Tuesday, July 16, 2024

How To Negotiate A Solar Lease

Summary Of The Wind Farms And Solar Farms Video

How to negotiate and resolve solar panel issues in a residential real estate purchase contract

Hello, my name is Shea Krauskopf, and Im an attorney with the law firm of Wadler Perches Hundl and Kerlick. Im principally located here in our Bay City office at 2233 Avenue G, Bay City, Texas.

Im here today to speak with you about solar farm and wind farm and battery storage leases. Theyre becoming an increasingly popular phenomenon here in Matagorda County and The Great State of Texas as a whole. There are three important things you should be looking for in these leases if youre the landowner.

Reasons To Stay In Your Solar Lease

1. Staying in your lease gives you more coverage if anything goes wrong. Under a lease, all of your equipment is covered. For example, if your inverter goes out while under a lease, you wont have to pay $2,000 – $3,000 for a new one. If you do buyout of your lease, the service and repair package included on your equipment will no longer cover you, but you will still have the manufacturer warranty. So if your inverter has a 10-year warranty and youre in year 7, youll still have 3 years left on that warranty before youd be on the hook for paying.

2. Sometimes the buyout cost is more than the value it would add to your home. This is another case by case basis, but if the buy out cost doesnt make sense regarding what it would add to your homes value, staying in your lease might be the better financial option.Theres a lot to consider when youre presented with the option to buyout your lease. We hope some of these points of consideration help make your decision a little easier. If you would like more guidance on whats best for your solar situation, contact a solar savvy real estate agent, or one of our affiliates, Tara Rutkowski, a licensed real estate agent who specializes in solar homes at or 623-640-6546.

If you’re interested in adding solar to your home, we invite you to download our free solar guide, Is Solar Right For You? In it you’ll learn the critical factors that contribute to a solar purchase decision.

What Are The Advantages Of Leasing Solar

The main advantage of leasing instead of purchasing is there is no initial capital outlay the way there usually is when one purchases a system. Homeowners are able to go solar without a capital investment, and have a predictable cost of energy for the duration of the solar lease. In addition, homeowners do not need to worry about maintenance if the system experiences a problem, the leasing company will come fix it, most often without a charge.

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Preserving Your Power: 10 Tips For Negotiating A Solar Farm Lease

By:Christopher R. D’AmicoMichael D. MintonDennis G. CorrickAnna H. Long

As Floridas major electric utility companies increase their efforts to invest in affordable clean energy, advancing technologies and phasing out older coal-fired and oil-burning power plants, locating land suitable for large solar is becoming increasingly competitive. Leading the way is Florida Power & Light . FPL plans to add eight new universal solar power plants by 2018. The new solar plants will require the installation of 2.5 million panels at the eight centers being located across the state. In addition to the solar expansion plans that FPL has for its sites, Duke Energy and Tampa Electric, an Emera Company are also making great strides in Florida with their expansion plans for future solar plants. Duke Energy renewable assets includes 60 solar facilities operating in a dozen states, with Dukes 8.8 megawatts Suwannee Solar Facility expected to be fully operational by the end of this year. Once up and running, the facility will produce enough energy to provide electric service to about 1,700 homes at peak production. TECO completed construction on its largest solar area site, located at Big Bend in Apollo Beach earlier this year. This 23 MW solar center is located on 106 acres and is capable of providing electricity to more than 3,300 homes.

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About the Authors:

Solar Energy Centers. . Retrieved July 26, 2017, from

Revoking Your Solar Lease Before The Setup Process

Solar Leases: Landowners Beware

In case you wish to get out of a solar lease because you have regrets getting one, you might be able to revoke it before the solar panel system installation. The period to revoke leasing without any costs primarily relies on the policy of the solar company. That is why you should be very keen on the terms of the contract before signing.

Remember that the solar system is valuable in saving you electric costs by the use of renewable energy. When purchasing, most buyers ask what is a solar lease? While you may be duped into signing a lease, wed love you to know that it is not the best long-term option. Whether to lease or buy solar should be your choice as a buyer.

While revoking your lease, the time frame is 30 days after you subscribe to the solar lease agreement.

If you have signed the solar lease agreement just to realize later that you need to fix the roofing, what do you do next? In this case, the solar firm allows the end of the contract under the stipulation of unforeseen and unanticipated additional costs.

Substantially, before signing a solar lease, it is essential to consider all the options. Be sure to thoroughly go over all the details so that you can weigh all the options and be well-informed as to whether going solar is right for you.

