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Shared knowledge from our partners: Peculiarities in acquiring property for construction of an energy site

At xFigureFinance, we structure renewable energy projects in a way that meets the requirements of capital providers, thus enhancing their overall returns on investment.  In the process of turning ideas into “bankable” projects, we invariably work with a number of trusted partners. Only the combination of legal, technical and financial expertise can guarantee the success and high return of your projects.

We thank our partners from Dimitrov, Petrov & Co. Law Firm (DPC) for the shared expertise and approach to speeding up the administrative process in projects where a division of the plot is required.

Peculiarities in acquiring property for construction of an energy site

A condition for connecting a solar or wind farm to the electricity grid is to certify the ownership or other property right over the property. This condition applies to all RES (Renewable Energy Sources) sites, regardless of their total installed capacity. So, the request for study of the conditions and method of connection of a power plant is submitted by a person who has property rights over the property where the power plant will be built. The same is also required for approval and coordination of investment projects and issuing of building permits under the Spatial Development Act (where such are required).

However, very often the property where the plant will be built is part of a larger land plot. Accordingly, in the preliminary contract for sale of the plot the parties often agree that the landowner will first divide the land plot into smaller properties. The investor will subsequently acquire the smaller property on which the energy site will be built.

However, the separation of regulated land plot implies an amendment of the detailed development plan, which is a complex procedure and usually takes long time. At the same time, investors often want the grid connection and investment design procedures to begin as soon as possible. Any delay in the construction of the plant leads to loss of revenue from the sale of electricity.

The following decision may be proposed in similar situations:

  1. prior to the separation of the land plot, the owner shall establish a building right for the construction of an energy site in favor of the investor on part of the larger property that coincides with the area and boundaries of the property which will be separated after the division and on which the investor plans to build the plant;
  2. the investor will thus acquire property rights for the land plot where the plant will be built, and the grid connection and investment design procedures will be initiated;
  3. at the same time, an arrangement can be included in the notary deed for establishment of building right that after the actual separation of the land plots the owner will also transfer to the investor the ownership of the parts actually divided as separate land plots on which the building right has been established.

Similar structure of acquisition of the land plot on which the energy site will be built, saves time and enables the investor to initiate the grid connection and investment design procedures as soon as possible. At the same time, this structure allows to preserve the economic and business logic pursued by the parties – the investor to acquire the ownership of actually separated land plots and not only the building right over the larger properties.

Dimitrov, Petrov & Co. Law Firm (DPC) are leading experts in the field of energy law and advise some of the leaders of the energy market in relation to regulatory and licensing issues and various participants in the sector – electricity producers, RES companies, traders , distribution network operators and end customers.

For legal advice on energy law and structuring your energy investments, you can contact the team here.

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