Option to lease powered land

A landowner with a grid connection or grid application gives a developer an exclusive option to take a long ground lease of the land (or to buy it), while the developer carries out due diligence and secures permits.

For operators · Updated Nov 2, 2026 · Example to adapt

Create a free account to download

An editable .docx with the fill-ins highlighted.

How this model works

How it works

An option gives a developer the exclusive right, for a fixed period, to lease (or buy) your land later on terms agreed now. You are paid an option fee for holding the land for the developer, and the developer is not obliged to go ahead.
During the option period the developer studies the land, applies for permits and works on the grid connection. You keep the land and your grid connection or application alive, and you sign the applications the developer needs.
If the developer is satisfied, it exercises the option and you grant a long ground lease, usually for several decades, on the heads of terms already attached. If it does not, the option lapses and you keep the fees.
Grid capacity is the reason datacenter developers want land. On AICapacity, land with a signed connection agreement (secured power) is shown separately from land with only an application (applied power) or an intention to apply (planned power), because developers value them very differently.

Good for

Landowners with a grid connection agreement, or a grid application in the queue, who want long-term income without developing a datacenter themselves.
Farmland, forest or industrial land near a substation, where a developer needs time to confirm permits and the grid position before committing.
Developers that need exclusive control of a site while they secure permits and finance, without paying for the land up front.

How the money works

Option fees: a one-off fee on signing, sometimes with a periodic fee during the option, and a further fee each time the developer extends. You keep them if the option lapses. If the developer goes ahead, some or all of them are commonly credited against the first rent or the price, so the developer gets them back as a discount.
Ground rent is set either per hectare per year, which is how farmland is usually priced, or per MW of secured grid capacity, which ties your income to what makes the land valuable. A base rent per hectare plus an amount per MW gives you a floor and a share of the upside if more capacity is secured later.
Rent usually rises each year with an inflation index, such as the national consumer price index. A floor stops it from falling; a cap limits how fast it can rise.
Grid operators often require deposits, securities or staged payments to keep a connection or a queue position. Agree now who pays them during the option, and whether they are repaid if the deal does not go ahead.

Watch out for

Do not let the grid connection lapse. A missed grid operator deadline or payment can lose the capacity for both of you, and the agreement makes keeping it alive your obligation.
Decide now what happens to the grid capacity if the developer walks away, especially any extra capacity the developer applied for or paid for.
Be exact about the grid status. Describe secured, applied and planned capacity accurately in Schedule 2: overstating it can let the developer terminate and reclaim its fees.
Reinstatement at the end of the lease: agree whether buildings are removed or left in place, and whether the developer provides security for the cost.
Registration and formalities differ by country. In some, an unregistered option does not bind a buyer of the land, and land documents may need a notary or wet-ink signatures. Take local legal advice; a developer contribution to your legal costs is common.

An example of how this kind of deal can be structured, to adapt with your own advisers. Not legal advice and not a final agreement. AICapacity is not a party to agreements made from it.

Option agreement for powered land

This agreement is dated [date] and is made between:

(1) [Landowner legal name], [a company registered in [country] under number [registration number], whose registered office is at [address] / of [address], personal identity number [number]] (the “Landowner”); and

(2) [Developer legal name], a company registered in [country] under number [registration number], whose registered office is at [address] (the “Developer”),

each a “Party” and together the “Parties”.

Background

(A) The Landowner owns the Land described in Schedule 1, which [has the benefit of a Connection Agreement / is the subject of a Grid Application] with the Grid Operator, as described in Schedule 2.

(B) The Developer wishes to investigate the Land, to obtain the Permits for the Project and, if satisfied, to [take a long-term ground lease of / purchase] the Land.

The Parties agree as follows:

