Heads of Terms between [Community Group] and Landowner
[Property]
Option Agreement
Option Period
Exercise of Option
Standard Security
Exclusivity
[Option Fee]
Right to Extend Period
Operational Activity
Initially 3 [to 5 years] years with option of further 2 year period.
A further extension will be granted for an additional 2 years in the event that a planning application
has been submitted but a planning consent has not yet been obtained and/or there is no grid
connection yet available.
The Community shall have a right to require that the Landlord grants them a Lease upon serving a
notice to that effect provided they have done so in the Option Period. The draft Lease shall be
annexed to the Option.
The Landowner shall grant a Standard Security in favour of the Community Group ranked according
to other existing securities.1
Subject to compliance with the Option Agreement terms, the Community Body’s right will be Exclusive
during the Option Period.
£[
] payable to the owner on completion of Option Agreement.] [NOTE:- Community
Organisations may get away without having to pay the Option fee. The market however may
dictate that you will pay for option as a commercial developer will almost always pay an option
fee. Accordingly if competition for site expect to pay around £2-2.5k per annum in an Option
fee.]
Each extension limited to 2 years, [subject to payment of further Option fee of £[ ]pa (indexed) with
automatic extension] i. Further extensions will be granted on an annual basis, up to a maximum of 10
years from signing of the option agreement, ONLY if a planning consent has been given but a grid
connection is not available.
Erection of up to [2] anemometer masts at agreed locations (owners agreement not to be
unreasonably withheld or delayed) and noise monitoring equipment, vehicle access along existing
tracks/roads, right to take vehicles, including 4wd vehicles, ATVs and diggers, onto land for
installation and maintenance of meteorological masts, pedestrian access across farm/forest land,
1
Subject to the Community Group having all necessary consents in place, however Community Group needs right/ability to exercise lease or if option period
expires whilst in appeal or close to determination.
Draft Heads of Terms January 2013
1
Ownership
Termination
Option Site
Planning
Competing Development
Assignation of Option Agreement
[Indexation
excavation of trial pits, and access for any necessary environmental and technical survey(s). Access
to be exercised to take reasonable account of the landowners current sporting and agricultural
activities.
The Landowner shall not sell, transfer, lease or create any interest in the Property or any part thereof,
without (1) binding the potential purchasers to comply with the terms on the Option Agreement in all
respects and (2) in all cases, without obtaining the Community Body’s consent first, such consent not
to be withheld or delayed, provided that the successor in title is bound by the terms of the Option and
granted a valid Standard Security to secure the obligations of the landowner under the Option.
Community Group can terminate the agreement at any point in time on giving 3 months written notice.
On termination of the Option Agreement the Community Group will fully reinstate the land and access
tracks to its original condition to the Landowner's reasonable satisfaction.
The Community Group will identify the extent of the Option Site, which is likely to be required in the
Agreement. The Landowner will confirm within 14 days of receiving this information whether the area
of land is acceptable.
The Landowner agrees during the Option Period not to undertake any activity outwith the option site
on their land which will either interfere with the wind development, including pursuing competing wind
power development, any mineral extraction activities or any other activity that may reduce the chance
of the wind development gaining planning approval. This also to include a provision not to diminish
the wind resource (excluding the normal growth of any existing trees).
The Landowners will assist, where requested by the Community Group, in any planning application
for the Option Site, subject to any additional costs or expenses incurred in this process being met by
the Community Group. The Landowner will not discuss/divulge to any third party any information
which the Community Group identifies as confidential without the Community Group's permission.
The Landowner agrees to enter into any legal agreements necessary to obtain planning or other
consent, subject to indemnification of costs by Community Group.
The landowner is not to facilitate or grant any third party rights to construct a competing wind
development on the landowners’ property.
Can assign to any company within the Community Group's group of companies or to financier or Joint
Venture partner without consent. Otherwise to any company of sufficient financial standing that will
actively pursue planning approval for a wind energy project on the Option Site with Landowner's
consent (not to be unreasonably withheld).
Will be based on the movement in the retail price index with a fixed reference date of signature
of agreement on [ ] if earlier. – IS THIS REQUIRED?]
Draft Heads of Terms January 2013
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Landowner's Costs
Option Notice
Direct Agreement
Reasonable costs, primarily Landowner's agent and legal advisors, to be reimbursed by Community
Groups up to a maximum sum of £[ ].
