What Should Landowners Know About Solar Farm Development in Kansas?
As of June 2024, Kansas is a prominent hub for solar energy development. The state has nearly 50 MW of installed solar capacity. With total solar investments reaching $319 million, Kansas's solar sector is thriving, supported by significant cost reductions—solar prices have declined by 43% in the last decade. Projections suggest an ambitious growth with an addition of 6.8 GW over the next five years.
Solar farm development in Kansas is steadily progressing, with notable projects like the Johnson Corner Solar in Johnson City, which produces 27.5 MW, enough to power 4,198 homes. Other significant installations include the City of Pratt Solar, generating 7.7 MW, and corporate initiatives by companies like ALDI, which developed a 2 MW project in Olathe. Solar energy currently contributes 0.38% of the state's electricity, with the cost of solar installations having decreased by 43% over the past decade.
The solar energy in Kansas powers approximately 22,637 homes, contributing to 10.15% of the state's electricity supply. Several policies and market initiatives have shaped Kansas's solar landscape, such as the state’s Renewable Portfolio Standard and various federal incentives aimed at subsidizing solar manufacturing.
The number of Kansas solar farms has increased exponentially over the past decade. This is a direct result of the implementation of various incentives promoting renewable energy generation across the state. Many solar developers are actively planning new projects across the state. This presents a great opportunity for landowners to earn a steady stream of income from their land through solar lease payments, also known as solar payments.
Landowners in Kansas are receiving offers from developers to lease their land for solar farms. They often wonder how much their land is worth for a solar farm and if they are receiving a good offer. Leasing land for solar farms helps landowners provide their future generations with long-term financial stability. Several factors go into solar farm valuations that landowners and realtors should consider.
LandGate is a marketplace that provides data intelligence to landowners while also providing them the opportunity to connect with Kansas solar developers. Traditionally, developers would knock on landowners' doors or cold-call them. This old-fashioned way is not easy for landowners. It can be perceived as unwanted solicitation at a time when the landowner is not ready and doesn’t have enough information to feel comfortable talking about a solar farm on their land.
LandGate provides useful data to landowners or to their agents to inform them for free about the value of their land for solar farm leasing. Equipped with more information, landowners can make good and fast decisions about pursuing a solar lease.
What is the Process for Leasing Land for a Solar Farm in Kansas?
Step 1: Solar Lease Negotiation Period in Kansas
The solar lease negotiation process is the first step landowners take when interested in having a solar farm on their property. Land professionals can assist landowners during this period to make sure they are receiving the best deal possible but also understand the time period between signing the lease and having an active solar farm on their land.
During the negotiations, landowners can negotiate solar lease payments, the length of the lease for the solar farm, and the percentage of the escalator to combat inflation.
Step 2: Solar Lease Option Agreement in Kansas
The next step is for the landowner to get a solar farm option agreement. At that point, the solar developer has done a preliminary study, also called a feasibility study, to know if the site is potentially suitable for solar farm development.
Why Can’t I Get a Solar Lease Agreement Directly?
The process of a solar farm project in Kansas begins with optioning the land, which is called “site control” by developers. The reason solar developers cannot go straight to a solar lease is that they have to evaluate the land thoroughly.
Typically the initial screening study is good enough that this first due diligence process is all that is needed. Another larger uncertainty for solar developers is to know if the solar project will be accepted by the utility on the electrical infrastructure (or electrical network). We refer to this phase as “utility’s application” in the graph above and developers refer to this phase as “queue submission”. This means that the solar project enters the interconnection queue of that region waiting for regulatory approval.
These queues are known as Independent Systems Operator (ISO) or Regional Transmission Organization (RTO).
During this period, the analysis of possible engineering and land factors is conducted to determine the feasibility of the project to be constructed and connected to the grid. This is the reason why the solar developer starts with an option, as not all solar projects are approved by the ISO/RTO.
How Likely Will My Kansas Solar Option Become a Solar Lease?
At the moment, about 20% of solar options become a solar lease and are built into a solar farm. Currently, the electrical infrastructure network is a big bottleneck. There are more applications of solar projects to get on transmission lines than available capacity.
However, governments are aware of this situation and are working to ease it, in order to foster more solar development. This means that it will likely get resolved in the next few years. The problem of available capacity applies only to utility-scale solar farm projects, which are typically greater than 5 MW capacity.
Where Can a Landowner Get More Information About the Solar Lease / Option Period in Kansas?
LandGate assists landowners with determining the value of their land for a solar farm. We do this by taking into account the proximity of substations, transmission lines, and state incentives - each of which plays a role in site control.
Am I Getting Paid During the Solar Option Period?
Yes. Solar payments start during the option period but are usually smaller compared to the solar payments during the lease or construction phase of the solar farm.
Step 3: Solar Lease Agreement in Kansas
Once the availability of grid capacity is confirmed, the solar project is moved to a “planned” phase. During this time, the developers will exercise the solar farm option agreement to become a solar farm lease agreement. Typically larger solar rent payments start at this time.
Step 4: Solar Farm Construction in Kansas
Solar payments are phased as the project progresses. It starts with small solar lease payments during the option phase. Then it increases during the solar lease phase, it increases again during the construction phase of the solar farm, and the largest solar payment occurs when the solar farm is active and generating electricity.
How Long Does It Take to Build a Solar Farm in Kansas?
Usually, it will take between 1 to 2 years to build a utility-scale solar farm. It takes less time to build a community solar farm since they are usually smaller in size.