1Definitions and interpretation
1. 1.1
  In this agreement:
  1. (a)“Affiliate” means any entity that controls, is controlled by, or is under common control with a Party, where control means the ownership of more than half of the voting rights or the power to direct management;
  2. (b)“Applied Capacity” means grid import capacity for which a Grid Application has been made and is pending, but which is not yet Secured Capacity;
  3. (c)“Business Day” means a day other than a Saturday, Sunday or public holiday in [country];
  4. (d)“Completion Date” has the meaning given in clause 9.2;
  5. (e)“Connection Agreement” means the [connection agreement / connection offer accepted by the Landowner] dated [date] between [the Landowner] and the Grid Operator described in Schedule 2, and any agreement replacing or varying it;
  6. (f)“Encumbrance” means any mortgage, charge, pledge, easement, servitude, right of way, lease, licence, option, right of pre-emption, restrictive covenant or other third-party right over the Land or any part of it;
  7. (g)“Exercise Notice” has the meaning given in clause 9.1;
  8. (h)“Financier” means any person providing or arranging debt or equity finance for the Project, and any agent or trustee acting for such persons;
  9. (i)“Grid Application” means each application for grid connection capacity for the Land made to the Grid Operator and described in Schedule 2, including its position in any queue;
  10. (j)“Grid Operator” means [name of transmission or distribution system operator], or any successor to its role;
  11. (k)“Grid Rights” means the Connection Agreement, each Grid Application, any queue position, and all related studies, offers, securities, deposits and rights;
  12. (l)“Ground Lease” means the lease of the Land to be granted under clause 9.3 on the terms in clause 10 and Schedule 4;
  13. (m)“Land” means the land described in Schedule 1 [and shown edged red on the attached plan];
  14. (n)“Option” has the meaning given in clause 2.1;
  15. (o)“Option Fees” means the Initial Option Fee, each Extension Fee and any periodic option fee set out in Schedule 3;
  16. (p)“Option Period” has the meaning given in clause 4.1, as extended under clauses 4.2 and 4.3;
  17. (q)“Permits” means the zoning or detailed plan, building permits, environmental permits and other public-law consents the Developer needs to build and operate the Project;
  18. (r)“Planned Capacity” means grid import capacity that the Parties expect to apply for, but for which no Grid Application has yet been made;
  19. (s)“Project” means a datacenter campus with up to [number] MW of grid import capacity, and ancillary facilities, to be developed on the Land;
  20. (t)[“Purchase Price” has the meaning given in clause 10.6;] and
  21. (u)“Secured Capacity” means grid import capacity that the Grid Operator has committed to provide under a signed Connection Agreement, subject only to its stated conditions and to completion of the connection works.
  Drafting note. Secured, applied and planned power are very different things, and developers value them very differently. Secured capacity is contracted: a connection agreement is signed and the grid operator has committed to provide a stated number of MW by an expected date, usually subject to conditions such as paying for connection works. Applied capacity is in the grid operator’s queue but not yet offered or signed; it may be reduced, delayed or refused. Planned capacity is only an intention to apply, with no standing with the grid operator. Describe each accurately in Schedule 2. Overstating the grid position is the quickest way to lose a developer’s trust, and may give it a claim under clause 12.
2. 1.2
  References to clauses and Schedules are to clauses of and Schedules to this agreement, and the Schedules form part of it. The words “including” and “in particular” do not limit the words that come before them.
2Grant of the option
1. 2.1
  In return for the Option Fees, the Landowner grants the Developer the exclusive right, exercisable during the Option Period, to require the Landowner to [grant the Ground Lease of the Land to the Developer / sell the Land to the Developer for the Purchase Price] on the terms of this agreement (the “Option”).
  Drafting note. This template is drafted as an option to lease. If the Parties agree an option to purchase instead, choose the second alternative here and in clause 9.3, and use clause 10.6 in place of clauses 10.1 to 10.5 and Schedule 4. Landowners with farmland or forest often prefer leasing, which keeps ownership and gives long-term income; developers and their lenders sometimes prefer to own. Some countries restrict the purchase of agricultural or forest land, require approval for acquisitions by foreign or corporate buyers, or give municipalities or tenants a right of pre-emption on a sale. Counsel should check before choosing.
2. 2.2
  The Developer is not obliged to exercise the Option. If the Developer does not exercise it before the end of the Option Period, the Option lapses and clause 11 applies.
3. 2.3
  The Developer may exercise the Option over the whole of the Land or over a part of it of not less than [number] hectares that includes [the connection point and the land needed for the substation and access] (“Part of the Land”). If the Option is exercised over Part of the Land, the Option over the rest of the Land [lapses / continues for the remainder of the Option Period].
3Option fees
1. 3.1
  The Developer shall pay the Landowner the Initial Option Fee stated in Schedule 3 within [ten] Business Days after [the date of this agreement / the Landowner has delivered evidence of title and the mortgagee consent under clause 14.3].
2. 3.2
  The Developer shall pay each Extension Fee on extending the Option Period under clause 4.2 [, and the periodic option fee stated in Schedule 3 [quarterly / annually] in advance during the Option Period].
3. 3.3
  If the Developer exercises the Option, [all / [percentage] of the] Option Fees paid [, other than Extension Fees,] shall be credited against [the rent first falling due under the Ground Lease / the Purchase Price].
  Drafting note. Crediting means the Developer gets the option fees back as a discount on the rent or the price if it goes ahead, while the Landowner keeps them in full if the option lapses. Commonly the initial fee is credited and extension fees are not, because extensions compensate the Landowner for waiting longer.
4. 3.4
  The Option Fees are not refundable, except that the Landowner shall repay all Option Fees paid within [20] Business Days after the Developer terminates this agreement under clause 13.2 or clause 13.3.
5. 3.5
