If you're a landowner considering solar leasing for your property, understanding the key
factors that impact its suitability is crucial. The blog titled "Does My Land Qualify for
Solar Leasing?" by LandGate breaks down these factors, offering valuable insights for
property owners.
Factors That Determine Land Suitability for Solar
Leasing
1. Acreage Requirements
Utility-scale solar farms generally require around 30 acres or more, while
community solar farms may work for smaller parcels between 5-10 acres.
Developers often seek larger plots, bringing higher earning potential through per-
acre payments. On average, each megawatt (MW) of solar installation needs
about 2 acres of land, and additional space is often necessary for infrastructure.
2. Exclusion Zones
Not all acreage on your property may be deemed "buildable." Exclusion zones
include areas affected by topography challenges, flood risks, or those located in
protected spaces like national parks, waterways, or hazardous sites. Structures
like buildings or significant tree cover also reduce usable land. Developers are
more drawn to land with minimal obstructions and will pay higher lease rates for
such properties.
3. Proximity to Infrastructure
Land closer to electrical infrastructure, such as substations and transmission
lines (preferably within 1-4 miles), is significantly more appealing to developers.
This proximity reduces interconnection costs, indirectly increasing the lease
payments landowners receive. Even the type of electrical system nearby can
influence the value of a lease.
4. Government Incentives
A state's renewable energy policies, tax credits, and energy certificates often play
a bigger role in a land's solar potential than sunlight levels. For example, states
with strong incentives, like Massachusetts, may offer more lucrative
opportunities than sunnier states with fewer incentives like Arizona.
5. Sunlight
While sunlight exposure is necessary, it is not the most critical factor. Developers
favor land in areas with renewable energy support over just solar irradiance
levels, making regions with fewer sunny days potentially competitive due to
government programs.
Importance of Due Diligence
Due diligence is essential before signing a solar lease. Solar leasing agreements are
long-term commitments, usually spanning 25-50 years. Landowners must research
developers, ensure the agreement terms are fair, and ideally work with a real estate
agent experienced in energy contracts. This careful evaluation helps avoid unfavorable
deals and ensures a transparent partnership.
Solar Leases vs. Power Purchase Agreements (PPAs)
A solar lease involves the developer paying a fixed annual rate (usually per acre) to
utilize the land for solar energy generation. By contrast, a Power Purchase Agreement
(PPA) involves the end utility customer paying a fixed rate per kilowatt-hour for the
electricity generated. Landowners seldom participate directly in PPAs, as this is an
agreement between developers and utilities. If you're leasing your land, the focus is on
ensuring you get fair compensation for its use.
Benefits of Solar Leasing for Landowners and Farmers
For landowners, solar leasing offers excellent financial and environmental benefits,
including:
● Income Diversification
Farmers and rural landowners can earn consistent revenue—typically between
$700-$2,000 per acre annually—independent of seasonal farming challenges or
market fluctuations.
● Cost Savings on Energy
Leased solar farms may offer lower energy rates, providing financial savings and
reducing reliance on conventional energy sources.
● Environmental Contribution
Landowners contribute to reducing carbon emissions and fostering sustainability
by enabling renewable energy production.
● Government Incentives
Tax credits and programs supporting solar energy further ease costs and boost
profitability.
To assess your land’s solar leasing potential and gather more details about these
crucial factors, read the full blog at LandGate’s website.