Step 5: Active Solar Farm in Kansas
After the construction has been completed, the solar farm is now considered ‘active.’ For landowners, this phase is called ‘production,’ as it signifies that their land is currently producing energy for the electrical grid that it is interconnected with. The production phase lasts anywhere from 25 to 50 years depending on what was negotiated on the lease.
What Can a Solar Farm Power In Kansas?
In Kansas, the average solar farm size is 30.62 acres generating approximately 3.27 megawatts (MW) of electricity when operating under optimal conditions. This output has the potential to cater to the energy needs of around 2,049 households as the typical electricity consumption of an average household in Kansas stands at 13,980 kilowatt-hours per year.
What is the Impact of the IRA and Other Factors in Kansas?
Kansas solar incentives have encouraged solar companies to develop more projects across the state. Additionally, favorable market conditions for electricity prices are encouraging investment into the solar sector in Kansas. Landowners and real estate agents should have an understanding of these incentives and market conditions to be prepared for potential offers for solar project deals.
Solar Development Incentive | Type | About |
Federal Solar Tax Credit, Solar Tax Credit (ITC) | Federal | The ITC allows for a 30% tax credit on the cost of solar system installation, applicable through 2032. Furthermore, solar panel installations are exempt from sales tax and any value-added property tax that may be levied from it. |
Renewable Energy Portfolio Standard (RPS) | State | According to the legislation, Kansas utilities were required to obtain 10% of their electricity from renewable resources from 2011 to 2015, 15% from 2016 to 2019, and 20% by 2020. |
Net Energy Metering | State | Kansas allows for net metering, which means that when your solar panels produce more electricity than you use, the excess energy is sent back to the grid, and you earn credits that can offset future energy bills. |
Property Tax Exemption | State | Solar panels in Kansas are exempt from property taxes. This means that installing solar panels will not increase your property taxes, even though they increase the value of your home. |
Evergy Clean Energy Program | State | In Kansas City, Evergy offers various solar incentives, including net metering, where customers can sell excess energy back to the grid and receive credits at an avoided-cost rate. This program helps reduce the cost of solar installations for residents. |
Midwest Energy Solar Program | State | Midwest Energy offers the How$mart Energy Efficiency Finance Program, which provides financing for energy efficiency improvements, including solar installations. This on-bill financing option allows customers to make upgrades without upfront costs, repaying through their utility bill |
Rural Energy for America Program (REAP) Grants | State | These grants provide financial assistance to small businesses in rural areas for energy audits, energy efficiency improvements, and the installation of renewable energy systems. This program helps reduce energy costs and promotes the use of clean energy. |
These incentives, combined with Kansas's high solar potential due to its abundant sunshine, create a favorable environment for solar energy investments. Landowners and real estate agents need to understand these incentives and the overall market landscape to navigate potential solar project deals effectively.
Despite the increase in LMP pricing in Kansas, solar energy is an affordable option for electricity consumers in the state. LMP is a pricing method used in electricity markets to determine the cost of electricity at specific locations (called ‘nodes’) within the electrical grid.
A PPA (Power Purchase Agreement) is a contract between a renewable energy developer (such as a solar company) and a power purchaser (such as a utility). Over the last three years, Kansas has experienced a slight decrease in PPA pricing by 1.3% and an average LMP price increase of 39% (this price is expected to increase a further 29% in 2025).
In the context of solar energy projects in Kansas, the relationship between LMP and PPA pricing lies in how the PPA sets the pricing terms for the electricity being sold. The relative stability in PPA pricing provides certainty to the solar developer about the revenue they will receive for the electricity that they produce. Meanwhile, the LMP serves as the market price for electricity at a specific node.
Increasing LMP prices has increased electricity costs for consumers and businesses. What’s more, the expected rise in LMP prices will foster investment in solar infrastructure statewide given the prospect of greater revenues for solar energy producers. As a result, the number of solar projects added to the interconnection queue is expected to rise given the variety of statewide solar incentives in Kansas.
Commercial, Community, & Behind-the-Meter Kansas Solar Farms
Typically, landowners and land professionals think of solar farms as huge plots of land covered in solar panels out in the middle of nowhere. However, this usually is not the case! In Kansas, active solar farms are typically 30.62 acres, allowing about 3.27 MW of electricity to be produced under ideal conditions.
Commercial solar projects are the commonly largest energy projects being about 40+ acres of land. These solar farms usually feed their energy into the grid and the surrounding area. Realistically these solar farms can be any size as it depends on the capacity available within the grid.
Community solar farms in Kansas serve energy customers directly within the same area or community. These solar farms tend to be smaller in terms of acreage and megawatts. Community solar is different from residential solar as residential solar panels are found on top of rooftops. Community solar projects can be larger, it just depends on the location.
Commercial, residential, and industrial solar farms are all considered to be behind-the-meter solar farms. Behind-the-meter means that they are intended to generate power primarily for on-site consumption rather than selling it to the grid. Community solar and utility-scale solar farms generate energy that is utilized in the grid to send it to all consumers a part of that grid. This means that they are front-of-the-meter solar farms.
Discover Land’s Value For Solar Leasing in Kansas
The solar energy industries within Kansas are growing to achieve energy goals for clean energy development. This makes it easier for landowners and real estate agents to participate in solar development deals. Landowners in Kansas can receive a free solar leasing estimate by identifying and claiming ownership of their parcel on our map.
Realtors can assist their clients in learning about their property’s potential for solar energy by using LandGate’s tool, LandApp. Land professionals can utilize LandGate’s data and analytics to provide their clients with information about their resource’s potential.
