23 Mar 2026
Key Traps Every Landholder Should Watch For
Renewable energy projects such as solar, wind and battery storage are increasingly being developed on rural land across NSW and regional Australia. For many farmers, these projects present an opportunity to diversify income, support succession planning and reduce exposure to seasonal volatility.
Renewable energy agreements are not standard commercial leases. They are long term and complex documents that can affect how land is used, accessed, financed and passed on for decades. In acting for landholders, I consistently see the same risks emerge.
Below are some of the most common tricks and traps farmers should be aware of before signing.
- Long option periods with minimal control
Most renewable energy projects begin with an option to lease, often running for many years and sometimes extended at the developer’s discretion.
During this period, the landholder may be restricted from selling or further developing the land, entering into other long term arrangements, or making changes that could affect the project.
The trap is an option fee that appears reasonable on an annual basis but effectively hampers use of strategically important land for a decade or more, with limited rights for the landholder to exit if the project does not progress.
Key issues to focus on are clear milestones, limits on extensions, meaningful option fees and termination rights if progress does not occur within agreed timeframes.
- Intrusion beyond the leased area without adequate compensation
A recurring issue in renewable energy leases is the disconnect between the defined leased premises and the practical footprint of the project.
While rent may only be payable on a defined area, the project may also involve access tracks and widened roads, underground cabling, construction laydown areas, easements and buffer zones, and temporary construction impacts well outside the leased area.
The trap is significant additional intrusion across productive farmland without clear compensation, control or reinstatement obligations.
Key issues to focus on are compensation mechanisms for off premises impacts, clear definitions of permitted use outside the leased area, limits on expansion and rehabilitation obligations once construction is complete.
- Protection of grazing and farming rights
Many leases allow the landholder to continue grazing or farming, but often only to the extent that it does not interfere with the project.
The trap is broad and undefined interference clauses that allow farming activities to be curtailed in practice, even where coexistence is feasible.
Key issues to focus on are clear preservation of existing farming uses, defined exclusion zones, agreed operational protocols and compensation where agricultural activity is restricted.
- Repair, maintenance and upgrade obligations for shared infrastructure
Renewable energy projects frequently rely on shared infrastructure including access roads, gates, drainage and fencing.
The trap is leases that impose minimal repair obligations on the tenant, leaving the landholder to deal with deterioration, increased maintenance costs or substandard infrastructure once heavy construction traffic has passed.
Key issues to focus on are clear tenant obligations to repair damage caused by construction and operation, maintain shared infrastructure to an agreed standard, upgrade infrastructure where usage materially increases, and return infrastructure in an agreed condition at the end of the lease.
- Rent structures that do not perform over time
Rent is commonly expressed as a minimum annual rent, a per hectare or per megawatt amount, or a staged or variable payment model.
The trap is rent mechanisms that appear attractive initially but fail to keep pace with inflation, land value or the operational life of the project.
Key issues to focus on are transparent rent calculations, robust escalation mechanisms, independent verification rights and protections against staging delays that reduce income.
- Preserving the right to deal with the land and plan for succession
Renewable energy leases are often drafted on the assumption that the landholder remains unchanged for the life of the project.
The trap is restrictions on transferring the land, restructuring ownership or passing land to family members that inadvertently interfere with succession planning or financing.
Key issues to focus on are clear rights to transfer land to family members or related entities, restructure ownership for succession or tax planning purposes, sell the property and grant security or deal with financiers subject to reasonable conditions.
- Confidentiality clauses that go too far
Confidentiality provisions are standard, but they are often drafted very broadly.
The trap is clauses that prevent landholders from speaking with neighbours, advisers or other affected landholders, even where coordination is sensible and necessary.
Key issues to focus on are appropriate carve outs for legal, financial and agribusiness advisers, family members, financiers and affected neighbours.
Conclusion
Renewable energy projects can deliver long term value for farming families, but only if the legal framework properly reflects how land is actually used, managed and passed on.
These agreements require careful negotiation based on an understanding of both agricultural operations and the commercial realities of renewable energy projects. Independent advice from a lawyer experienced in acting for landholders is essential before signing.