Photovoltaic systems have become hugely popular among private investors due to their potential to reduce household electricity bills. Business owners see this as a way to supply electricity to larger areas by building solar farms, and thus as a means of generating profit.
What is a photovoltaic farm?
In a nutshell, a photovoltaic farm is a specially designated area within a given site where photovoltaic panels have been installed to convert solar energy into electricity. The power output depends on the number of photovoltaic panels installed. Thus, the more panels installed, the greater the power generated.
An increasing number of entities are deciding to invest in photovoltaic power plants. The investment may involve the investor registering a company and constructing a photovoltaic farm in a designated area. However, before a photovoltaic farm can be established, a number of obligations must first be fulfilled. It is necessary, amongst other things, to obtain the relevant administrative decisions and permits, including environmental and planning permissions, to secure grid connection terms, and to hold legal title to the property on which the investment is planned. The process of constructing a photovoltaic farm and securing grid connection terms is therefore quite time-consuming.
Problems relating to the property for the investment may arise as early as the initial stage. This is because not every investor owns, or is able to obtain, the title to the land required for the investment. Consequently, investors often decide to enter into a lease agreement with the property owner, which is usually concluded for 29 years. It should be borne in mind that the leased land must also meet specific conditions, and these may vary depending on the investor and the investment.
As indicated above, the process of obtaining all the required decisions and permits is time-consuming and requires a certain financial outlay. Therefore, a potential investor wishing to invest in green energy and solar farms may also acquire shares in an existing special purpose vehicle established specifically for the purpose of constructing a solar farm, or acquire the rights to the project itself (installation on a specific property). In the first case, upon acquiring 100% of the company’s shares – the investor, becoming the sole shareholder of the company, becomes the owner of the project. Acquiring rights solely to a specific project (without acquiring shares in the special purpose vehicle) entails a greater number of formal obligations to be fulfilled.
Should you have any questions regarding the above, please do not hesitate to contact our firm. We also invite entities interested in investing in photovoltaic power plants to get in touch.
Expert in energy, commercial and business law - She has extensive experience in the areas of energy, commercial and business law, gained both at renowned Warsaw law firms and by serving as in-house lawyer at leading energy, financial and new technology companies. Her professional practice focuses on providing comprehensive legal services to corporations, managing mergers and acquisitions (M&A) transactions, transformations of commercial companies, and in resolving corporate disputes.
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