  All amounts in this agreement are stated exclusive of value added tax, which shall be added where applicable.
4Option period
1. 4.1
  The option period begins on the date of this agreement and ends [number] months after it (the “Option Period”), unless extended under clause 4.2 or clause 4.3.
2. 4.2
  The Developer may extend the Option Period [up to [number] times] by [number] months each time, by notice to the Landowner given before the Option Period would otherwise end, accompanied by payment of the Extension Fee.
  Drafting note. Permits and grid decisions often take longer than either side expects. The Developer needs enough time to finish due diligence and secure the key permits; the Landowner needs a firm end date. A common structure is an initial period, paid extensions and an overall maximum.
3. 4.3
  If, when the Option Period would otherwise end, an application for a Permit or a Grid Application has been made and not finally decided, or a decision on it is under appeal, the Option Period is extended until [20] Business Days after the final decision, but by no more than [number] months in total under this clause [, and the Developer shall pay the periodic option fee for the extension].
4. 4.4
  The Option may not be exercised after the Option Period has ended.
5Exclusivity
1. 5.1
  During the Option Period, the Landowner shall not, and shall ensure that its Affiliates, co-owners, agents and advisers do not, directly or indirectly:
  1. (a)offer, market, sell or lease the Land or any part of it, or grant any option or other right over it or over any Grid Rights, to anyone other than the Developer;
  2. (b)solicit, encourage or negotiate any proposal from anyone else to develop the Land as a datacenter, or for any other use that would prevent or hinder the Project; or
  3. (c)allow the Grid Rights to be used for any project other than the Project.
2. 5.2
  The Landowner shall promptly tell the Developer of any approach it receives that would fall within clause 5.1, without needing to name the person making it.
3. 5.3
  Clause 5.1 does not prevent the continued [agricultural / forestry] use of the Land under the arrangements listed in Schedule 1, provided they can be ended on not more than [number] months’ notice [and are ended by the Landowner with effect before the Completion Date].
6Access and surveys
1. 6.1
  During the Option Period, the Developer and its consultants and contractors may enter the Land, on at least [five] Business Days’ notice, to carry out surveys and investigations for the Project, including topographical, geotechnical, environmental, ecological, archaeological, hydrological, noise and utility surveys, and to make boreholes, trial pits and similar investigations.
2. 6.2
  When exercising these rights, the Developer shall:
  1. (a)comply with applicable law and the Landowner’s reasonable requirements, including for livestock, crops, forestry operations and gates;
  2. (b)cause as little disturbance as reasonably practicable;
  3. (c)maintain public liability insurance of at least [amount] per event;
  4. (d)make good any physical damage it causes, as soon as reasonably practicable and to the Landowner’s reasonable satisfaction; and
  5. (e)compensate the Landowner for loss of crops or timber at the rate in Schedule 3.
3. 6.3
  The Developer shall indemnify the Landowner against third-party claims for death, personal injury or damage to property caused by the Developer’s exercise of these rights, except to the extent caused by the Landowner’s own negligence.
4. 6.4
  The survey results belong to the Developer. [If the Option lapses or this agreement is terminated, the Developer shall on request give the Landowner copies of the environmental and geotechnical reports [free of charge / against payment of [amount]], without any warranty and subject to any restrictions imposed by their authors.]
7Landowner’s obligations during the Option Period
1. 7.1
  During the Option Period, the Landowner shall:
  1. (a)keep the Connection Agreement and each Grid Application in full force, meet all their deadlines and conditions, respond promptly to the Grid Operator, and not withdraw, reduce, vary or transfer any of them, or allow any of them to lapse, without the Developer’s prior written consent;
  2. (b)send the Developer copies of all correspondence with the Grid Operator within [two] Business Days after sending or receiving it, and notify the Developer immediately of anything that may reduce, delay or end any Grid Rights;
  3. (c)not create or allow any Encumbrance over the Land, or vary any existing Encumbrance, other than those listed in Schedule 1 [or with the Developer’s prior written consent];
  4. (d)not sell or otherwise dispose of the Land or any interest in it, except in accordance with clause 14.2;
  5. (e)not change the use, physical condition or boundaries of the Land, carry out works on it, or fell timber [other than in the ordinary course of its existing use];
  6. (f)not apply for any Permit, zoning change or other public-law decision concerning the Land, or object to or comment adversely on any application by the Developer, without the Developer’s consent; and
  7. (g)pay all taxes and other outgoings for the Land when due and comply with its obligations under every Encumbrance.
2. 7.2
  [The Developer shall pay, or reimburse to the Landowner, / The Landowner shall pay] any fees, deposits, securities and connection charges that the Grid Operator requires during the Option Period to keep the Grid Rights in force. [Amounts paid by the Developer are credited against the rent under the Ground Lease if the Option is exercised, and are dealt with under clause 11.2 if it is not.]
  Drafting note. Grid operators commonly require staged payments or security to keep a connection or a queue position. Decide now who funds them. If the Developer funds them, it should get the benefit back if the deal goes ahead, and be repaid, at least to the extent the Grid Operator refunds them, if it does not.
3. 7.3
  If the Landowner fails to take any step or make any payment needed to keep the Grid Rights in force, the Developer may, after giving the Landowner notice where time allows, take that step or make that payment on the Landowner’s behalf, and the Landowner authorises the Developer to do so. The Landowner shall repay the cost on demand, and the Developer may set it off against any amount it owes the Landowner.
  Drafting note. Some grid operators will deal only with the named holder of the connection or application, and some countries require a power of attorney in a particular form. If so, have the Landowner sign a separate power of attorney at the same time as this agreement.
8Permits and grid applications
1. 8.1
