Solar panels get €1,000/acre so what’s the catch?

Kerry2021

So I’ve heard a lot lately about solar panels getting farmers €1,000/acre for their land.

I want to get a full understanding of it all and would like for everyone else to tell me what they know or have heard about it.

I’ve read lately in the papers about solar farms having an operational lifespan of 40 years. However I’ve read that there is 10 year leases being given out. So what happens after 10 years when the lease is up if for whatever reason the company you are dealing with doesn’t want you continue the lease? Also your farm would be covered in these solar panels & sub stations etc so wouldn’t this leave anyone in a very poor position to try negotiate a new deal? Plus if the company that is leasing from you somehow goes belly up how would you ever get rid of the solar panels and all the rest of the stuff? You’d probably be stuck with it.

Something else I want to know is if it is possible for a farm to go back to being a farm after the 40 years or whatever are up? Or will there be all cables and concrete etc all over the farm preventing it from ever being land again?

I know €1,000/acre sounds like a lot but you’d have to be getting paid that money into a company. The company would be leasing out the farm, this type of company would be subjected to 25% tax and there’s no way around that. Also when a person would try pass on the farm afterwards they wouldn’t be able to avail of whatever special tax treatment that farmland is subjected to usually.

Personally I would never in a million years be in favour of solar panels. It’s just a death by 1,000 cuts much the same as planting a farm in forestry. I’d genuinely be extremely interested to hear what everyone else has to say about it though

Ak84

There are solar farms all over the world.

They are what they are. You would have to be within 10km of a Substation I think.

Regarding the forestry comment. I am planting 30 % of the farm. I see it as adding value to the farm. I'll have more than 1 product(ie. Beef) to grow and sell. Plus I love trees.

There are 2 ways to "plant" farms.

Plant trees with spruce and forget about it for 30 years.

Or learn about growing a productive forest with a diverse mix of species, including spruce.

cap.in.hand.

https://www.boards.ie/discussion/2058294339/solar-panels-get-1-000-acre-so-what-s-the-catch

Most of the solar farms being planned seem to involve a lot of different farmers/farmland over a few townlands so it usually is part of your farmland if that suits.... certainly wouldn't like to be looking at the whole farm covered in solar panels

DBK1

I’d have a little bit of knowledge on this as there’s planning gone in for a big solar farm near here and I know all the land owners involved.

€1,000 an acre is what was being offered 5 years ago, the rates would be €1,500 - €1,800 per acre now.

Leases are generally for 30 years or longer.

The solar companies are contractually obliged to remove all panels etc. after the lease if this is what the land owner wants. I assume there will be an option to continue on with the solar farm at that stage too.

There’s signing on deals of €7,000-€10,000 per farm per year from when you sign up until the time planning is either rejected or construction of the solar farm starts. This is usually a 5 year period and this money you get to keep even if planning fails and the solar farm never happens.

All sounds great so far, then you get to the small print!

Your lease per acre is paid to you and this is submitted in you tax returns. There are no tax reliefs like there is on long term leases for agricultural land. For anyone in the high tax band you’d be giving half of it to the tax man. The people on the older €1,000 rate paying half in tax are only getting €500 per acre now. Land is making more than than that for agricultural use now and it’s not covered in steel and glass.

BPS will no longer be paid on the land so you are down that money.

When the time comes to pass this land on to the next generation because it is used for solar panels it’s now classed as commercial land, not agricultural. Therefore the agricultural relief for Capital Gains tax won’t apply. This relief allows agricultural land to be taxed at 10% of its actual value when being passed on. On solar farm land this will be paid on the full 100% value of the land. Again the €1,000 per acre man gets well screwed here as the next generation could end up paying the amount earned over the 30 years in capital gains when the time comes depending on acres involved and land values.

As regards the solar company removing the panels afterwards. If this company goes into liquidation after 25 years who do you go to 5 years later when the panels are to be removed? That’s not a headache I’d like to be facing into.

There’s also the issue of looking at them ugly panels for the next 30 years as well as the service roads and cable tracks that have all been put into your lovely farmland.

It wouldn’t be for me anyway.

