Over the past few years, there has been a steady increase in the demand for solar energy due to the demand for additional energy requirements. This demand is further boosted with changes in technology and some encouragement from public policies. In a bid to meet this demand, many solar energy developers are currently approaching landowners with the offer to rent their land for a certain period. For landowners, who hold a vast area of land with them, this offer can act as an additional source of income. However, landowners should remember that leasing land to a solar developer would lock his land for a longer period of time. Considering that solar power is not similar to regular energy, there are many nuances that the landlord should keep in mind. Our guide will help you to understand these nuances and requirements necessary for leasing land for a solar farm.
Once a landowner evinces interest in leasing his land for a solar farm, the company will first evaluate his property to determine if it is feasible to install a solar project. Here, the solar developer will look at:
- Size of land available: Solar developers evaluate the land by seeing how big the farm is. This is primarily because any solar farm should at least have 5 acres for each megawatt the solar farm provides. For instance, if the solar power plant provides 100 MW energy, then the farm should be around 500 acres. If the landowner has a smaller farm, then the developer will consider if they are in partnership with neighboring landowners so that they can collaborate and build a bigger solar farm.
- Access to the grid: Solar developers also check to see the proximity of the farmland to the high-voltage transmission lines or the grid. Close proximity helps the solar developer to connect the farm to the grid in a cost-effective manner.
- Site analysis: Developers will then analyze the land to see how many hours of sunlight it receives.
- Layout of land: As the final step, solar developers will also look at the layout of the land as utility scale solar project often require a gentle sloping land with good exposure to the sun.
When planning to lease land for solar farm, landowners are advised to employ the services of an attorney to review any official document. However, despite having an attorney, there are certain aspects that the landowner should keep in mind. The landowner should always know that a leasing document is primarily an amalgamation of many agreements. The document will include:
- A lease agreement
- An option agreement
- An easement agreement
Here, a landowner should remember that while creating lease agreements the option is always in favor of the lessee (solar developer). Also, the terms offered in each agreement will be different from the other.
Other than the above, the landowner should always have their attorney involved in the process to ensure fair dealing. Prior to this, they should not enter into any form of verbal agreement or commitment and should always be cautious of vague timelines and payment information.