Wednesday, September 14, 2022

How Much Money Can You Make Leasing Land For Solar

Understand The Capital And Operating Costs

How much can you make per acre leasing your land out for solar?

Solar farm costs are one of the biggest boundaries toward further adoption. What is the cost of a solar farm per acre? Usually, the capital cost is $0.82-0.95 per watt for utility farms.

Consider the aforementioned value of 285.71 MWh/year for one acre. This amount is equivalent to:

285.71 MW-hyr*1365 yrday*124 dayh=0.03262 MW=32.62 kW=32,620 W

At this rate, you will pay between $26,748.40 and $30,989 for solar panels per acre. You will also need to pay for the other components, such as racking equipment, inverters, batteries, transformers, and wiring.

Overall, you are likely to pay $400,000-$500,000 per 1 acre solar farm.

For the most part, solar farms do not require much maintenance. On average, you will need to pay between $15-$25/kW/yr.

For one acre, that amounts to about $489.30-$815.50 annually.

Amount Of Land You Have

This is a tricky one because there is no simple guideline here. In most cases, the more land you have, the more valuable it is per acre. Thats because there are significant economies of scale in building large solar farms , which reduces the developers costs per MW of capacity.

However, the regional supply of available land tempers this. In southwestern states, finding 100 acres or more of flat, clear land isnt a big challenge. In and of itself, the fact that one landowner in Nevada has 500 acres and another has 100 doesnt mean that the 500-acre property is worth more per acre. But to find 500 acres of flat, clear land in Virginia is extremely rare, and in that case 500 acres is worth much more per-acre than 100 acres there.

In addition, sometimes developers want to build smaller to meet a particular energy buyers needs, or to benefit from a tax incentive for a project of a specific size. There is currently an incentive in NY state, for example, to build 5 MW community solar farms, which requires about 40 acres. Developers want to build right up to this limit to maximize their economies of scale, but wont build any bigger than that. And in this case, the going rate for land in NY for community solar projects currently hovers between $1,000 and $1,5000 per acre. Compare that to central Texas, where lease rates are typically in the $400-$600 per acre range.

Promotes Sustainable Farming Practices

Few people have better firsthand knowledge about the impacts of climate change than farmers and ranchers, and many of them lease land to solar companies to try to reverse the current trajectory.

Climate change can mean the following:

  • More extreme weather conditions
  • Increases in crop pests and pathogens

Participating in any activities that reduce carbon emissions is helpful to the agricultural industry.

Additionally, many farmers and ranchers connect to the solar farm on their property for electricity, significantly reducing carbon emissions for their operations.

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Learn More About Solar Land Leases With Revision

Got a piece of land that you think would be good for solar? Have a solar option proposal and want to see if its a good deal? Got other questions? Get in touch!

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    Lease Land For A Solar Farm With Landgate Find The Solar Value Of Your Land

    How Much Money Can a Solar Farm Make?

    LandGate has already done the work for landowners to determine their propertys solar land lease value and we have that data ready to share with you for free. Skip the guesswork and claim ownership of your parcel to see its Solar LandEstimate. If you like what you see, you can list your land for free on our leading marketplace for exposure to thousands of solar investors. We help landowners quickly and easily make extra income on their land and ensure they are getting a fair offer.

    Also Check: How Much Do Solar Panels Add To Home Value

    Key Takeaways On Solar Farm Land Requirements

    Farmers, ranchers, and landowners in search of a predictable way to receive passive income should determine if they meet the solar farm land requirements for leasing a solar project on their property.

    The advantages gained from satisfying the minimum of 6-8 acres of solar-ready land per megawatt needed to construct the smallest of community solar farms may outweigh any disadvantages as detailed in this article.

    One hundred sixty or more acres would satisfy the solar farm land requirements for a larger utility-scale solar power station.

    But each case is unique. Search out legal advice before going all in.

    With our top 7 tips for farmers concerning solar leasing after youve met the solar farm land requirements, youll be well on your way as a partner in a quintuple win/business opportunity for you, the solar developer, the public utility, consumers, and the planet.

    Proximity To A Transmission Line Distribution Line Or Substation

    The further away your land is from the grid, the higher the cost of interconnection for the developer. If your property is adjacent to a transmission line, distribution line, or substation, the developer can save interconnection costs and pass those costs onto you in the form of a higher lease rate per acre. That solar farm income will go up even more if the voltage of the line or substation is in the range required by the developer for the desired project capacity. Solar developers will also take the injection capacity into consideration. The presence of a road doesnt mean that the road can handle big city rush hour traffic. What if that road is a one-lane highway? Similarly, just because there is infrastructure in place near your land, doesnt mean it can handle any size solar project.

