10 Surprising Benefits of Solar Leasing on Land
In recent years, solar power has emerged as a viable and lucrative energy source for landowners nationwide. With the increasing demand...
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Solar Farm Leasing Process & FAQs
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Do I have enough land for a solar farm?When it comes to solar farm land requirements, location is more important than the amount of land you have. Even if you only have a few acres, you still have a chance to generate income by leasing your land for a solar farm. This is because solar developers also consider proximity to electrical infrastructure (substations and transmission lines) and a few other factors as they evaluate parcels of interest. To find your land's value for solar leasing, find your parcel on our map and generate your free Property Report!
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How long are solar leases?Solar farm leases typically range from 20 to 40 years total. Once you sign the solar lease agreement, or option to lease, there are generally four phases to a solar farm project: Development Phase (sometimes referred to as the Option Period) – This could take anywhere from 1 to 5 years. It will include planning, permitting and regulatory matters. There is a possibility that during this phase, the operator may decide not to complete the project due to financial or regulatory restrictions. Construction Phase – This typically lasts between 2 to 4 months while they install the solar panels and supporting infrastructure. Operations Phase (sometimes referred to as the Production Phase) – During this phase, the solar panels should actively be producing energy. This phase could last anywhere from 20 to 50 years depending on the lease agreement. Decommissioning Phase – Unless the solar developer negotiates the right to extend the lease for another lengthy operations phase, the solar panels and supporting structures will be removed and they work with you to restore the property to its original condition pre-lease.
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Will I still be able to farm & run cattle on my property if I lease it for a solar farm?Usually, solar developers will allow landowners to continue farming, running cattle, or carrying out other activities on their land during the option/ development period. If they elect to begin construction, the landowner will be restricted from further activities that would interfere with construction, development, and the operations phases of the solar lease.
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Can I lease the surface of my land for a solar farm if the minerals are already leased?Yes, you can still lease your land for a solar farm if the minerals are already leased for an oil and gas drilling operation. The solar company will work with you and the operator of the lease to ensure that there are dedicated locations set aside for future drilling and development operations. In these cases, there will likely be a negotiation between the solar developer and the oil and gas company. The solar developer will not be able to move forward with the project until they are certain there will be no interference from oil and gas drilling operations since the mineral estate is dominant over the surface estate in most states.
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Can I lease my surface for a solar farm if someone else owns the mineral rights?Yes, you can still lease your land for solar energy if someone else owns the minerals. In most states, the mineral estate is dominant over the surface estate. This means that the mineral owner has the right to grant an oil and gas lease to an operator, who then has the right to use as much of the surface as is reasonably necessary to produce oil and gas. The solar developer will know if the minerals have been leased. If they have been leased, the developer will attempt to coordinate with the oil and gas company in an effort to ensure they can install solar panels on your land. If the minerals have not been leased, the solar developer will contact the mineral owner in hopes that a deal can be made before minerals are ever leased.
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1. Determine Solar Property ValueLandowner gets their free Property Report on LandGate to determine the potential lease value for a solar farm on their land, and any other resource they are interested in Landowners can partner with a broker to help build a full land report for their property. LandGate can connect landowners with locally licensed brokers upon request.
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2. Create Solar ListingLandowner, or landowner representative, publishes a listing on LandGate's online marketplace Landowners can use the solar lease value determined by LandGate, and are encouraged to add a detailed description as well as any additional information regarding the property. Landowners can upload documents to provide further details Multiple listings for different resource types that landowners are interested in leasing can be created at the same time LandGate's listing experts can assist in creating a listing and provide support
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3. Listing shared with solar developersAfter a listing is posted, it is added to LandGate's marketplace, where solar developers are able to view listings and landowner contact information Solar developers will receive a notification after the listing is published letting them know your property is potentially available for solar farm development Interested solar project developers will reach out, with a tentative offer, beginning the negotiation process
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4. Developer NegotiationsLandowner and developer(s) negotiate the terms of the lease/purchase, LandGate or a broker can provide support with additional information Landowner selects best offer Landowner is encouraged to hire an attorney that can review and provide legal counsel to the landowner regarding the agreement; LandGate can refer the landowner to a list of independent local attorneys at the landowner's request
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5. ClosingClosing - Landowner marks their LandGate listing as 'sold' Payment
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6. Development PhaseDeveloper designs layout of solar farm Solar farm designs are sent to permitting and regulatory bodies for approval Solar farm development may stall out in this phase depending on financial or regulatory considerations
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7. Construction PhaseSolar panels and supporting infrastructure are installed and connected to electrical infrastructure. This phase typically lasts from 2 to 4 months.