Grueller

https://www.boards.ie/discussion/comment/120531054#Comment_120531054

Well put DBK1. That is exactly my sentiments on them too.

What’s uglier the panels or the turbines? I think the turbines are more of an eyesore

Kerry2021

https://www.boards.ie/discussion/comment/120531054#Comment_120531054

Is it true that people can really get €1,800/acre? That sounds crazy. I think if someone had land that was extremely poor quality, had no farm buildings of any sort then that would be a good option to go for versus forestry definitely. If they had the farm leased via a company & only paying 25% tax on the €1,800 they’d be doing well. Did I pick it up wrong or can someone call it off then after 10 years and get their farm back completely?

alps

https://www.boards.ie/discussion/comment/120531054#Comment_120531054

Well explained...

Should note however that you can lease out 49% if you holding and retain the Agricultural relief.

A bond for the removal of all equipment and the reinstatement of the land will have been part of the planning permission regulations.

At the end of the process, you will be left with a site fully serviced for the connection of any power production facility..wind, hydro, AD etc.

If you are on poor ground, this is a savage return.

the_amazing_raisin

It might be also worthwhile asking this question in the renewables forum, there's a few landowners over there who have larger solar arrays

I can't really comment from any land ownership or farming standpoint but I'll give what I know from a renewables standpoint

So 1 acre of solar panels works out to something like 500kWp of generation, assuming you got something like 50% coverage of the usable area. This will in turn generate approximately 500,000kWh of electricity per year, enough to power over 1000 homes

Now in terms of payback, the €1000/acre I'm guessing is essentially some company leases an acre of land from you for installing panels and pays you €1000 per year? That works out at 0.2c/kWh, which is pretty rubbish tbh considering I'm getting 22c/kWh for exporting solar from my rooftop

Of course the company is bearing the up front costs and financial risks, which is why you aren't getting much

However, if you're interested in solar power, I would consider looking at something smaller scale to start with

For example farms can install between 6kWp and 50kWp of solar and get paid 13.5c/kWh for electricity they send to the grid. A 10kWp system will likely generate up to €1,000 per year before tax if selling all the electricity to the grid

It'll generate even better savings if you consume most of the electricity yourself because it means you don't have to buy electricity from the grid at ~45c/kWh

The disadvantage of this approach is that you have to pay the upfront costs of the system which will be in the tens of thousands

I have a rooftop array on my house and it's brilliant. It's allowed me to reduce my monthly bills from ~€280-350 to €85 and I'm expecting it'll have paid for itself within 6-7 years

DBK1

https://www.boards.ie/discussion/comment/120531325#Comment_120531325

No, if you want to pull out of a 30 year lease after 10 years I’d imagine the solar company will look for you to return all money already paid to you and probably the cost of construction also.

I take your point about a lad in bad ground but generally you’re looking at 3-400 acres of a block of land for it to be viable for the solar company. There’s not too many lads with that type of area on bad ground. Even to get 4 or 5 lads with 50-100 acres each beside one another to make up the acres is few and far between on bad ground too and they’re not going to want to deal 10 or 15 farmers with 20-40 acres each as that’s too messy and too many people involved.

Not everyone wants to go into company structure either as there are costs and consequences to that too. The company might only pay 25% tax but if you want to take money from the company yourself you then have to pay your income tax and prsi on it so it’ll amount to the same thing.

If you can afford to leave the money for your land in the company and not touch it to avoid the paye and prsi then you probably don’t need the €1,800 per acre in the first place anyway!

eire23

Are ye sure that's all solar is making at the moment? 1k a acre sounds very little.Turbines are around 6-7k a megawatt at the moment or 2.5% of the total earnings which generally exceeds the price per megawatt of it's a good wind site and far less land taken up.

enricoh

I know a lad that has c 100 acres gone into it. He's happy enough with it, he had hedgecutter, bale trailers shifting panels etc hired into the crowd during construction. He has sheep in the fields with the panels as lawnmowers basically.

There was a petition to stop one near me, saying they'd devalue the houses etc. W#@kers looking for a payoff in my opinion.

