Thinking about a
solar lease? Here are 5 things you should consider.
Walley-Stoll, Farm Business Management Specialist with Cornell Cooperative Extension’s
Southwest New York Dairy, Livestock, and Field Crops Program.
Rural landowners across the Southwest New York Region, and
New York State in general, have been receiving invitations from solar companies
to lease their land for utility scale solar arrays. While this has been around
for several years, the general trend of increasing renewable energy sources has
spurred lots of conversations about the potential benefits, pitfalls, and
logistics of hosting solar arrays on your property.
One thing to note is that solar leases are rarely something
landowners should feel pressured to rush right into. Careful consideration,
consultation with legal counsel, and an evaluation of the role such a lease
would play into a farm business plan are all important steps before signing on
the dotted line. Here are 5 things to consider as you think about leasing your
land for solar.
Benefits of Solar Leases: Solar energy is an important part of reducing carbon
emissions and meeting statewide,
efforts of increasing renewable energy sources. As a landowner, a solar lease
can also provide a steady income stream, ranging from $250 - $2500/acre/year.
While this isn’t as profitable on a per acre basis as other production options,
for unused or marginal land, solar leases can help diversify
farm revenues. There are several companies in our area recruiting land
parcels for solar development, which could work to your advantage! Research and
in your area for the best lease rates and agreements.
Leases and Your Farm Business Plan: Having a farm business plan in place is
so much more than a dusty binder sitting on a shelf in the farm office. A
business plan tells you where you’re going, why you’re doing what you’re doing,
and what other types of opportunities you’d like to explore. Depending on your farm’s
business plan, stage
in the business life cycle, and succession
planning goals, solar may help spur new growth or hinder new investment
opportunities. A solar lease can affect how you might use that land in the
future, which could include mortgages, property sale, production
diversification, expansion, or generational use.
Need Legal Counsel: Lease agreements are living documents that can be
adapted to meet your needs. This could range from including provisions that
protect actively farming around the solar arrays (apiaries, small
ruminant grazing and market garden production), hunting, right of ways,
insurance and liability concerns, and more. Leases can range in length from 20
to 40+ years, and it’s important to have a sound and fair lease in place from
the beginning. There’s very little chance of changing the lease terms once it’s
- 4.Effect on
Property Taxes: If you’re currently receiving an Agricultural
Assessment, or other property tax reduction, taking the land out of
production agriculture and into a solar array may require paying some of those
reductions back and conversion
penalties (you can typically negotiate that the solar company pays these
costs). A solar array can sometimes increase the value of your property and
your tax obligations. Once the land is in a lease, the solar developer should
also be responsible for any real property taxes, PILOT payments, etc. There is
a renewable energy tax exemption that will protect increases for a 15 year
period, but this often expires before the lease does – and many towns in our
region have opted
out of this program. Be sure to research potential tax implications prior
to negotiating the lease agreement.
UGLY”: You may have heard some horror stories related to array
construction, maintenance, and disassembly. Much of this can be negotiated with
sound legal counsel who is familiar with solar arrays into your lease
agreement. However, things do (and probably will) happen and you should be
prepared to handle these issues on your property. Some areas of concern
- Construction debris during the installation
phase, traffic, and potential interruptions to your farming practices.
- Dismantling the solar equipment at the end of
the lease and the oversight of that process, which should be laid out in very
specific terms in the lease. Be sure to include specifications of the quality
of the property (returning it back to production).
- Security, assurances, and/or bonds in place to
cover the termination of the lease and equipment in the case of developer
bankruptcy or missed payments.
- Company transitions with the nature of the
renewable energy industry, your lease will likely change hands several times
and you will need to navigate those ownership changes.
- Local zoning approvals may be a breeze or a
community uproar depending on your area and could delay a potential project.
Solar leases and their potential impact on our agricultural
industry can be both and exciting and an intimidating topic of conversation.
While the situation will vary from farm to farm, developer to developer, and
community to community – the most important thing will be reaching out to sound
legal counsel to negotiate a fair agreement and reflecting on your farm’s
For more information, visit any of these great resources
Written by Katelyn
Walley-Stoll, Cornell University Cooperative Extension, Southwest New York
Dairy, Livestock, and Field Crops Program. For more information, contact
716-640-0522, firstname.lastname@example.org, https://swnydlfc.cce.cornell.edu/. SWNYDLFC is a partnership between
Cornell University and the CCE Associations of Allegany, Cattaraugus,
Chautauqua, Erie, and Steuben counties. CCE is an employer and educator
recognized for valuing AA/EEO, Protected Veterans, and Individuals with Disabilities
and provides equal program and employment opportunities.
Last updated November 21, 2022