The Community Body may serve the Option Notice (in the same or substantially the same form as the
version annexed to the Lease) at any time within the Option Period. The Option Notice will define the
extent of the leased subjects. The date of entry under the Lease will be [1/2] months following service
of the Option Notice.
The Landowner is obliged to enter into a direct agreement with the Community Body’s lender on such
terms as are reasonably required.
Lease
Lease Term
[28] years, to include, the period of construction, operation and final decommissioning.
Date of entry to be 28 days after last date of consents [(ie 18 months to build 25 years operation 18
months decommissioning).]
Extension of Term
[Development
Payment)]
Sum
On agreement of new rent for a further 25 year period.
(Disturbance [The sum of £[ ] paid to the Landlord at the date of entry.]
[This consideration is in respect of the grant of the Lease and a Disturbance Payment.]
Tenants Rights
To construct, operate, maintain, repair and dismantle wind turbines (and the rights to re-power after
the expiry of 10 years) and associated equipment including anemometer masts, telecommunication
equipment, underground cabling, overhead line, access roads, hard standings, temporary
construction compound, substation, control room and necessary borrow pits.
Generally, the tenant will be granted all rights necessary over the Leased Subjects to construct
commission and operate the wind turbine/wind farm development.
The location of any borrow pits to be approved by the Landowner in writing (acting reasonably).
Leased Subjects
On exercise of the Lease the Development Site (the leased subjects) will be defined by plan and
appended to the lease, within the Development Site being no greater than the Option Site. The
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Development Site will be limited to those areas of the Option Site required for operation of the wind
farm (including but not limited to turbine locations, anemometers, hard standings, construction areas,
sub-station, control/metering station, cabling and overhead line) in addition to areas required for the
protection of the long term wind resource. Also the Tenant will be entitled to a right of access over the
Landlord's other land.
Tree-felling / Forest Management
If tree felling is required then Tenant shall have right to fell trees where reasonably required. A felling
and restocking plan is to be agreed between the Tenant and the Landlord prior to the Date of Entry
under the Lease (both parties acting reasonably).
[Principal Access]
[If part of a multi-ownership site, then where one landowner provides the tenant's declared principal
access off the public road then an additional payment of £[ ] (indexed) per annum.]
[Sub-station/control station]
[Where a site is required fir a substation/control station for the benefit of a multi-ownership project a
rent of £[
] (indexed) per annum.]
Grid connection
Where power generated on the landlord's property is exported from the Development Site via
overhead line or underground cables, then standard SLF/SNFU wayleave/servitude rates to apply in
relation to that additional ground that is required for the grid connection,. The Landowner reserves
the right to reasonably dictate the route of any overhead cables.
[Crop Compensation]
[The tenants have the right to clear fell any forestry within the Development Site. Where there is a
requirement for any woodland clearance, compensation will be paid to the landowner prior to the
commencement of such clearing operations. Crop compensation will be based on agreed figures to
be entered into [matrix to be attached to the Agreement]. If the landlord is legally required to re-pay
any Forestry Commission grants (plus interest) in relation to any tree clearance than these costs are
to be recovered from the tenant.
(Note: Community Group needs to be advised at any early stage of suggested matrix)]
Landlord's Reservation
Any parts of the Development Site, which are not occupied by the tenant equipment can be used by
the landlord as long as his activities are secondary to the tenant's requirements and do not interfere
with the tenant's interest.
Draft Heads of Terms January 2013
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Funder Protection
Rental Options
The Landowner is obliged to enter into a direct agreement with the Community Body’s lender on such
terms as are reasonably required. The Community Body’s lender shall have rights to “step-in” and
take over the Lease in the event that the Tenant defaults on its obligations to the lender.
All notices shall be copied to the Tenant’s lender.
[On the date of entry the Tenant will pay a Development Fee of £[ ] or £[ ] per megawatt of Installed
Capacity (whichever is the greater).
For the first 15 years of the Lease the Tenant will pay a Semi Variable Rent:
1.
Either:
1.1
a Base Rent (a) for the first 15 years of the Lease at £[
]
(index
linked)
per
megawatt x Installed Capacity pa; or (b) for the period after the first 15 years at £[]
(index linked) per megawatt x Installed Capacity pa;
or
1.2
a Land Fee (a) for the first 15 years of the Lease at £[
] per megawatt hour of
electricity exported in any calendar year from the turbines on the Development Site; or
(b) for the period after the first 15 years at £[
] per megawatt hour of electricity
exported,
whichever of 1.1 and 1.2 is the greater; and
2.