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    Planning A Solar Farm

    We start by working closely with the landowner to ensure that we are respecting their needs for the property. From those discussions, we will choose the precise location of the solar project.

    Then we work with the local towns and surrounding communities, along with the state or federal government authorities, to ensure the solar project meets all environmental requirements and standards.

    Acreage Required For A Solar Farm

    How You Can Monetize Your Land With Solar

    While there is no definitive answer to how many acres do I need for a solar farm?, we generally consider 30 acres a great start to attracting solar developers. You can list land under 30 acres for solar panels, it just may be more difficult to get it leased. Every 1 MW of solar farm capacity requires around 2 acres of solar panels. In general, solar farms are getting larger in capacity and requiring more acreage. Keep in mind local towns and authorities usually do not permit full coverage of the entire parcel AND extra space is required for additional solar equipment. If leases pay a certain amount per acre, then the larger your land parcel is, the more you could make.

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    Can You Show Me Other Solar Farm Projects Youve Done

    When considering signing a lease with a solar developer, you want to ensure that they know what theyre doing. If the solar developer cannot point to any solar energy projects, this could be a red flag. They may have just started in the solar industry or worse, they dont have the knowledge or expertise to get the project to construction.

    Its important to ask your developer how many projects they have brought to operational having a track record of completed projects is a great indicator of a reputable solar developer. They should have no issue with providing a list of operational projects and may even have a list on their website, which you should take the time to view in any case.

    When agreeing to sign up for a long-term lease, you want to make sure that your solar developer signs leases with the intent of developing a project instead of holding vast areas of land with no intent to follow through with their promises.

    Watch For Prohibitions On The Use Of Other Properties

    Solar lease agreements sometimes require that the landowner not construct anything that could impede the sunlight flowing to the solar project. This restriction could affect not only the land where the solar panels are located, but also neighboring land owned by the landowner.

    For example, some solar leases prohibit crop dusting in the area of the solar farm because it leaves a film on the panel that reduces power efficiency and must be cleaned off. The particulates in the film can also degrade the panels.

    Carefully consider whether these types of prohibitions could be a problem for your operation.

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    What Our Landowners Are Saying

    If I was any farmer that wanted to sign up I’d call Greg. The work he’s done here …he’s been a great help.

    Bruce SNew York State Farmer

    OYA was upfront and clear with their intentions and what it would take to get to a finish line.

    Mark H.Minnesota Landowner

    OYA successfully navigated some complicated land-related issues and worked hard in everyone’s interest to get our project built. I couldn’t be happier that we finally got there.

    David E.Minnesota Landowner

    How To Get A Solar Farm On Your Land

    Solar Land Leasing

    If youre a commercial land owner with some unused land, you may wonder what to do with it. Have you considered leasing it for solar farm usage? Leasing your land for a solar panel farm is a great way to use your open land while giving back to the environment. Lets explore your solar options so you can select the right type of renewable energy solar solution for your land.

    Also Check: How To Install Off Grid Solar Power System

    Utility Scale Solar Solutions

    When you lease your land for a solar farm, you can gain a lot from leasing it for a utility scale project. What is a utility scale solar project? Its a solar project where a utility company leases your land to generate solar energy and return it to the electrical grid. Then the grid distributes that renewable energy to the surrounding community. Verogy can work with you to lease your land to nearby utility companies that want to generate solar energy for their consumers. We make sure you generate reliable income through your land, and we manage and maintain the solar farm throughout its lifespan, so you dont have to take care of it. We simply install the solar panels on your land, and then you reap the benefits of that utility scale solution.

    Example : How Much Money Does A 1 Mw Solar Farm Make

    Here is an explanation of how solar farms generate revenue:

    A 1 MW solar farm is considered a Utility Solar Farm because of its size.

    Utility Solar Farms sell their power on the wholesale electricity market by entering into Purchase-Power Agreements for their generation.

    The national average says that there are four peak sun hours per day which means that a 1 MW solar farm would make 1,460 MWh per year .

    In 2019, solar power was traded for an average of $27.40 per MWh, according to the LevelTen Energys P25 Index.

    So to calculate the revenue on a 1 MW solar farm, you would take the MWh per year and multiply it by the trading price: 1,460 MWh per year x $27.40 = $40,000/year.

    The calculations show that a 1 MW solar farm can earn an average of $40,000 per year.

    Of course this is just an example, and you will want to factor in the actual price of solar power production in your area and the going rate for solar generation in the wholesale market – which will vary the numbers, but this gives you an idea of how revenue is calculated.

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    Must Have Right Terrain And Quality Of Soil

    The quality of both the terrain and soil are also very important when evaluating the land.

