Battery storage is a fast-growing sector in the UK, as it offers a flexible and reliable way to balance the electricity grid and integrate more renewable energy sources. Battery storage facilities can be installed on land that is not suitable for other uses, such as brownfield sites, industrial estates, or near substations.

Typically negotiations start with heads of terms which set out the main commercial and legal terms that will form the basis of the option agreement and the lease agreement. The option agreement gives the developer the right, but not the obligation, to lease the land from the landowner for a certain period of time, during which they usually seek the necessary planning and grid connection consents.

If the option is exercised by the developer, the lease is entered into. This is a contract that grants the developer the exclusive right to occupy and use the land for the battery storage facility for a fixed term in exchange for paying rent and complying with certain obligations. This fixed term is usually between 20 and 30 years.

The heads of terms are not legally binding, but they are an important tool to ensure that both parties have a clear and mutual understanding of the key aspects of the deal and to avoid disputes and delays later on. Therefore, it is advisable to seek legal advice from a solicitor who specialises in energy and property law at an early stage before entering into heads of terms.

Some of the most common and relevant legal aspects to consider when negotiating the heads of terms are:

  • The location and size of the land that will be subject to the option and the lease, and whether it includes any access rights, easements, or restrictions.

  • The duration of the option period and any rights to extend.

  • Responsibilities for obtaining planning permission, a grid connection offer, and environmental permits and duties to assist with these.

  • The duration of the lease term and the rent that the developer will pay to the landowner, and whether it is subject to any reviews, indexation, or incentives.

  • The rights and obligations of the developer and the landowner under the lease, such as maintenance, insurance, security, indemnity, and termination.

  • The provisions for dealing with any changes in circumstances, such as force majeure, change of law, breach of contract, or insolvency.

  • Liability for contamination.

These are not exhaustive and may vary depending on the specific circumstances of each project. If heads of terms are agreed then it is hard to subsequently try and renegotiate so it is important to seek early advice from a solicitor who can help you to protect your interests and achieve a fair and balanced deal, particularly since developers will usually agree to pay the landowner’s legal fees.

To speak to a commercial property solicitor about leasing a battery storage facility, please call 0845 287 0939 or contact us by email through our online contact form.