Solar Panels, Solar Farm, YSG Solar
June 3, 2020

As the world turns increasingly to renewable energy sources, the demand for solar energy projects has grown massively. Residential solar has seen fantastic growth over the years, but now there is even further demand for utility-scale solar installations. These large solar panel installations are commonly referred to as solar farms and, as the demand for solar farms grows, so too does the demand for suitable land. 

 

With this increasing demand, solar developers have been on the lookout for suitable locations. Landowners in places like New York, Massachusetts, Pennsylvania, Virginia, and North Carolina are being approached with exploratory offers to lease land for solar development. This can be a profitable venture for a landowner, generating an additional revenue stream with little effort on the part of the landowner. Generally, the solar developer will handle the bulk of the work and pay the landowner a lease rate for the use of their land.

 

Of course, the promise of a consistent revenue stream with minimal work sounds extremely appealing, but there are a number of considerations to take into account before committing to a solar land lease. You will need to determine the viability of your land for a solar project, clarify every aspect of the project with the developer, and carefully review the lease before signing. 



Is My Land Suitable for a Solar Land Lease?

Following initial contact between landowner and developer, this will be the first step in the process. No matter how keen the involved parties are, if the land in question is unsuitable then the project won’t get off the ground. There are plenty of variables involved, but the factors below are generally the most important.

 

  • Amount of Land: For most developers, a minimum of 10 acres is necessary to develop a solar project. For a 1 MW solar farm, the developer will require about 5 acres.

  • Annual Sunlight: The land should receive plenty of sunlight on an annual basis, with little to no shading.

  • Grid Proximity: Ease of interconnection to the power grid essential. Developers will want land in close proximity to three-phase power and a substation.

  • Land Quality: As with agricultural farming, the quality of the land is important. Clear, flat land with no major obstructions or wetlands is desired.

 

Other factors may come into play depending on the project in question, but these are vital features across the board. 


YSG Solar Land Lease, Solar Farm

Solar Land Leases: What to Ask the Developer

Before signing a lease or coming to any legal agreement with a solar developer, you will want to ensure that you have thoroughly reviewed every aspect of the potential land lease. Solar land leases are long-term agreements generally spanning somewhere in the vicinity of twenty-five years so it’s important that landowners completely understand what they are signing up for. Make sure to ask questions about:

 

  • Lease Length: Clarify the length of the solar land lease. They generally last around twenty-five years but this can vary from project to project.

  • Annual Payments: Clarify exact details of payments to you, the landowner, at every stage of the project—before, during, and after construction. Determine whether these payments are fixed amounts, or variable payments depending on external factors relating to the energy market. 

  • Your Rights: Check if you are allowed to continue shopping around for other offers after the lease agreement, or if you are bound to the developer in question. Establish your rights with regards to land access/usage before, during and after the solar project. 

  • Your Responsibilities: Ascertain which party is responsible for environmental and legal compliance with regards to the leased land, as well as clarifying who is responsible for paying taxes associated with the solar project.

  • History of the Developer: Ask your developer about their business history and, if possible, seek references for other solar farms developed by the company. Speaking to another client of the solar developer can give great insight and put your mind at ease.

 

Both sides should be open in their communication with one another so that both can be satisfied with the terms of the lease moving forward. 


YSG Solar Land Lease, Solar Farm

Before Signing the Lease: What to Consider

After asking all these questions of the developer, you may want to ask yourself a few questions. A solar land lease is a long-term commitment so it’s important to consider every facet of the project before signing the lease. Items to consider include:

 

  • Land Usage: The amount of land being used could affect your ability to use other parcels of land for other purposes, as well as hindering your ability to access the rest of your land.

  • Taxation: Speak with a qualified tax professional to determine how construction on your land will affect your property tax. In addition, your income from the lease will likely be taxable. 

  • Land Value: The solar panel array on your land could have implications for your mortgage, your borrowing ability, and the value of your land, so be sure to clear this up with relevant parties.

 

Other items to consider include the impact of utility-scale solar installation on the local community, zoning regulations in your area, and the long-term implications of the solar farm for future generations of your family. 



The financial rewards from a solar land lease could be great news for you and your family, but it’s important to think carefully and seek legal advice ahead of any agreement. The first step is to speak to a solar developer and get a sense of your land’s suitability for a solar farm. If your land is located in any of the following states, YSG Solar would be happy to speak to you about a solar land lease:

 

  • New York

  • Massachusetts

  • Pennsylvania

  • Virginia

  • North Carolina

 

We are also happy to consider working further afield for certain projects, so feel free to reach out even if your land is located outside these areas.



Rent Your Land for Solar

Check out our short video below for a quick explanation of the solar land leasing process and the benefits of renting your property out for a solar project.





To learn if your land is suitable for a solar land lease, contact YSG Solar today. YSG has been in business for over ten years, working on solar projects across New York, Massachusetts, Pennsylvania, Virginia, North Carolina, and more. Send us an email, or call at 212.389.9215 to get started.



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.



Sources:

https://extension.psu.edu/landowner-leasing-for-utility-scale-solar-farms