  The Developer may, at its own cost, apply for any Permit for the Project, including a new or amended zoning or detailed plan, and may apply to the Grid Operator for additional capacity, a change of connection point or the transfer of Grid Rights, in each case in its own name or, where the applicable rules require, in the Landowner’s name.
2. 8.2
  The Landowner shall cooperate with the Developer’s applications, including by promptly signing the applications, owner’s consents, powers of attorney and other documents that the Developer reasonably requests, providing information about the Land in its possession, and attending meetings with authorities or the Grid Operator where its presence is required.
3. 8.3
  The Developer shall keep the Landowner informed of the applications it makes, give it copies on request, and reimburse the Landowner’s reasonable out-of-pocket costs of cooperating under this clause 8, up to [amount] in total [unless agreed otherwise in advance].
4. 8.4
  On exercise of the Option, the Landowner shall take all steps within its control to [transfer the Connection Agreement and the Grid Applications to the Developer or its nominee / hold the Grid Rights for the exclusive benefit of the Developer for the term of the Ground Lease], in each case to the extent the Grid Operator’s rules permit.
  Drafting note. In many countries the municipality decides on zoning, and the landowner’s consent is needed for the developer’s applications; in others, the developer can apply alone. Grid operators take different views on whether a connection agreement or a queue position can be transferred, and some require the holder to own or control the land. Check the Grid Operator’s rules before signing and record the agreed route in Schedule 2.
9Exercise of the option
1. 9.1
  The Developer may exercise the Option at any time during the Option Period by giving the Landowner written notice (an “Exercise Notice”) stating whether the Option is exercised over the whole of the Land or over Part of the Land, with a plan of that part.
2. 9.2
  The Exercise Notice shall state a date for completion that is not less than [20] and not more than [60] Business Days after the date of the notice (the “Completion Date”).
3. 9.3
  On the Completion Date, the Landowner shall [grant, and the Developer shall accept, the Ground Lease / transfer the Land to the Developer against payment of the Purchase Price], and the Landowner shall deliver:
  1. (a)[the Ground Lease signed by the Landowner, in the agreed form annexed to this agreement / the Ground Lease signed by the Landowner, reflecting Schedule 4 and the terms agreed or decided under clause 9.4];
  2. (b)vacant possession of the Land, free of Encumbrances other than those listed in Schedule 1 that the Developer has accepted;
  3. (c)a release of every mortgage over the Land, or a consent and non-disturbance undertaking from each mortgagee in favour of the Developer and its Financiers;
  4. (d)the documents needed to transfer or make available the Grid Rights under clause 8.4; and
  5. (e)any other document needed to register the Ground Lease [or the transfer].
4. 9.4
  [If the Ground Lease is not annexed in agreed form, the Parties shall negotiate in good faith to agree its full terms, consistent with Schedule 4, within [20] Business Days after the Exercise Notice. Any point not agreed by then shall be decided by an independent [lawyer / chartered surveyor] with experience of commercial ground leases in [country], appointed by agreement or, failing agreement, by [appointing body], whose decision is final and binding. The Completion Date is postponed as needed to allow for the decision.]
  Drafting note. Attaching the full ground lease in agreed form at signing avoids a second negotiation at the moment when the Landowner has most leverage. If that is not practical, this clause provides a way to finish the document.
5. 9.5
  An Exercise Notice cannot be withdrawn without the Landowner’s consent.
6. 9.6
  If the Landowner fails to complete on the Completion Date, the Developer may [seek an order for specific performance or] terminate this agreement under clause 13.2, in addition to any other remedy.
10The Ground Lease
1. 10.1
  The Ground Lease shall be on the terms set out in Schedule 4 [and otherwise in the agreed form annexed to this agreement]. Its main commercial terms are set out in this clause 10 and Schedule 3.
2. 10.2
  The term of the Ground Lease shall be [number] years from the Completion Date, with [number] options for the Developer to extend it by [number] years each.
  Drafting note. The term must be long enough for the Developer to finance and recover the cost of the buildings, and lenders commonly require the lease to run well beyond the loan. Some countries cap the length of land leases, or have specific ground-lease legislation with mandatory rules on term, rent adjustment, termination or compensation for buildings at the end. Counsel in the country of the Land should confirm the maximum term and any statutory tenant protections that apply.
3. 10.3
  Rent shall be payable [quarterly / annually] in advance from [the Completion Date / the start of construction / energisation of the grid connection for the Project], calculated as [Option A: the rate per hectare per year stated in Schedule 3, multiplied by the area of the Land leased] [Option B: the rate per MW per year stated in Schedule 3, multiplied by the Secured Capacity made available to the Developer under the Grid Rights] [Option C: a base rent per hectare plus an additional rent per MW of Secured Capacity, at the rates stated in Schedule 3]. [Until rent becomes payable at the full rate, a reduced rent of [amount] per year is payable.]
  Drafting note. Rent per hectare is simple and is how farmland is usually priced. Rent per MW links the Landowner’s income to the grid capacity, which is what makes the land valuable for a datacenter: it rewards a landowner who brings secured capacity and shares the upside if more is secured later. A combination gives the Landowner a floor and a share of the upside. Where rent is per MW, state how capacity added or lost during the lease is counted.
4. 10.4
  The rent shall be adjusted [annually] on each anniversary of the Completion Date in line with [the consumer price index published by [statistics authority] / [other index]] [, but shall not fall below the rent payable in the previous year] [and shall not increase by more than [percentage] in any year].
5. 10.5
  The Ground Lease shall permit use of the Land for a datacenter and ancillary uses, including substations, energy storage, on-site generation, heat recovery, offices and parking; allow the Developer to assign, sublet and mortgage as set out in Schedule 4; and require the Developer to reinstate the Land at the end of the term as set out in Schedule 4.
