. There are plenty of sharp operators out there looking for gullible farmers.
The margins are tight, so sites close to main sub stations will be very popular.
Deals must be inflation proofed.
Rates must be paid by operator.
I suspect with today's announcement there is going to be a lot of hassling to get deals on the go quickly, planning will probably see most forgotten
 

Thick Farmer

Member
Location
West Wales
Quite obviously a no brainier if you have the right spot.
But you must get the deal sorted properly. There are plenty of sharp operators out there looking for gullible farmers.
The margins are tight, so sites close to main sub stations will be very popular.
Deals must be inflation proofed.
Rates must be paid by operator.
I suspect with today's announcement there is going to be a lot of hassling to get deals on the go quickly, planning will probably see most forgotten

What was today's announcement?
 

Honest john

Member
Location
Fenland
Any idea how much and who pays them generally - landlord or solar operator?

Just trying to build a 'complete' picture to get a decent comparison for people interested.

Lee
The solar operator pays the rates. In the lease.
The only issues to worry over is IHT & maybe CGT.
Everyone's tax position will be different of course.

There is a sale of a site near Cambridge guide price 25K acre.
 

Clive

Staff Member
Arable Farmer
Location
Lichfield
My big worry about these projects is how the contracts will stand up over the project lifetime ?

What would happen if the government introduced a tax on income from fits ? Effectively taking most of the margin back. A massive vote winner and a incentive for power hungry industry to locate itself in the uk yet only unpopular with a relatively small amount of power producers who have invested ?
 

Honest john

Member
Location
Fenland
My big worry about these projects is how the contracts will stand up over the project lifetime ?

What would happen if the government introduced a tax on income from fits ? Effectively taking most of the margin back. A massive vote winner and a incentive for power hungry industry to locate itself in the uk yet only unpopular with a relatively small amount of power producers who have invested ?

The last time government had a go it was challenged in the high court, and lost.
These big operators could threaten to switch off.
I think you are worrying unduly.
 

Clive

Staff Member
Arable Farmer
Location
Lichfield
The last time government had a go it was challenged in the high court, and lost.
These big operators could threaten to switch off.
I think you are worrying unduly.

Had a go at taxing it or reducing contracts ? I can't see anyone ever legally reducing contracts but I reckon a government can choose to tax what they like especially when the majority of the population would be behind that tax ?

Energy prices are already a political hot potato and that's going to get a lot worse in the not so distant future - 20 years is a long time and a lot can change over such periods
 

Against_the_grain

Member
Arable Farmer
Location
S.E
If the site is unprofitable the developer will close the site and return the land to its former condition. In the meantime you have had you're rental income
 

JNP

Member
Location
Herefordshire
If the solar companies can offer £900 per acre why can they not buy the land and pay a repayment mortgage with these payments? Or do they have more long term info than they are letting on?
 
Had a go at taxing it or reducing contracts ? I can't see anyone ever legally reducing contracts but I reckon a government can choose to tax what they like especially when the majority of the population would be behind that tax ?

Energy prices are already a political hot potato and that's going to get a lot worse in the not so distant future - 20 years is a long time and a lot can change over such periods

Possibly I guess but if energy prices keep going up and the FIT is taxed then profit could easily stay at the same margin?
 
If the solar companies can offer £900 per acre why can they not buy the land and pay a repayment mortgage with these payments? Or do they have more long term info than they are letting on?

Because take a 100ac site which is where the big returns are, that's at least another £1.2 million to buy the land that they might not get planning on!

Nobody is going to sell them land with planning at £12k/ac as it would be double that with planning.
 

Clive

Staff Member
Arable Farmer
Location
Lichfield
Possibly I guess but if energy prices keep going up and the FIT is taxed then profit could easily stay at the same margin?

Just depends on the level of a potential new tax I guess ? If they taxed income from fits at 60% things would look pretty bleak I guess

Governments don't have to play by the rules, they make them ! This would worry me personally
 

Exfarmer

Member
Location
Bury St Edmunds
Just depends on the level of a potential new tax I guess ? If they taxed income from fits at 60% things would look pretty bleak I guess

Governments don't have to play by the rules, they make them ! This would worry me personally
I am surprised at you Clive
You should know better than most, they tax profits not income
 

Clive

Staff Member
Arable Farmer
Location
Lichfield
I am surprised at you Clive
You should know better than most, they tax profits not income

Profits of businesses and income of individuals

They can make up the rules to please themselves and that worries me when investing in anything where revenue is from the government
 

Exfarmer

Member
Location
Bury St Edmunds
Profits of businesses and income of individuals

They can make up the rules to please themselves and that worries me when investing in anything where revenue is from the government
Biuld costs interest payments etc are allowable on any investment of this nature.
And the revenue does not come from the government.
fITs and export are paid by the energy companies
 

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