DBK1

https://www.boards.ie/discussion/comment/120531391#Comment_120531391

Maybe so but how many lads on poor ground have the type of acres required for a solar farm that accounts for less than 49% of their farm? I’m sure on poor ground construction costs will be a lot higher too and so the leases would probably be of a lower value for the land in them areas to account for that?

I’m not an accountant or financial advisor so maybe my reading of it is wrong but I think with land being leased tax free on 10 year leases at anything from €500-€700 an acre it makes far more financial sense than signing into a 30 year lease at €1,000-€1,800 and paying up to half of it in tax.

5 years ago €300 an acre was mad money to be giving for land, now it’s double that. If it doubles again in the next 5 to 10 years I’d be very disappointed to be one of the €1,000 per acre 30 year lease men then.

DBK1

https://www.boards.ie/discussion/comment/120531517#Comment_120531517

The group of farmers that signed up to a solar company here too are all happy as well and are hoping planning will be granted.

It all depends on your circumstances. If you’ve no one coming behind you to leave the farm to then it definitely makes sense. If you’re in your 50’s or more and have maybe gotten fed up of farming and are looking for an easy retirement it probably will work too.

If you have teenage kids that have an interest in farming and want to take it over in 10-15 years then I think it would be lunacy to go into solar.

Different strokes for different folks I suppose.

DBK1

https://www.boards.ie/discussion/comment/120531450#Comment_120531450

While what you have done is a great investment for a home owner and fair play, over its lifetime it should pay you back well, it’s a bit different to a commercial solar farm.

The man putting a 200 acre farm into a solar company at €1,800 per acre is looking to make €360,000 before tax with zero investment. Even after tax he should be clearing close to €200,000 for himself. It’s not really comparable to a 10kwp system earning €1,000 per year after investing probably €10,000 plus day one.

the_amazing_raisin

https://www.boards.ie/discussion/comment/120531606#Comment_120531606

All absolutely true, I was speaking from a viewpoint of the profit from the electricity generation

From that viewpoint, the lion's share of the profit is definitely being kept by the solar company. The land owner gets a steady income and little to no risks but for that they don't seem to get a big slice of the profits

I don't know how €1,000 per acre compares to other uses of the land, probably poor compared to livestock farming. There is some possibilities for dual use land, where animals can graze on the same land as the solar panels

It's something which has worked in other countries pretty well. Apparently the animals often like to sit in the shade from the panels so are quite happy. It doesn't work with cows from what I've read, something about how they've a tendancy to scratch their sides against the mounting poles and can bend them

Anyway, I was hoping to address some of the OPs concerns as they seemed very unconvinced about solar panels in general. FWIW, even on a murky day like today 65% of my electricity has come from sunshine. I'm currently running all my appliances for free and heating the water for the house free of charge

Kerry2021

Would many of you be inclined to think that if a person was going to plant their farm in forestry or else cover their farm in solar panels that they would be better off entirely just selling the farm?

Land is making roughly €10,000/acre. I think if a person is farming the land for 20 years they can sell it and pay no CGT at all on it. I may be wrong but I’m pretty sure that’s the case.

Personally I think forestry is the last word altogether. Once the forest is cut down and the grants have been drawn what is the “land” worth then?

I think from a farmers own standpoint wind turbines are the best bet. A guy could have 2 or 3 turbines up around his farm and he can still farm the land the same as always.

I would be very interested if anyone could tell me how much farmers are actually getting paid for wind turbines now? I know someone above mentioned 2.5% regarding the turbines but I didn’t really understand their comment

Water John

A 2.5MW turbine would give the landowner about €20K per year. Many of the solar projects are smallish as they would supply into the local substations. So a 5 MW solar farm would need about 25 acres. Sheep really are the only animals one could have under them. I'm not sure is it being looked at in this country but panels are usually from about 3 feet up and some are looking to raise the base. This would allow a broader set of options for the ground use.

Kerry2021

Anyone heard anymore lately about solar panels? I was reading over this thread again and I can’t get my head around the fact that some people are making €1,800/acre. That is absolutely mad money. I wonder is it index linked? Inflation would wear that €1,800 down to nothing half way through the 30 year lease

Water John

IDK about solar but Turbines would be indexed.

