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15 November 2023

A big hit or a pipe dream?

Easements for solar, wind, hydrogen & co. shall become transferable. Banks and developers are rejoicing - perhaps too soon?

What is it all about? 

The construction and operation of solar and wind power plants on land owned by someone else requires not only a long-term lease agreement, but also something enigmatic which goes by the name of “limited personal easement” (beschränkte persönliche Dienstbarkeit). While the lease agreement includes the details of the contractual relationship, the easement protects the plant operator from the rights of third parties and the insolvency of the landowner. Together they ensure that the plant can be operated for decades on land that does not belong to the plant operator. 

In practice, however, the fact that easements under German law are generally not transferable has led to difficulties. The plant operator may be replaced during the long operating life of a generation plant. The financing bank may want to appoint a new operator if the previous operator defaults on the loan. However, as the easement is not freely transferable, this is only possible with the landowner’s consent or by means of complicated makeshift solutions such so-called reservations (Vormerkungen) in the land register. 

The German government now wants to change that. 

More flexibility 

On 13 September 2023, the government presented a draft law to enable the transfer of easements. The government points out that the renewable industry currently has to make do with “elaborate and complicated contractual arrangements”. “To promote the energy transition”, there is “a practical need” to extend transferability.  

At present, only easements for pipeline rights can be transferred without the landowner’s consent. The government’s draft law now stipulates in Section 1092 (3) of the German Civil Code that easements for the use of land for “plants for the utilisation of hydropower, wind energy, solar energy, geothermal energy, environmental heat or energy from biomass” and for “plants for the electrochemical production of hydrogen or for the generation of electricity from hydrogen” should also become transferable. 

Pros and cons 

While the legislative initiative has been welcomed by banks and operators it has attracted criticism from legal experts.  

For example, it is criticised that the draft law does not explicitly mention (battery) storage systems.  

It is also unclear whether the term “installations for utilisation” includes the necessary infrastructure – i.e. in particular transformer stations, substations, roads, rotor sweeps and clearance areas – and, ultimately, also construction and impairment bans. 

The harshest criticism, however, is directed at the reform itself: It is feared that landowners would no longer be willing to make their land available for solar and wind energy at all if the easement could be transferred without their consent and separately from the lease agreement. It was also unclear what the consequences would be if there were two different authorised users, one deriving its rights from the lease agreement and the other from the easement. Landowners should be able to exclude the transferability of the easement with effect in rem, which is not provided for in the draft law. 

Critics therefore see the danger that the new law could hinder rather than promote the energy transition.  

What will happen? 

Realistically, what the government decided on 13 September 2023 will come to pass. 

It is therefore likely that the clarifications and additions called for by critics will not be implemented and will have to be provided by the courts. 

What does that mean in practice? 

The transferability of easements will make things easier. In some cases, however, new problems will arise if landowners refuse to grant easements. Their concerns can be addressed in lease agreements and easement deeds. 

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