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Rates Per Acre Around The Us

Now that you know more than you ever wanted about the solar land market in the United States, lets talk rates per acre. A 10 acre site next to a substation outside of an urban area with high land prices might be justified in asking $2,000 per acre. Even in rural areas of North Carolina or California where demand for small solar sites is high, rent over $1,000/acre would be common by a substation with capacity. Larger tracts over 100 acres for major power plant projects commonly rent at $300 to $500 an acre across Texas and normally around the $500/acre range across most of the Southeast. Large tracts can fetch upwards of $800/acre in Illinois, Virginia and the Carolinas depending on numerous factors. High priced, large tracts in Californias Central Valley often go for $1,000 per acre.

The best deal is one thats fair for you as the landowner and the developer, not one that puts either party at a disadvantage.

Michael White, Strategic Solar Group

Solar Royalty Payments Are Not As Common As Solar Rental Payments

The music industry, movies, wind, oil & gas, mineral all these industries use royalty payments. Why are solar farms different?Royalty payments based on production are the standard payment structure in oil and gas lease agreements. Although commodity prices are extremely volatile, production volumes and commodity prices are generally public information, making them easier to calculate. Because there are so many variables in trying to calculate revenues and expenses associated with solar farm production, annual rental payments are more efficient. Many of these efficiencies would be impossible to predict or project at the time of negotiating a solar farm lease agreement with the developer.

Over a 30 year period, we can expect the technology to improve and costs to reduce over time in just about every industry. However, this is especially true in the renewable energy industries where we have seen the cost of a solar panel decrease by over 15% since just 2018. Solar farm economics will continue to improve translating to an increase in resource value for property owners. Make sure you do not negotiate blindly, always try to fully understand the project and lease structure being offered before jumping to quick decisions. These agreements can last for decades and could leave you falling victim to predatory leasing tactics if they are not carefully read.

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Competition Has Lowered Prices Already

If you live in a state like California or Hawaii where home solar is extremely popular, you probably see a lot of trucks emblazoned with the colorful logos of the installers in your area. There are over a thousand solar installer companies in California alone, and theyâre all vying for your business.

This means they may have already lowered their prices as much as theyâre willing.

On the other hand, if you live in a state where the home solar market is new and growing, you might have relatively few companies working in your area. But that doesnât mean those companies have free rein to overcharge you, because fewer customers also means lower annual profits for companies.

Bottom line: nobody goes into the home solar business to get rich, and that includes the big national players like Sunrun, which has been financing their operations with debt and regularly reports quarterly losses.

Advice For Buyers Considering A Home With Leased Solar

Negotiating Land Leases for Wind Farms and Solar Farms – Matagorda Bay City Lawyers

A leased solar system does not need to be the end of the deal, but it is important that buyers go into it fully informed. The buyers should get a full copy of the leasing agreement, along with payoff costs, maintenance charges and termination charges. If buyers credit scores are above 700, it is likely they can assume the lease, but that is not a guarantee.

I recommend to my buyers that they negotiate having the lease paid off by the seller or negotiate a credit to allow them to do so later. There may be some instances where assuming the lease makes sense, although more times than not, it is always better to own a home free and clear without a solar lien against it.

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Negotiating Land Leases For Wind Farms And Solar Farms

Bay City Attorney Shea Krauskopf talks about three things you should know in negotiating land leases for wind farms and solar farms. You should always talk with a knowledgeable attorney before you sign any agreements. Call our Bay City office for an appointment with Mr. Krauskopf at 979-245-5445 or call or text 800-929-1725 anytime.

Energy Is Incredibly Valuable No Matter Where It Comes From

Landowners have the opportunity to earn significant income from their land by partnering with energy companies across the United States. Solar energy is extremely dependent on the amount of available land suitable for solar energy projects. As solar energy sees increasing demand in the market, so will the land suitable for solar projects. Solar leases offer landowners the opportunity to partner with a solar developer and earn long-term revenue from the generation of solar energy. It is important to partner with developers that have demonstrated technical expertise and a successful reputation for completing solar projects. Many landowners fall prey to leasing their properties to middlemen and intermediaries that often delay the timeline of a project being completed.

Historically, the largest and most valuable companies in the world have been energy companies. Surprisingly, NextEra Energy, a solar and wind energy company, has now leapfrogged Exxonmobil and Chevron as the most valuable energy company in the U.S. There are countless management teams that tout their technical expertise in marketing materials but have no track record of success building and operating solar farms but simply flipping opportunities to the next buyer. This is important to note when considering leasing land to solar companies.

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Purchase Of The Solar System At Market

Some lease agreements do not clearly state an amount of purchase but indicate that an expert appraiser will specify the fair market value at the time of purchase. You have to take into consideration how long your system has been in use, plus the current market options. Keep in mind that your solar panel system is locked up to a commodity of producing power, and unlike cars that lose value over time, the cost of purchase may be higher.

Solar Leases Can Complicate Home Sales

Solar Leases

As a real estate agent here in Marin County, California, many of the homes I represent for buyers and sellers have solar electric panels on the roof. Some also have hot water solar systems for heating swimming pools, however those are less common. Having handled a number of transactions with homes with leased solar, I now put solar leases in the likely a challenge category when evaluating a property.