Gudstock

https://www.boards.ie/discussion/comment/121785932#Comment_121785932

AFAIK that would be rental income, so can't write off expenses against it so full whack of income tax rates against it. Also, complicated tax issues if land is transferred from one generation to the next, might no longer be agricultural so massive tax implications.

Bangoverthebar

A solar farm in dublin sold for 160m recently. Not sure what paper i saw it in.

If you have a perfect south facing site near a large population centre i would be holding on.

Bangoverthebar

Found it

Business Post

https://www.businesspost.ie › news

Statkraft sells Meath solar farm to Octopus for €160m

Jonnyc135

https://www.boards.ie/discussion/comment/120531054#Comment_120531054

Excellent post, learned alot there regarding the land being classed as commercial and that would have serious inheritance tax implications down the line.

The only option I would see solar working on our farm is using it as a way of getting out of the replanting obligation on our forestry that was planted late 80s. This land is already dead in terms of income and as we got the grant back then there is nothing to be got the second time around, the solar would provide an income on income less land in this case - but it all boils down the grid connection and grid route costs and payback.

Bazzer007

I think a lot of lads convert their farms into companies when opting to plant solar panels. Pay corporation tax, write off profits against expenses. May qualify for business relief.

Kerry2021

I wonder what’s the minimum amount of land required for a solar farm? I’d be thinking it’s surely at least 350 acres.

if a person was to go down the route of a solar farm they would have to have the whole lot of that income coming in through a company. Because it would be “unearned income” it would be subject to 25% corporation tax so you’d be clearing €1,350/acre after tax.

I know there’s complications with inheritance tax after but my guess would be land won’t be getting dear anytime soon and a fella could buy as much land as he’d like out of the money he’d be getting into his solar farm company in rent money. * edited to explain that for inheritance tax purposes a person must have 51% of the land they own dedicated to agriculture so even if a person put all their own farm in solar panels they could just buy more land to have their children still qualify for agricultural relief

if it’s not index linked then it is absolutely useless though. My own grandfather bought our farm for £30/acre in the 1940’s, by the 70’s wasn’t land making up to £4,000/acre and by the Celtic Tiger wasn’t it making €20,000/acre in ‘07

what would seem like a fortune today might be nothing in 30 years

Donald Trump

https://www.boards.ie/discussion/comment/121786898#Comment_121786898

The money would be taxed at corporate rates once it stays within the company. You'll be taxed on it as you extract it.

Bazzer007

https://www.boards.ie/discussion/comment/121786898#Comment_121786898

It's index linked. Companies seek farms over 300 acres or seek to combine farms. If you live near a sub-station, battery storage is three or four times the rental income. I'd be open to planting as you say you could buy another farm with the income.

Kerry2021

I wonder could a person borrow against the future money they would earn from having their own farm rented out as a solar farm?

we’ll say for round figures a guy has 400 acres in 1 block, is getting €2,000/acre rent so €800,000/year

would a bank be willing to lend him a couple million to buy another farm based on the future income he’ll get in rent from his solar farm?

also could it please be explained to me about the money to be made from the battery storage, that’s something I’m totally unfamiliar with. Thank you

Donald Trump

https://www.boards.ie/discussion/comment/121786959#Comment_121786959

The banks would lend against the physical assets - one or both farms - and then take the projected income into account when determining whether you can repay.

They would not secure your loan against only the payments as the solar company could go bust next year. If they wanted to be in the business of taking that risk, they might as well start buying land themselves and renting it to the solar people.

In general, where Ag relief is not available, there is a possibility of qualifying for Business relief which also results in a 10% valuation for the purposes of CAT. If you wanted to find out whether it would be possible to set yourself up for that in a specific situation, you'd want to get advice. Rules also can change over time too. There would be no guarantee that the same reliefs will be around in 10/20/30/40 years.

Water John

Generally a small sub station might have 5Mw spare capacity. That would require 25 acres. The total land in the country required for solar is quite small.

