Leasing land for solar can be a hugely profitable venture for Arkansas landowners and now, thanks to the successful passage of the Arkansas Solar Access Act (SB 145), developers are eager to identify suitable land in the state. This means landowners are well positioned to create an additional revenue stream with their unused, vacant land.
The Arkansas Solar Access Act
The Arkansas Solar Access Act (SB 145) is a successful bill which removed many of the regulatory hurdles which had previously stunted the growth of solar energy in the state. Notably for landowners and solar developers, the bill enabled solar leasing and third-party purchasing for non-taxed entities. This allows much greater flexibility for AR energy customers and opens up the Arkansas solar market to the potential of solar farm land leases.
How Do I Lease Land for Solar in Arkansas?
Thanks to the aforementioned Solar Access Act, leasing your land for a solar farm in Arkansas is now more viable than ever before. The bill has lessened the monopolistic control of the utility companies, giving greater power to the consumer, who can now access a wider range of financing options for solar projects, and receive a fair level of compensation for energy generated on their land and the use of the land for solar PV projects. A solar land lease is one potential option for Arkansas landowners. Generally speaking, a solar land lease is an agreement in the region of 25 years, wherein a solar developer pays a landowner for the use of their land to develop a solar farm. These rental payments are typically made annually on a per acre basis, though in some cases they may occur on a per megawatt basis.
How Much Can an Arkansas Solar Farm Make?
A wide range of factors determine the lease rate for a solar farm, and it’s impossible to know for certain how much your land could make from a solar land lease without speaking to an established developer like YSG Solar. Nonetheless, we’ve explored some of the most common factors determining the potential profitability of an Arkansas solar farm below. Keep in mind that every project will differ, and this list is not exhaustive. However, these factors should allow you to get a sense of how much your land could be worth to a developer.
Size of Land Parcel: Most developers will require at least 10 acres of land for the construction of a solar farm project, though this can differ depending on other factors, and some may require as little as 5 acres. A general rule of thumb is that 5 acres is equal to roughly 1 megawatt (MW) of solar power. In fact, smaller sites—less than 30 acres or so—can often demand a higher price per acre because of issues around electrical infrastructure and landowner risk & reward.
Quality of Land: Much like a conventional agricultural farm, the quality of the land itself plays a big role in determining the overall value of the site and its potential profitability. Good quality land is necessary for a successful solar farm. This means clear, flat land with minimal incline (5 degrees at most) and little to no wetlands or major obstructions.
Proximity to Three-Phase Power: Access to three-phase power is essential for a solar farm. Project sites should be within 1,000 feet of three-phase power, and 2 miles of a substation. Additionally, power grid infrastructure may be in better condition in certain areas, resulting in greater demand for land in that area and, as such, a higher price per acre.
Land Value: Aside from the size and quality of the land, and external concerns such as grid access, the overall value of the land, removed from the idea of a solar farm project, will play a part in determining the price per acre a solar developer must pay. If the landowner can reasonably expect to profit from their land in its current use, or from an alternative use, solar developers will have to increase their offer in order to make a solar farm the superior option for the landowner. If land is highly valued for other purposes before solar comes into the picture, then it will naturally demand a higher price per acre as part of a solar land lease.
Location: Apart from the inherent quality of the land, as well as its size and alternative profit potential, the location of the land plays a significant role in determining the price a developer is willing to pay. We’ve already spoken about grid access, which is a vital component of any potential solar farm project, but scarcity of viable land in a region can also drive up its value. In a county/town/region where quality land is in short supply, the price per acre will be higher. On the other hand, if viable land is plentiful in the area, then developers won’t be willing to offer as high a rental price.
Solar Farm Land Lease Rates: Arkansas
Broadly speaking, across the United States, solar land leases can pull in an annual rental payment between $300 and $2,000 per acre. Of course, these are just ballpark estimates and are not strictly applicable to every solar farm project. When negotiating a rental price for a solar farm, the developer will take all the factors above into account, as well as additional factors based on the specifics of the project and parcel of land in question. For Arkansas landowners, the information in this article will give you a starting point to determine the viability and potential profitability of a solar land lease, but the only way to know for certain is to speak with a solar farm professional.
For further information about Arkansas solar farms, and the growth of Arkansas solar in general, please consult some of our recent articles:
To learn how much you could make from a solar land lease, reach out to YSG Solar today. We will determine whether or not your land is suitable for a solar farm project and, if so, work with you to ensure a profitable solar land lease. To get in touch, send us an email or call at 212.389.9215.
YSG Solar is a project development vehicle responsible for commoditizing energy infrastructure projects. We work with long-term owners and operators to provide clean energy assets with stable, predictable cash flows. YSG's market focus is distributed generation and utility-scale projects located within North America.