6. 10.6
  [Option to purchase alternative. The price for the Land is [amount / [amount] per hectare of Land transferred / [amount] per MW of Secured Capacity transferred with the Land] (the “Purchase Price”), less the Option Fees credited under clause 3.3. On completion, the Landowner shall transfer full title to the Land, free of Encumbrances other than those the Developer has accepted, together with the Grid Rights. [Transfer taxes and registration fees] shall be paid by [the Developer]. The Landowner gives the warranties in clause 12 again at completion.]
11Grid capacity if the option ends
1. 11.1
  If the Option lapses, or this agreement is terminated other than by the Developer under clause 13.2 or clause 13.3, the Grid Rights held by the Landowner remain with the Landowner, and the Developer shall not do anything to withdraw, reduce or transfer them.
2. 11.2
  Any Grid Application made, or capacity secured, by the Developer for the Land, and any fees, deposits or securities paid by the Developer under clause 7.2, shall be dealt with as follows: [Option A: at the Landowner’s request, the Developer shall transfer the relevant Grid Application or capacity to the Landowner where the Grid Operator’s rules permit, and the Landowner shall repay the fees, deposits and securities the Developer has paid, to the extent the Landowner takes over their benefit.] [Option B: the Developer may withdraw or keep them at its discretion, and the Landowner shall repay deposits and securities only to the extent the Grid Operator refunds them to the Landowner.] [Option C: the Landowner may take a transfer of them by paying the Developer [amount / the Developer’s documented costs] within [number] Business Days, failing which the Developer may withdraw them.]
  Drafting note. The grid capacity is usually the most valuable thing on the land, so decide now what happens to it if the deal does not go ahead. A landowner should make sure it is not left with a reduced or withdrawn connection. A developer that has paid to secure extra capacity will want that money back, or a fee, if the landowner keeps the benefit.
3. 11.3
  Permits obtained by the Developer for the Land shall [remain with the Developer / be transferred to the Landowner on request, where transferable, for [no payment / a payment of [amount]]].
4. 11.4
  If the Developer terminates this agreement under clause 13.2 or clause 13.3, the Landowner shall repay the Option Fees under clause 3.4 and all fees, deposits and securities the Developer has paid under clause 7.2 [, and reimburse the Developer’s documented costs of the Project up to [amount]], in addition to any other remedy.
12Landowner’s warranties
1. 12.1
  The Landowner warrants to the Developer, on the date of this agreement and again on the Completion Date, that:
  1. (a)it is the sole owner of the Land with full title, and there are no Encumbrances other than those listed in Schedule 1;
  2. (b)it has full power and authority to enter into this agreement, and every consent needed for it to do so, including any consent of a spouse, co-owner or mortgagee, has been obtained;
  3. (c)the description of the Grid Rights in Schedule 2 is complete and accurate, the Connection Agreement and each Grid Application are valid and in force, and the Landowner has received no notice of default, reduction, delay or termination concerning them;
  4. (d)there are no leases, licences or rights of occupation of the Land other than those listed in Schedule 1;
  5. (e)there are no current or threatened disputes, claims, expropriation or compulsory acquisition proceedings, or public-law orders affecting the Land; and
  6. (f)so far as the Landowner is aware, the Land is not contaminated, and there are no protected habitats, heritage sites or other constraints on development of which it has not told the Developer in writing.
  Drafting note. Where the land is owned by a family or by several co-owners, everyone with an interest, and in some countries a spouse, must sign or consent. The Developer should also check the land register and the grid documents itself rather than relying on these warranties alone.
2. 12.2
  The Landowner shall notify the Developer promptly if any warranty in clause 12.1 becomes untrue.
13Termination
1. 13.1
  The Developer may terminate this agreement at any time by giving the Landowner [30] days’ written notice. Option Fees already paid are not refundable, and no further Option Fees fall due after the notice is given.
2. 13.2
  Either Party may terminate this agreement by written notice if the other commits a material breach of it and, where the breach can be remedied, fails to remedy it within [20] Business Days after notice requiring it to do so.
3. 13.3
  The Developer may terminate this agreement by written notice, and recover the Option Fees under clause 3.4, if:
  1. (a)the Secured Capacity is reduced below [number] MW, or the Connection Agreement is terminated, other than because of the Developer’s own act or omission;
  2. (b)an Encumbrance or title defect not listed in Schedule 1 is found that would materially hinder the Project, and the Landowner does not remove it within [40] Business Days after notice; or
  3. (c)a warranty in clause 12.1 is materially untrue.
4. 13.4
  On the lapse of the Option or the termination of this agreement:
  1. (a)clause 11 applies;
  2. (b)the Developer shall remove its equipment from the Land and make good any damage in accordance with clause 6.2;
  3. (c)the Developer shall apply to remove any registration of the Option in accordance with clause 14.4; and
  4. (d)rights and liabilities accrued before then are not affected.
5. 13.5
  Clauses 1, 3.4, 6.3, 6.4, 11, 13, 14.4, 16 and 18 to 20 survive the lapse of the Option or the termination of this agreement.
14Registration and protection of the option
1. 14.1
  The Developer may [register the Option / record a notice of the Option / have the Option annotated] at [the land registry / cadastre / real property register] for the Land, and the Landowner shall sign, [have notarised,] and deliver any document needed for that purpose.
  Drafting note. Whether and how an option can be registered depends on the country. In some, an option or a pre-agreement to lease can be recorded on the land register and binds a later buyer; in others, it binds only the landowner personally, and a sale of the land could defeat it. Some civil-law countries require the option to be made by notarial deed to be enforceable or registrable. Counsel in the country of the Land should confirm the method and whether registration fees or stamp duty apply.
