Important information for Farmers considering Solar.
530 Utility Scale Solar Photovoltaic’s (USSPV) or Commercial Solar Farms have sought connections onto the Irish Grid up to Jan 2017; the total MegaWatt (MW) size is 5,215 MW, covering approx 26,000 Acres. What should the Irish Farmer be looking out for when contemplating Solar? CAP subsidy or Basic Payment system (BPS). Any Agricultural land switched to USSPV will not be eligible for a BPS claim for the duration of the contract. The Minister of Agriculture, Michael Creed TD, has indicated that “While cases involving solar panels will be examined on an individual basis, the area covered by the solar panels will be deemed ineligible for the purposes of claiming BPS, in line with advice from EU Commission.” Farmers should check availability and cost of land to transfer entitlements and ensure availability for the duration of the USSPV otherwise the farmer may be rescinding BPS entitlements in perpetuity on Commercial Solar Farm lands. An additional caveat is that Farm land should be owned/leased and used and managed by the BPS applicant in order to qualify for the scheme; land owned by the Farmer but leased to a Solar Developer for a Commercial Solar Farm should be additionally checked for eligibility. Farm transfer and succession planning, Section 89 of the Capital Acquisitions Tax Consolidation Act (CAT) 2003 provides for ‘Agricultural relief’. The relief takes the form of a 90% reduction in the taxable market value of the gifted or inherited agricultural property, to avail the agricultural holding must comprise at least 80% by the prevailing gross market value of the beneficiary’s total property. The Minister of Finance replying to a parliamentary question from James Browne TD: “The Revenue Commissioners take the view that land on which solar panels are installed is not agricultural property for the purpose of establishing whether or not a beneficiary satisfies this ‘80%’ test.“ A condition for agricultural relief that applies in relation to gifts and inheritances taken on or after 1 January 2015 is that a beneficiary must actually farm the land for a period of at least 6 years after taking the gift or inheritance. The ability to farm the land would be affected if solar panels are installed on the Farm during this 6 year period. Farmers should know that a valid grid connection application linked via a USSPV Option/Lease to their Farm lands may become a tradable item exercisable at the discretion of the Developer, the Farmer should be cognizant of exposing his holding to commercial strangers, a contract quid-pro-quo should accommodate moving his USSPV option/contract to a competitor Solar developer should a solar developer sit on his hands/fold/exit the State. The Farmer should exercise caution about signing a contract that allows a developer to exercise optional control in perpetuity, even to successors, over his lands before putting pen to paper. A USSPV Renewable Energy Feed in Tariff (REFiT), or subsidy, is unlikely be in place until late 2017/early 2018, and the Minister has indicated that this will be limited; the existing 530 USSPV applications may well be disappointed. Solar will undoubtedly be of benefit to Ireland in its future energy mix, and undoubtedly there will be farms that USSPV will suit perfectly – adjacent to an existing substation, with a southerly aspect, on marginal land, with low or non-existent BPS claim, with no succession concerns. The family Farmer should take the best legal and tax advice possible to ensure that they are fully aware of what they are signing their farm up to; an empty sack doesn’t stand on its own – it’s unadvisable to fill it with hot air.