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8. Operations PhaseThe solar farm is fully operational and generating electricity. The landowner receives payment from the solar developer according to their agreement.
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Can LandGate tell me the value of my land for a solar farm?Yes - LandGate can provide you with a free solar lease estimate when you find your land on our map and generate your free Property Report. Solar lease payments vary across the country and are affected by various factors. Learn about typical solar lease payments here:
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What factors go into how valuable my land is for solar leasing?There are many factors that affect what you will be paid when you lease land for solar energy, such as the size of your property, distance to electrical infrastructure (nearest transmission lines and substations), topography, state and federal incentives, just to name a few. Additionally, the size of the project will have an impact. Larger utility scale projects could require 100 acres or more, whereas. Whereas small to medium scale projects could require 2 – 40 acres. Future needs for electricity in your area, ease of access to your property (highways or farm roads), and supply and demand for solar sites in your area are also factored in. If your land has easy access to highways or farm to market roads, your solar lease value could increase. You can learn more about if your land qualifies for solar leasing here.
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How would I get paid for leasing my land for a solar farm?There are quite a few ways to get paid when you lease your land for solar energy. Across the country, deal terms vary. Generally, for Utility Scale Solar Farms, the developer will pay you $10 - $40 per acre per year for a 2-6 year option to lease. Following the option period, if the developer elects to exercise the option to enter into a formal lease and begin construction, you can be paid between $400 - $2,000 per acre per year for 25 - 30 years depending on what is negotiated in the lease. You can learn more about getting paid for a solar lease here.
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What is a solar lease option?The solar lease option is the 2-6 year term at the start of a lease agreement that grants solar developers the exclusive right to enter into a formal lease agreement. During this time, the solar developer evaluates the parcel's suitability for solar leasing and works to obtain the proper permits that would allow them to begin construction. That being said, entering into a solar lease option does not guarantee that the solar developer will move forward with construction.
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What is a fixed annual payment in a solar lease?A fixed annual payment for a solar lease is a pre-negotiated amount of money you will be paid annually to lease your land for solar energy. The number of years is also pre-negotiated and usually 25-30 years, with an option to extend the lease for another 5 years.
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As electricity prices increase over time, am I compensated in my solar lease contract?In a fixed annual rent payment lease, the landowner will not benefit from higher future electricity prices. As an alternative, most solar farm lease agreements provide for an annual escalator of 1.5 - 3%. Another benefit to the fixed annual rental payments is that the rental payment does not decrease if electricity prices go down.
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Will I have to pay property taxes if my land is developed as a solar farm?You will be responsible for property taxes on the portion of your property that is not developed for a solar farm. The solar farm lease agreement generally provides that the developer will be responsible for the taxes assessed on the developed lands. However, every lease agreement is negotiable.
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Can I sell my solar royalty payments?Yes, landowners receiving payments from solar farm developers can market and sell those future payments as a lump sum up front. Selling future solar lease payments is generally in the best interest of the landowner since those payments technically decrease in value over time as a result of inflation, and the lease payments are never guaranteed (the developer of the lease can stop operating the solar facility at any time). Property owners can market the payments they receive from a solar lease with LandGate. Find your parcel on our map and follow the process to create a listing!
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What happens if the solar developer goes out of business?During the lengthy leasing period, it is possible that the lease may change hands at some point, or that the developer goes bankrupt. In the event that the solar developer goes bankrupt, the solar farm may be sold to another developer, who would take over the lease and continue operating the project as planned. This means that there is a potential for gaps in the lease payments, but the developer who purchases the solar farm would be responsible for any back payments. There is a level of risk associated with leasing your land for solar energy (and many benefits!), so it’s important to have potential lease agreements reviewed by a licensed attorney.
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