2. 14.2
  During the Option Period, the Landowner shall not transfer the Land, or grant any interest in it, unless the transferee or grantee first agrees in writing with the Developer to be bound by this agreement as if it were the Landowner [, unless the Option is registered so as to bind it].
3. 14.3
  Within [20] Business Days after the date of this agreement, the Landowner shall obtain from each mortgagee of the Land its written consent to this agreement and an undertaking that it will not, on enforcing its security, disturb the Developer’s rights under this agreement or the Ground Lease.
4. 14.4
  Within [ten] Business Days after the Option lapses or this agreement is terminated, the Developer shall apply to remove any registration made under clause 14.1 and shall sign any document the Landowner reasonably needs for that purpose.
15Assignment and financing
1. 15.1
  The Developer may, without the Landowner’s consent and on notice to it, assign or transfer this agreement to an Affiliate or to a project company formed to develop the Project, and may assign or charge its rights under this agreement by way of security to any Financier.
  Drafting note. Developers often place each site in its own project company before raising money. This clause lets them do so without asking.
2. 15.2
  At the Developer’s request, the Landowner shall enter into a direct agreement with the Developer’s Financiers on terms customary for project financing, giving them notice of any default by the Developer, a reasonable period to remedy it, and the right to transfer the Developer’s rights to a substitute, without increasing the Landowner’s obligations.
3. 15.3
  The Landowner may not assign or transfer this agreement except to a buyer of the Land in accordance with clause 14.2.
16Confidentiality
1. 16.1
  Each Party shall keep the terms of this agreement, information about the Grid Rights and the results of the Developer’s surveys confidential, and may disclose them only to its Affiliates, co-owners and family members with an interest in the Land, professional advisers, Financiers, potential investors and potential buyers who need to know them and are bound by obligations of confidentiality, to the Grid Operator and public authorities for the purposes of the Project, or as required by law.
2. 16.2
  The Landowner acknowledges that applications for Permits and grid capacity may become public, and that this is not a breach of clause 16.1.
3. 16.3
  Neither Party shall make a public announcement about the Project without the other’s prior written consent, except as needed for public consultation on the Permits.
17Introduction through the platform
1. 17.1
  The Parties acknowledge that they were introduced through AICapacity and that the terms of use of AICapacity that each of them has accepted continue to apply to any agreement between them arising from that introduction, including the Ground Lease. AICapacity is not a party to this agreement or the Ground Lease and has no rights or obligations under either of them.
18Personal data
1. 18.1
  Where the Landowner or any co-owner is an individual, the Developer processes their personal data, including names, contact and payment details and information from the land register, as an independent controller for the purposes of this agreement and the Project, in accordance with applicable data protection law, including the General Data Protection Regulation (EU) 2016/679, and the privacy notice it has given to them. Each Party shall otherwise share personal data under this agreement only where necessary for its performance, and acts as an independent controller of the personal data it receives.
19General
1. 19.1
  This agreement [, together with the Ground Lease in agreed form,] is the entire agreement between the Parties about its subject matter and supersedes any earlier letter of intent, heads of terms or other arrangement about it.
2. 19.2
  No variation of this agreement is effective unless it is in writing and signed by both Parties [in the form required by law for agreements concerning land]. No failure or delay in exercising a right is a waiver of it.
3. 19.3
  If any provision of this agreement is found invalid or unenforceable, the remaining provisions continue in full force, and the Parties shall replace the invalid provision with a valid one that comes as close as possible to its intended effect.
4. 19.4
  Notices under this agreement shall be in writing and sent by email to the addresses each Party gives below, with a copy by post or courier where the notice is an Exercise Notice or concerns a breach or termination.
5. 19.5
  Each Party bears its own costs of negotiating and entering into this agreement, except that the Developer shall contribute up to [amount] towards the Landowner’s reasonable legal and advisory costs.
  Drafting note. A contribution to the landowner’s legal costs is common where the landowner is an individual or a small company. It helps the landowner obtain independent advice, which also makes the agreement harder to challenge later.
6. 19.6
  Nothing in this agreement creates a partnership or joint venture between the Parties.
7. 19.7
  [This agreement may be signed in counterparts and by electronic signature, each of which is an original and together form one agreement.]
  Drafting note. Some countries require documents creating rights in land to be signed in wet ink, witnessed or notarised. Check before relying on electronic signature, and delete this clause if it does not apply.
20Governing law and disputes
1. 20.1
  This agreement and any dispute or claim arising out of or in connection with it are governed by the laws of [the country in which the Land is situated].
2. 20.2
  Any dispute arising out of or in connection with this agreement shall be finally resolved by [arbitration under the rules of [arbitral institution], with the seat of arbitration in [city] and the proceedings conducted in [English / language] / the courts of [country and city]].
  Drafting note. The law of the country where the land lies will govern the property aspects in any case, so it is usually simplest to use it for the whole agreement. Disputes about rights in land and tenancies of land are often reserved to the courts of the country where the land is situated, and some may not be capable of arbitration; counsel should confirm whether arbitration is available and suitable. Where the Parties can choose, arbitration keeps disputes private, while local courts are often cheaper for a smaller landowner. In the Nordics, a common choice is local law with arbitration under the rules of the local chamber of commerce, or the local courts.