Kerry2021

I wonder why more people aren’t doing it? For people in tillage with a big stretch of land you’d imagine it’d be a no brainer, it’s not like they’d have a lot of money invested into the farm in terms of buildings etc and tillage has basically zero of a return from what I hear

Donald Trump

https://www.boards.ie/discussion/comment/121787717#Comment_121787717

What would happen to the value of your land if, suppose in 10 years you want to sell up, but the buyer of the land would be stuck with a contracted price of 2k per acre for the remaining 20 years when the going rate for panels at that time is now 4k an acre?

That's even ignoring the issues that not everywhere will get planning permission for the solar farms.

Kerry2021

At 8.53am today Bazzer007 said in a post that the payments are index linked so according to that you’d be getting whatever the going rate is forever more.

I’d know nothing about the situation as regards anyone trying to sell the land during the 30 year lease, I don’t think it’s something many people would have an interest in

alps

https://www.boards.ie/discussion/comment/120531054#Comment_120531054

50% tax on €1.800 is still €900....and index linked.

Very few live next door to someone willing to pay €500 to €900 index linked for the next 25 years.

As long as Solar Land does not exceed 49% of holding, or what's being transferred, agricultural relief applies.

Sell your BP. When you get your land back, you can apply for a new one.

A bond will have to be lodged with the County Council to make provision for reconstitution of the lands in the event of the solar company not doing so.

You will be left with reconstituted land, or not if you wish, plus a grid infrasture to your farm that may be a huge asset in time..

Donald Trump

https://www.boards.ie/discussion/comment/121788443#Comment_121788443

The contract would be between you and the operator. There would be no rules as to what the terms would have to be.

"Index linked" could mean anything as it would depend on the index. If you had rented out your land in 1980 on a 50 year contract at a good yearly rate for then and had the repayments linked against a milk-price index, you probably wouldn't be too happy today. Are you going to link it to CPI (easily measurable) or some unofficial index of energy prices that may or may not exist in 20 years?

Bazzer007

https://www.boards.ie/discussion/comment/121789156#Comment_121789156

CPI would be the norm.

If really interested in going that route get a good land agent involved. There's not much of a catch really as plenty of these farms are now operational. Speak to the owners and let them tell you what's involved. I've heard of lads getting over 6k per acre for battery storage depending on planning. 20k sign on etc. Planning for wind turbines is easily taking over a decade now.

Donald Trump

https://www.boards.ie/discussion/comment/121789236#Comment_121789236

That was the point. CPI might not keep the landowner at "the going rate" as regards money being paid for land. It could be more or it could be less. Especially with something like renewables where there would be advances in the technology itself.

On the other hand, it could hypothetically work in your favour if CPI went way ahead of the going rate for land. But in an extreme scenario the company renting the land could just walk away and fold up.

Bazzer007

https://www.boards.ie/discussion/comment/121789338#Comment_121789338

There's always an element of risk but with CPI you have some level of protection. I know farmers who leased land at €500 an acre and they're not getting paid. It was fine in 2022 when the milk price was strong. In reality, most newly leased farms are making €300 to €350 max. If you can get €1500 to €1800 an acre you'll be set up for life.

Insurance bonds can protect you by returning the land to its original condition. In reality with the level of investment involved the solar farm would be purchased by another company. Obviously there's risk involved but not as much as trying to milk cows and spending big money trying to keep up with the latest regulations.

Donald Trump

https://www.boards.ie/discussion/comment/121789417#Comment_121789417

A receiver can repudiate any lease. That's besides the point.

My point about the index linking was to the poster who assumed that they would always get the "going rate" of the day. I did not say there would be zero protection - I just pointed out that their assumption was not exactly correct.

Kerry2021

I wonder on what ground a solar panel wouldn’t get planning permission? I’ve actually never laid eyes on one myself so they must have a tendency to put them in out of the way places.

roosterman71

https://www.boards.ie/discussion/comment/121789948#Comment_121789948

Plenty haven't got planning. Search any of the counties planning lists and you'll see many rejected.