A sum equivalent to [ ]% of the Tenant's Buy-Out Fund Dividend.
For the period after the first 15 years of the Lease, at the election of the Landlords, the Rent
shall be either (a) the Semi Variable Rent or (b) a Variable Rent whichever is the greater of the
Base Rent or a sum equal to [
]% of Gross Income (ie all income from electricity
generated and all other income from the operation of the turbines on the Development Site).
3.
Dependent upon the manner which rent is to be paid, the tenant will provide supporting
Draft Heads of Terms January 2013
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information declaring
a.
the installed capacity;
b.
The actual or anticipated amount of electricity generated during each payment period.
c.
The actual or anticipated Gross Income.]
Indexation
Will be based on the movement in the retail price index with a fixed reference date eg. the signature
of agreement or date of entry if earlier.
Wind Protection Zone
The parties shall agree areas required for the protection of the long term wind resource, in which the
landowners shall only be entitled to erect buildings or structures, or plant trees or hedges except with
the Tenants prior consent (not to be unreasonably withheld). Wind Protection Zone may be [500m]
radius from location of wind turbines.
[Shooting
Unless otherwise agreed with the landlord, the right of the landlord or any shooting tenant to shoot on
those areas not occupied by the tenants’ equipment will be continued, but will be governed by an
agreed Code of Practice. (Note: code to be agreed at early date).]
[Early Termination
The Tenant has the right to terminate on 6 months notice, but will continue to pay rent as long as he is
in occupation of the leased subjects, subject to
a.
no penalty being payable in the first 10 year period from date of entry;
b.
two years rent payable if early termination occurs between years 11 and 20 and is not due to
loss of an economic power purchase agreement;
*Rent due during any early decommissioning period, will be based on the fixed rental formula.]
[Use of Minerals
Royalty due in respect of any dug material from borrow pits used for the construction of access roads
and hard standings, paid at £1.00 per cubic metre; for the avoidance of doubt no royalty shall be
payable on any material won from foundation excavations.]
Access Roads
The standard of any road built for the purpose of turbine installation and future maintenance and
Draft Heads of Terms January 2013
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decommissioning will meet the minimum forest roading spec. that is annexed to the lease.
[De-Commissioning
[Landlord's Costs
1.
An escrow account will be established for the portion of the wind project at an amount fixed
by an independent engineer, reviewable at the reasonable request of the landlord, every 5
years. 50% payable on commencement of construction and remainder when project is
commissioned.
2.
12 months period after decommissioning and lease termination to restore ground
vegetation. All surface structures removed and concrete broken out to 1 metre below
surface. Road that might be of use to the landlord to be left at his discretion, subject to
planning approval (underground cabling not to be the subject of removal).]
Reasonable costs to be settled by tenants including prior to and during construction:
[1. Costs associated with agreeing any woodland clearance and agreeing any crop details
with tenant/Community Groups forestry surveyor.
2. Costs associated with attending any site meetings to agree method of working or
responding on written requests from tenant/Community Group.]
The tenant/Community Group will confirm their wish for landlord's input prior to any costs being
incurred.
However, costs to be reimbursed exclude any policing of the lease by the landlord or his appointed
agent, where this involves written or verbal reports to landlord, impromptu site inspections and any
other time and expense resulting from the landlord's need to "monitor" the tenants or the tenant's
contractor's activity during and prior to construction of the wind farm.]
Indemnification
Planning Agreement
To indemnify the landowner from and against all actions, proceedings, claims, demands, losses (but
excluding consequential loss), costs, expenses, damages and liability in respect of (a) any
death/injury or damage to property, (b) the landowner's obligations under any Planning Agreement,
and (c) any claim in respect of fire damage – no smoking or fires to be lit. The basis for any loss of
moorland and or woodland as a result of fire to be no less than the landlord's existing cover. To have
general insurance cover of not less than £5 million.
Landowner is obliged to co-operate with Tenant and/or local authority and enter into a Section 75
Draft Heads of Terms January 2013
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Agreement and such other planning agreement reasonably required. Tenants will meet all cost and
expenses as a result of entering into agreement and be responsible for complying with obligations
therein
Competing Development
The landowner is not to facilitate or grant any third party rights to construct a competing wind
development on the landowners’ property.
Draft Heads of Terms January 2013
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