Schedule 1The Land

Describe the Land as it appears in the land register, and attach a plan with the Land edged red.

Term	To fill in
Property designation	[cadastral or title number(s)]
Location	[address, municipality, region, country]
Area	[number] hectaresState whether taken from the land register or from a survey.
Plan	[plan reference], attached, with the Land edged red
Registered owner(s)	[name(s) and ownership share(s)]
Current use	[agriculture / forestry / vacant / other]
Existing leases and occupation	[occupier, term and notice period] / [none]Arrangements that may continue under clause 5.3.
Encumbrances	[mortgages (lender and amount); easements; rights of way; utility lines] / [none]
Zoning status	[current plan designation; any plan change in progress]
Access	[public road access; rights of way needed]
Excluded areas	[farm buildings, dwelling or other areas excluded from the Option] / [none]
Known constraints	[protected areas, flood zones, heritage sites, contamination] / [none known]

Schedule 2Grid connection status

The grid position exactly as it stands on the date of this agreement. See the definitions of Secured Capacity, Applied Capacity and Planned Capacity in clause 1.1.

Term	To fill in
Grid Operator	[name]The transmission or distribution system operator.
Connection point	[substation name or location]; voltage level [number] kV
Secured Capacity	[number] MWOnly capacity under a signed Connection Agreement.
Connection Agreement	[reference, date and holder] / [none]
Applied Capacity	[number] MWPending applications. Not guaranteed; may be reduced, delayed or refused.
Grid Application(s)	[reference, date filed, holder and queue position, if known] / [none]
Planned Capacity	[number] MWAn intention only; no application has been made.
Expected energisation date	Secured Capacity: [date or quarter]; Applied Capacity: [date or quarter, if indicated]As indicated by the Grid Operator; not a guarantee.
Conditions and deadlines	[milestones, securities and payments the Grid Operator requires, with due dates]
Connection costs	[amount paid to date and by whom; amount still due]
Transferability	[transfer permitted with the Grid Operator’s consent / not permitted / not known]Determines the route chosen in clause 8.4.
Export or generation capacity	[number] MW / [none]

Schedule 3Option fees and ground rent

Term	To fill in
Initial Option Fee	[amount]Payable under clause 3.1.
Initial Option Period	[number] monthsClause 4.1.
Extensions	up to [number] extensions of [number] months eachClause 4.2.
Extension Fee	[amount] per extension
Periodic option fee	[amount] per [quarter / year] / [none]
Crediting	[all / [percentage] of] Option Fees [excluding Extension Fees] credited against [the rent / the Purchase Price]Clause 3.3.
Crop and timber compensation	[amount] per hectare affected / [market value assessed by an independent valuer]Clause 6.2(e).
Rent basis	[per hectare / per MW of Secured Capacity / base rent per hectare plus rent per MW]Clause 10.3.
Rent per hectare	[amount] per hectare per year
Rent per MW	[amount] per MW of Secured Capacity per year
Rent commencement	[Completion Date / start of construction / energisation]
Reduced rent before commencement	[amount] per year / [none]
Indexation	[index], adjusted [annually]; floor [yes / no]; cap [percentage] / [none]Clause 10.4.
Payment terms	[quarterly / annually] in advance, within [number] days of invoice
[Purchase Price]	[amount / [amount] per hectare / [amount] per MW of Secured Capacity]Only for an option to purchase (clause 10.6).
Value added tax	[whether the Landowner is registered for VAT, or has opted to tax the Land]
Contribution to the Landowner’s costs	up to [amount]Clause 19.5.