If you fly into Dublin on a fine day and come at the airport from the Kildare/Meath direction you'll see the finest of tillage land covered in panels. I was amazed when I seen it last time

pureza

The crowd doing the rounds in my area in the southeast are offering €1300 an acre index linked

They will pay an upfront sum non refundable for you to sign up to an agreement that becomes official if they get planning

They pay all the costs including your legal fees

You are taxed at 40% btw the same as renting a house,meaning you get 650

Unlike retirement relief there is no cap on how much you can earn

So if you give them 150 acres you will end up with 97k+ into your hand

Renting the same if over 55 and retiring at say 400 an acre,you'd get 60,000 but would be taxed on on 16 k of that minus your allowances

Those are rough calculations, so you can see why it's tempting for some given its guaranteed,whilst the farmer rental isn't

50HX

https://www.boards.ie/discussion/comment/121786799#Comment_121786799

Are you in a hen harrier zone, if so you may qualify for a proposed new scheme to not replant a felled forestry plot as part of the threat response plan to low harrier numbers

Kerry2021

My own personal take on it all is a person would want to be in a position where they could afford to set up a company for the income from the solar farms and to not be drawing a wage out of it and buy property then out of the solar farm rental money.

i wonder would any flat land that’s south facing be suitable for the solar panels? I take it north facing land wouldn’t be accepted.

you’d hear of people doing once a day milking, putting in robots even to milk their cows and you’d have to ask the question would those people be better off to just put in solar panels?

I saw videos on YouTube of solar panels in Ireland and they don’t look that bad, I can easily imagine the land being farmable again once the lease is up

Water John

The main factor is the electricity grid and stations in the area, with spare capacity.

SodiumCooled

https://www.boards.ie/discussion/comment/121791359#Comment_121791359

Not sure I agree with all the setting up companies etc - at the end if you ever want the money out you are going to be taxed. My take is you are as well off to just treat it as income, max all reliefs like as much as possible into your pension and just take the rest like a wage.

There is no talk of any around us at the moment but what I would see it as is my pension if there ever was an opportunity. Like many my pension isn’t great due to starting paying too late and there is only so much you can afford monthly now but a solar or wind turbine would allow me to max my pension for years to come and probably actually retire at a normal age along with the left over additional income every year (after tax).

Given the option a wind turbine would be far more preferable also, wouldn’t be a fan of giving up so much land to solar whereas a turbine you might only lose half an acre plus a bit for the road into it and you can farm away as normal.

Kerry2021

https://www.boards.ie/discussion/comment/121791546#Comment_121791546

As regards the pension as far as I know because the income from the solar farm would actually be from what’s essentially rent you wouldn’t be allowed put it towards your pension. I know that’s the case with the rent of houses anyway.

for round figures let’s say a person earns €50,000 in their job and €50,000 from the rent of houses and we’ll say they’re 35 years old. They’d only be allowed to put in 30% of the income from their job. The rules are a bit funny when it comes to “unearned” income. You could save the money up in the company anyway, when you’d retire you could draw out a wage from it each year and keep yourself on the lower tax rate so it’s apples and oranges anyway really

SodiumCooled

https://www.boards.ie/discussion/comment/121792492#Comment_121792492

As regards not being able to put the solar income into a pension - I don't know the ins and outs but the simplest solution regardless would be to just max your contribution from your job and compensate the drop in take home pay with the solar income.

Agreed there is different ways but I've heard discussions on using companies to avoid tax before and it often doesn't make sense. But there are a lot of variables and it will be down to each individual case most likely.

techman1

you fly into Dublin on a fine day and come at the airport from the Kildare/Meath direction you'll see the finest of tillage land covered in panels. I was amazed when I seen it last time

It's madness for the government and the stupid green greens to be encouraging this. Solar farms should only be installed on barren lands in southern Europe and North Africa where there is loads of sun , and barren dry land. We are doing the opposite covering the best most productive land on the planet with this industrial junk . There is no shortage of barren sun drenched land in the world however there is a shortage of arable fertile land with great rainfall. Eventually ireland will have to goto nuclear energy anyway

Who2

Would a self administered pension fund not be an option here or is that loophole still open?