Landowners often wonder if their land qualifies for solar leasing. You may be looking to make additional income from your land on a solar energy lease, but how do you know if your parcel would even work well for a solar farm?
We go over some must-haves if you want to lease your land for a solar farm, as well as factors that make the land more attractive to solar energy developers, and therefore worth larger solar lease payments to the landowner. LandGate accounts for all of the factors we will discuss below and more to determine your Solar LandEstimate™ provided in our free property report. Learn what your land could be worth if you lease it for solar panels today.
Solar Farm Land Requirements
Acreage Required for a Solar Farm
While there is no definitive answer to “how many acres do I need for a solar farm?”, we generally consider 30 acres a great start to attract utility-scale solar developers. You can list land under 30 acres for solar farms on LandGate, it just may be more difficult to get it leased. Community Solar farms are generally a better fit for smaller parcels (5-10 acres): you can learn about the difference between Utility and Community-Scale Solar Farms here.
Generally, every 1 MW of solar farm capacity requires around 2 acres of solar panels. However, solar farms are getting larger in capacity, therefore requiring more acreage. Keep in mind local towns and authorities usually do not permit full coverage of the entire parcel, and extra acreage is required for additional solar farm infrastructure. Since most solar leases are paid on a per acre per year basis, the larger your parcel is, the more you could make when you lease your land to a solar developer.
Exclusion Zones and Buildable Acreage
Not all of your acreage may be suitable for solar panels. Exclusion zones can be thought of as land that solar equipment cannot be placed on for one reason or another. Many exclusion zones prohibit the construction of solar panels:
Topography
Dwellings
Flood Zones
Waterways
Wilderness
National Park
State Park
Hazardous Sites
NFS Land Units
Grassland
After removing these exclusion zones from your total acreage, you are left with the “buildable acreage” suitable for a commercial solar farm. LandGate provides the exact location of these exclusion zones on your parcel(s), along with a calculation of the buildable acreage. In addition, when a solar energy developer needs to clear obstacles from the land (such as trees), it costs them more time and money. To compensate for this, they may not be willing to pay as much to lease your land for a solar farm. Receiving an offer for a solar lease on your land is more likely if it is clear of trees and structures.
Although some solar developers will timber trees to construct new projects, it isn't very common. Solar developers are also willing to pay more for land that is bordered by a road so that construction and maintenance of the solar farm is easier.
Proximity to Electrical Infrastructure
The further away your land is from the electrical grid, the higher the cost of interconnection for the developer. If your property is adjacent to a transmission line, distribution line, or substation, the developer can save interconnection costs and pass those savings onto you in the form of a higher lease rate per acre.
Generally, solar developers look for land that is located within 4 miles of a substation, but the closer, the better! Similarly, parcels located within 1 mile of a transmission line are suitable for solar projects. However, having a transmission line going through the property or adjacent to it is ideal. Solar farm lease payments will increase even more if the voltage of the line or substation is in the range required by the developer for the desired project capacity. Solar developers will also consider the injection capacity. The presence of a road doesn’t mean that the road can handle big city rush hour traffic. What if that road is a one-lane highway?
Similarly, just because there is electrical infrastructure in place near your land, doesn’t mean it can handle any size solar project. It is important to remember that even if your land is not currently located in relevant electrical infrastructure, this does not mean that you can't receive solar lease offers. Electrical infrastructure and new technologies are constantly being developed to support new solar projects.
Solar Power Incentivization
Governments are incentivizing solar development more and more, and living in an area where solar energy is highly incentivized means your land could be worth a lot more when you lease it for solar panels. Energy incentives such as Renewable Energy Certificates (RECs) and energy tax incentives like Sales and Use Tax, State Median Property Tax, State Sales Tax Exempt Status, etc. will play a role in solar value.
For instance, Arizona gets more sun than any other state. But Massachusetts solar rights are worth much more due to governmental incentivization, even though land in MA receives significantly less sunshine than land in AZ. These incentives are paid to the solar developer, not the landowner.
Amount of Sunlight
The amount of sunlight (solar irradiance) that hits your land might seem like a major driver for solar lease value but, perhaps surprisingly, it is not. While your land must receive adequate sunlight, a sunny parcel is not worth as much to a solar developer as the factors mentioned above, most notably the renewable energy incentivization in your state.
The amount of sunlight can also be thought of in terms of annual solar irradiance and the absence of sunlight-blocking obstacles, such as trees and buildings. NASA defines solar irradiance as “the output of light energy from the entire disk of the Sun, measured at the Earth.” Specific to a solar lease, it is a measure of how much solar power your land is getting.
Although solar irradiance does play a role in the value of land for a solar farm, it is not the most crucial factor. Many states that are known to receive lower levels of sunlight compared to other states have some of the highest renewable energy incentives, such as Minnesota.
Lease Land for a Solar Farm with LandGate - Find the Solar Value of your Land
Are you interested in leasing your land for a solar farm? LandGate's solar lease estimates within our free Property Report provide landowners with data to help them determine if their land could be suitable for a solar farm.
The factors discussed above are all used in calculating this estimate. Skip the guesswork and get your free Property Report today! If you like what you see, you can list your land for free on our leading marketplace for exposure to thousands of high-intent solar investors. By entering your land into a competitive marketplace, you can ensure that you are getting the best offer.