Schedule 4Heads of terms of the Ground Lease

The Ground Lease shall reflect the following terms, in addition to clause 10 and Schedule 3.

1
Parties and premises: the Landowner as landlord and the Developer, or its project company, as tenant. The premises are the Land, or the Part of the Land stated in the Exercise Notice, with rights of access, rights to lay and maintain cables, pipes and fibre across [the Landowner’s retained land], and rights to connect to the grid.
2
Term: [number] years from the Completion Date, with [number] tenant options to extend by [number] years each. [The tenant may end the lease early on [number] months’ notice if [the Permits are refused / the Grid Rights are lost / at any time after year [number]].]
3
Rent: as set out in clause 10.3 and Schedule 3, indexed under clause 10.4, [with no other rent review].
4
Use: a datacenter and the ancillary uses described in clause 10.5, and any other lawful use with the landlord’s consent, which shall not be unreasonably withheld.
5
Buildings: the tenant may build, alter and demolish without the landlord’s consent, subject to the Permits. [Buildings and installations belong to the tenant during the term / become part of the Land, as local law requires], and the tenant may register [separate ownership of the buildings / a building right] where local law allows.
Drafting note. In some countries buildings automatically belong to the owner of the land; in others the tenant can own them separately or hold a registrable building right. This matters greatly to the Developer’s lenders, who will want security over the buildings.
6
Grid Rights: the arrangements in clause 8.4 continue for the term. The landlord shall not deal with the Grid Rights, and any additional capacity secured during the term is for the tenant’s benefit [and counts towards rent per MW].
7
Assignment and subletting: the tenant may assign or sublet the whole or part without consent to an Affiliate, a project company, a buyer of the Project or a Financier enforcing its security, and otherwise with the landlord’s consent, which shall not be unreasonably withheld. The tenant may grant leases, licences and services agreements to datacenter customers without consent.
8
Financing: the tenant may mortgage or charge the lease and its buildings. The landlord shall enter into a direct agreement with the tenant’s Financiers giving them notice of any tenant default, at least [number] Business Days to cure it, and the right to transfer the lease to a substitute tenant.
9
Landlord’s termination: only for non-payment of rent that remains unpaid [number] Business Days after notice to the tenant and its Financiers, or as mandatory law requires. The landlord has no other right to end the lease.
10
Reinstatement: at the end of the term the tenant shall [remove above-ground buildings and plant and restore the surface to [agricultural / forestry] use, leaving foundations below [number] metres / leave the buildings in place, with [compensation of [amount / market value] / no compensation] payable by the landlord / reinstate as the parties agree at least [number] years before the end of the term]. [From year [number], the tenant shall provide security of [amount] for its reinstatement obligations.]
Drafting note. Reinstating a large datacenter site can be costly, so the landowner will want certainty that it will be done and paid for. A bond or other security in the later years of the lease is a common compromise. Some ground-lease laws give the tenant a statutory right to compensation for buildings left on the land; check the local position.
11
Outgoings: the tenant pays [property taxes attributable to the buildings / all property taxes on the Land], utilities and the insurance of its buildings. The landlord pays tax on its own income.
12
Landlord’s covenants: quiet enjoyment; not to encumber the Land or the Grid Rights without the tenant’s consent; not to use or develop any retained land in a way that interferes with the Project; [and a right of first refusal for the tenant if the landlord decides to sell the Land].
13
Registration: the lease shall be registered at [the land registry / cadastre] at the tenant’s cost.
14
Statutory protections: [the Parties shall exclude or agree the application of [statutory tenant or landlord protections] to the extent permitted by law].
Drafting note. In some countries, statutory rules on leases of land or premises apply whatever the parties agree; in others they can be excluded by following a particular procedure. Counsel in the country of the Land should identify the rules and any formalities.

Signed for and on behalf of the Landowner

Name

Title

Date

Signature

Signed for and on behalf of the Developer

Name

Title

Date

Signature

Ready to put a deal on paper?

Templates help once there is a counterparty. Operators find theirs through scored, anonymous requests; buyers by placing one.

List your capacity All templates

Option to lease powered land

How this model works

How it works

Good for

How the money works

Watch out for

Option agreement for powered land

Background

1Definitions and interpretation

2Grant of the option

3Option fees

4Option period

5Exclusivity

6Access and surveys

7Landowner’s obligations during the Option Period

8Permits and grid applications

9Exercise of the option

10The Ground Lease

11Grid capacity if the option ends

12Landowner’s warranties

13Termination

14Registration and protection of the option

15Assignment and financing

16Confidentiality

17Introduction through the platform

18Personal data

19General

20Governing law and disputes

Schedule 1The Land

Schedule 2Grid connection status

Schedule 3Option fees and ground rent

Schedule 4Heads of terms of the Ground Lease

Ready to put a deal on paper?