Lease Land For Solar Farm: 6 Things You Should Know

Farmers and landowners with land over 25 acres can lease their land to solar farms for additional income.

This helps diversify the use of your land while meeting the growing demand for solar.

If you’re intrigued by this possibility but don’t know where to begin, keep reading.

Here’s what you should know when it comes to leasing a piece of land for solar farms and the questions you should ask.

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Disclaimer: we are not lawyers, accountants, or financial advisors, and the information in this video is for informational purposes only. This video is based on our own research and experience and, while we do our best to keep it accurate and up-to-date, but it may contain errors. Please be sure to consult a legal or financial professional before making any investment or purchasing decisions.
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Video Transcript:
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Hi guys this is Erica from Gokce Capital. Now before I begin, be sure to click subscribe and turn on the notification Bell. Princess's family has been raising Wisconsin dairy cows for Generations but now Brent will add another crop to his herd son.

We'll more at the end of this video. But first, if you own land you may want to consider leasing it to a Solar Company, and today's video we have the top things you should know. Number one, what is a lease for a solar farm plus the name would suggest?

This kind of lease occurs when you grant a company a lease in order to develop a solar farm on your property. Number two, what are the pros of leasing your land for solar Farms?  The primary benefit of course is that it generates income.

It also promotes sustainable farming in two senses of the word. First, you're helping to generate renewable energy. But also, you're getting a steady reliable long-term source of income finally, a big question that many people may have is can I still use my farm if I lease it to a Solar Company?

The answer is generally yes. In many circumstances, the Solar Company will not use all of your property and you can continue to farm on the rest while you continue to generate income from the lease. Number three, what are the cons of leasing your land for a solar farm? Well, first a solar lease is almost always a long-term commitment think 20 to 30 years.

So of course solar panels are going to be placed on your land which will limit what you can do with at least a portion of it and some other things you may not consider immediately. But it's possible that your lease will interfere with certain government programs and benefits, particularly things like tax breaks for using the land for agricultural purposes. Oh and there's one final con.

Keep in mind that you do not own any Solar equipment. Your income is coming not from the energy that is produced but from the fact that you are a Landlord leasing land. So this means the equipment is not an asset you own and you also don't get any benefit from the energy produced.

Number four, how do you know if your land is right for solar? Now you may be sold on the idea of leasing your land for a solar farm but it's possible your property won't work. Here are some things to keep in mind.

You will need substantial acreage. Most land leases for solar Farms are for utility-scale Farms. You'll also need the right topography and something you may not think about.

But your land does not need to be near existing electrical infrastructure. Like transmission lines and substations as well as a demand for electricity. So if you're too far out.

You may be out of luck and finally, your land must be located in a jurisdiction that will give a permit to your developer for a solar farm. Number five, if a company has reached out to you, here are a few things that you should look for. When you're discussing terms, there are the basics.

What will the lease amount be and what is the annual escalator? Your lease amount should go up each year and it should at least track inflation. Another thing to keep in mind is that a Solar Company is it's not going to enter into a lease with you right away.

They're going to want to do their due diligence to make sure your land is right for a solar farm and this period can take quite a long time anywhere from a year to two years. During this period your land will likely be tied up. In that, you won't be able to sell it.

[ruthwarren]

Another concern is that the solar farm is an improvement to your property. That means your property can have a mechanics lien against it if the solar company doesn’t pay their bills. Every property owner in our county with a wind turbine had a mechanics lien on their farm when the wind company didn’t pay their wire bill. When researched, the company was averaging 16% of their projects had one or more liens during construction. These liens show on the land owners credit report. The company did pay the delinquent bills, but what will happen in the next 50 years. Would you trust a company that can’t get through the first year without problems for the next 50 years? Decommissioning is a big deal as well.

[adamsteineke]

The decommissioning is important as I've heard they may strip the land of all top soil to prevent plant/weed growth, which will pretty much destroy your ability to grow crops when they leave.

[EkilibrioRock]

Awesome video very informative, I don't own land but seems like a good way to generate money in the long term!

[gregadkins]

What a great informative video. I would add 1 more option that wasn’t mentioned that I specialize in so I can speak on it, is there companies that will enter into a partnership with the owner at zero cost to them and split the income, generating more income than a standard lease. Not only does it generate more income but will increase the value of the property over 15%.

[willmckinney]

Please consider your neighbors’ property values and views before signing a lease.

[righttobeararmsetc.]

I have the perfect farm and on each side of my land is big towers two separate sets one is sixty foot tall towers the opposite side is 100 foot towers

[tatecartermemory]

This is video is filled with things that need correction. As a solar provider for feedback

[Eleenabattise]

Hi iam intersting to give my land for solar project how come you will guide me thank.

[bradmcclendon]

The video states that Brent leased 500 acres (one third of his farm) to the developer. How many acres (of the 500) did the developer actually use? I'm very curious because some of the lease agreements payout on the acres used by the solar farm.

[CountryboyBOB]

I guess my initial comments were removed but what I said was true the solar “Farms” in my area are broke as soon as the tax breaks run out.

The land owner no longer has the agricultural tax exemption for 7 years.

No long term jobs come to the area just temporary during construction.

[winfordnettles]

I have acreage that is currently in pulp, paper, and pine straw production, however, I am considering converting the land use to a solar farm. There is about 30 acres of usable land that would be good for a solar farm. What kind of income, taxes, and maintenance can I expect if I decide to convert it to a solar farm? What is the typical lease period for such use? How do I contact energy companies that would be interested in such a venture? How do I vet these companies by the quality of their performance? Just a few thoughts to consider.

[PowderPuff_]

Can a solar farm come in and force you to sale your residential home?

[gwendolynholsey]

does it have to be farmland or just acreage available to place solar panels on

[willpower]

I heard there is an options period could be 3-5 years, this true?

[th_Gen_Proud_Texan]

What’s the best way to get in touch with a solar company to see if they are interested in leasing my land?

[marcodesul]

Solar Farm is built in 4 to 14 weeks? Where?

[reynoso]

I owe a residential lot ! It's empty !! It's depends on the city planning department??

[donkerwin]

Can you farm the land after the solar system is removed?

[paradise]

I have land I want to lease for a solar farm. Can you help me find a company who would like to build one. I am about 1.5 miles from a substation, I own the top of a mountain almost all flat with a county maintained road going right through it. Triple phase is on an adjacent property. Land on top is almost all flat but would need to be cleared of brush. I am not in a swamp or wet land. Property is 1200 in elevation above sea level and fog line about 4 miles from ocean when driving. On the north coast of California not in a costal zone. Upper residential zoning. I have two parcel right next to one another of 119.18 acres in total. I'm open to doing as big as we can get out of the use of the land.

[reynoso]

How many square feet? How much can I make