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Can I Sell My Solar Royalties Or Solar Rent Payments

Landowners receiving payments from a solar farm on their property can market and sell those future payments whether it is a royalty payment or a fixed rental payment. Royalty payments can be marketed at a higher premium than fixed rental payments because the value of the royalty may have the potential to increase at some point in the future. Property owners can market the payments they receive from a solar lease with LandGate.

Considerations When Negotiating Solar Leases

Robert Moore | Nov 16, 2020

Over the past few years, many landowners have been contacted by solar companies interested in leasing land for solar panel construction.

It is important for landowners to closely review the proposed lease before signing it. Options to lease may last three to six years, so your land would be tied up for that period. If the option is exercised, solar leases could last between 20 and 50 years.

This means bad lease terms could be around for a long time. Like all leases, the terms are negotiable. Do not be afraid to negotiate with the solar lease company. Like any rational buyer, they want the best deal and are probably not going to offer their best terms upfront.

The most obvious lease term to negotiate is the lease payment. Solar leases are based upon an annual rent-per-acre basis. Lease payments vary from lease to lease based upon location, access to electric infrastructure and expected project costs.

Landowners are usually pleasantly surprised at the amount of the lease payment being offered, sometimes as much as $1,000 per acre. However, the lease also should include an escalator. The escalator increases the lease payment over time to help keep up with inflation. Royalties are extremely rare for solar leases, so upfront rent negotiations are vital.

Landowners should strongly consider having their leases reviewed by an attorney. Some of the terms in the lease will be legalese, with the meaning of the terms not always obvious.

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Understand The Pros And Cons Of Leased Solar Panels

You may think that leasing solar panels in San Diego is your best option because it requires virtually no money down. But as weve explained here, leased solar panels can cause complications in the long run.

At RC Energy Solutions, we customize each solar panel installation to our customers specific needs. We invite you to contact us for a free in-home consultation. Well explain all your options and help you find a total home energy solution that will save you the most money over the years to comeeven if you end up selling your home. We look forward to helping you lower your power bill now and in the future.

Check That A Restoration Bond Is In Place

What Factors Determine Solar Land Lease Rates? | YSG Solar

Lastly and probably most importantly, we want to make sure there is a restoration bond in place. This restoration bond or some other form of security is needed in the event the company goes under or something else happens and they attempt to leave their personal property on your property. In that case, you would use the bond to pay for the removal and decommissioning of any of their personal property located on your property.

So those are the three most important things to look for in a solar farm, wind farm or battery storage lease. If you have any questions regarding one, please feel free to contact us at 979-245-5445. Thank you.

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Watch For Common Legal Technicalities

Be sure you understand the following technical legal terms often included in solar agreements:

  • Guarantee of title. Commonly included in lessee-drafted oil and gas contracts, solar contracts sometimes include a term in which the landowner guarantees or warrants good title to the property. Delete this term since the company is in a better position to investigate deed records and determine the ownership of the property.
  • Confidentiality clauses. Sometimes a solar company will include a confidentiality clause that prohibits the landowner from discussing or disclosing the terms of his or her lease agreement with others. Reject this type of clause so that you can talk to your neighbors and work together to obtain the best possible lease terms.
  • Forum clauses. A contract will often contain a forum clause identifying the location where a dispute will be heard. For example, a lease might state, Any and all disputes over this agreement will be heard in New York City, the principal place of business of the solar company. There are several reasons why you would not want to agree to this clause.
  • You do not want to fly to New York City every time a meeting, hearing, or deposition is scheduled.
  • You want home-field advantage, including a judge and jury pool of your peers who live in the area. Although most real property disputes are properly resolved where the land is located, the court will usually enforce this type of forum clause if the parties agreed to it.

Are They Proposing A Lease Or An Option To Lease

First, you need to realize that even though you sign a solar lease, the lessee may not develop your land into a solar farm. In some instances, the lease is going to act as both an option agreement and a lease. This might not be apparent because the option usually isnt referred to as an option. The option period might be called an initial term, or a development term. This option period is usually much shorter that the 20-30 years term the land might be leased for if the option is exercised. Typically, the developer pays a smaller amount of rent through this option period, but it isnt obligated to commence construction or commit beyond this initial phase.

Make sure you understand the developers obligations with respect to the land, what they are required to do and for how long. If the developer exercises the option to extend the lease, the payments you receive are going to be higher going forward than the payments during the option period, because at that point the developer will have committed to actually producing energy on the property long term.

If you are being enticed by larger payments during the renewal period, you need to know the likelihood that you will ever be entitled to receive these payments. If you subject your farm to an option for five years at a lesser value, only to not have that option exercised, you might be missing out on a lot of money from other uses of the land over several years.

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