    The land shouldnt be sloped, excessively rocky, or unstable. It should be flat land that faces south to serve as a sunny platform. Having flat land is important for uniform placement of the solar panels and to avoid shadowing from nearby panels.

    If the land is littered with large boulders, the developer will have to take into consideration the cost of removing these boulders into their budget.

    How To Get The Best Land Lease Rates For Solar Projects

    What Factors Determine Solar Land Lease Rates? | YSG Solar

    One of the big questions solar developers need answered when moving into a new market is how much to offer for a lease rate. Typically, landowners arent actively marketing their property for solar use, aside from a few national land exchange platforms and local real estate brokers arent familiar with this relatively new type of development. Thus, determining an appropriate lease rate through third-party data is pretty tough to come by.

    While agriculture rates and sale prices are readily available, benchmarking a 40-year land lease with a 3-year initial due diligence period is not so easy, either. Many developers are inclined to benchmark the current market rates for rural uses, such as agricultural or timber, which can be as low as $200 to $300 per acre. This lease rate range would allow for healthy margins, but under closer review it may not be a fair comparison and there are other factors to consider.

    A Different Value Proposition

    One must also consider the highest and best use of the property. If the property is truly in a remote area, then perhaps there will be no higher and better use aside from agricultural land in the foreseeable future, however in many cases these properties are in transitional areas that could be used for residential development in the next 10-15 years.

    Like it or not, a solar farm drastically alters the look and feel of a community, and one may not be inclined to upset their neighbors unless a sufficient premium is offered.

    The Bottom Line

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    Solar Farms Benefits For Landlords

    Author – Jack Saunders

    With the reduced cost of solar panels and high performance of rental incomes, solar farms offer some great benefits for landlords.

    This article looks at the various benefits for landlords considering leasing land for solar farms and gives an overview of the current solar energy market.

    Size Of Your Solar Farm Plays A Crucial Role In Its Profitability

    Size does matter when it comes to how large your solar farm is. The larger the landmass you have to work with, the more solar panels you can set up. You may run into restrictions when it comes to how large your solar farm can be.

    Even though there is no environmental impact do to solar farming, you should always talk to your local authorities to make sure that you fully understand how large of a farm youre allowed to create. Some people will make the mistake of thinking that they can put solar panels on any size area, and that may not be true.

    Local ordinances vary from region to region, and thats why its best to talk to someone in your area and not rely on what you read on the internet.

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    What Rights Belong To Mineral And Groundwater Owners

    An important consideration for both landowners and solar companies is the status of the mineral and groundwater estate beneath the land being considered for a solar project. Because the mineral and groundwater estates are dominant in Texas, the mineral or groundwater owner can use as much of the surface estate as is reasonably necessary to produce oil and gas or groundwater, including building drill pads, preparing roads, installing pipelines, and drilling injection wells.

    Solar companies looking to install a solar facility on the same land will carefully analyze the status of the mineral and groundwater estates, including how many ownership interests exist in it and whether a lease agreement is currently in place. The issue is much simpler if the surface owner also owns the minerals and the groundwater. But, the situation becomes more complicated if the property has been severed and there are multiple owners or existing mineral or groundwater leases. If you are the landowner, do not agree to serve as a middleman or negotiator between solar and mineral lessees, particularly if you have no relationship with the mineral or groundwater owners.

    Find Out About The Land You Own

    Solar Farm Land Lease Rates

    Before you begin to lease your land for solar farms, there are a few things that you need to know. First of all, the land should be flat and open and receive a lot of sunlight. You also need to make sure that it is not prone to flooding or wildfireswhich can both cause damage that could put your solar farm out of commission.

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    How Can Landowners Make Money From Carbon Credits

    Reducing greenhouse gases such as CO2 benefits everyone. As a landowner, these carbon offset methods can make you extra income. And this income is not contingent upon you making radical changes to your land, as it is already storing carbon naturally. Land is proving to be valuable for biological carbon sequestration, mainly in soil. Soil carbon sequestration, also known as carbon farming or regenerative agriculture, is the act of removing carbon from the environment to store in soil beneath land. Scientists have estimated that soils, mostly agricultural ones, could sequester over a billion additional tons of carbon each year.

    Emitters of greenhouse gases such as CO2 are having to comply with government regulations to reduce emissions. Therefore, its these companies who are looking to pay landowners like you for your carbon credits. And your land can store carbon alongside other types of green leases, such as leasing your land for awind farm or solar farm.

    For example, a landowner could receive royalties from a wind farm on their land while receiving carbon credits from carbon offsets, and using regenerative grazing techniques to feed cattle. Another landowner may earn carbon credits by managing their land and also receive royalties from a solar farm, while also growing flowers for bees. Carbon offsets do not tie up your land so it can still be used for a variety of surface activities.

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