As the solar industry grows, many landowners are discovering that their land can become an asset for solar developers, providing a steady revenue stream over a long-term contract.
However, not all land is a good fit for solar development and many landowners have questions about how a solar project might affect their land over 25 years or longer. Inovateus has developed numerous solar projects with farmers and other landowners, and we often answer these frequently asked questions:
How do I know my land is right for solar?
Ideal land parcels for large, 50 MW or larger solar farms are preferred to be flat, contiguous parcels with some form of access by road. The land should not be a wetland or have major drainage areas, such as seasonal ponds or lakes that form a few months of the year. A good solar team can always determine creative ways to work with land which does not meet all these criteria, due to the fact a large solar project will usually consist of several different parcels.
Land with heavy vegetation and trees is also not generally viable unless the owner is intending to clear and sell the grove for lumber. In addition to being easily cleared and planed, the land should not have minimal major impediments, such as ditches, streams, large power lines, or other Rights of Way conflicts.
Land that is far enough away from large residential or commercial communities is preferred. Typically zoning restrictions in these areas make project siting difficult.
How much will I be paid?
Lease payments for an ideal piece of land can range from anywhere from $600 – $800 per acre annually. If a solar developer offers substantially more than $800/acre, make sure you are working directly with a solar project developer and not a land broker. Land brokers will attract landowners with attractive deals and then sell your development rights to another project developer. Brokers may not have an actual project in development and are working more exclusively in speculative land practices.
The amount of the lease payment will also depend on challenges that affect the cost of development and construction. For example, if the land has too much vegetation or has other impediments, Inovateus still may be able to mitigate the land for solar development, but these extra costs will be factored into the lease payment. Brownfields typically fall under this category.
The type of soil, the land’s proximity to electricity infrastructure, and other land conditions and environmental regulations may also increase development expenses and decrease the lease payment.
What’s the process of being approved for solar development?
Utility-scale solar projects must undergo a lengthy application process with the grid operator, the entity that manages the grid and manage the solar project’s generation. This grid operator is often called the “ISO” (independent system operator) or “RTO” (regional transmission organization).
If you option your land to a solar developer, be prepared to wait for final approval and execution of the full lease term. ISO and RTO applications can take months or even years for approval before a project gets the green light to commence construction.
In addition to the grid operator, solar project developers must apply for permits that must be approved by the Authorities Having Jurisdiction (AHJs). Typically, the AHJ is the county, but it may also be a municipality, a building department, or another local agency. Once again, receiving AHJ approvals can be a long process, especially when multiple permits are required.
If my lease is approved and fully executed, how will my land be affected by a solar project?
If your land is approved for construction, the land will need to be cleared of any vegetation, rocks, or obstructions. Once planed, the construction crew will insert steel posts into the ground, which support either a fixed racking system that holds the solar panels or a solar tracking system that orients the panels towards the sun. Typically, the racking or tracking equipment stands roughly 7 – 10 ft. above the ground.
Depending on the location, construction crews may also have to build access roads to the site. Fencing will also be installed around the project. A sustainable solar developer like Inovateus will also make sure that wildlife will be able to pass through the site, preserving the ecosystem as much as possible.
How long is a solar land lease?
First, development rights are secured for a certain amount of time. If a solar project receives all permits and passes all environmental and government approvals, fully executed solar land leases can last from 15 to 30 years, although most leases are for 25 or 30 years. Sometimes a lease will include options to extend past that time.
What happens after the solar system is decommissioned?
Decommissioning can take 6 – 12 months depending on the size and location of the array. Research by soil scientists has determined that the soil’s pH levels and overall quality will actually improve over the 30 year lifetime of the solar array, providing even better soil for future farming. Once the decommissioning is complete, farmers can plant the same crops with the same agricultural practices that were used before the solar project.
How does leasing land for solar compare to other land revenue?
Solar leases allow landowners to diversify their revenues and utilize their land in a manner that is safe and not subject to weather disasters (drought) or fluctuating crop bushel pricing markets.
Does the project’s solar production or performance affect my lease payments?
No. If the solar project malfunctions for some reason or is producing more or less energy than expected, year-to-year, the contractual obligations of the lease and the payment terms will remain the same.
If you have more questions about leasing your land for solar projects, please fill out our information form, and an Inovateus solar representative will contact you about your concerns.
