What You Should Know before Leasing Your Land to a Solar Company

The pros and cons of leasing your land to a solar company

As more communities look to renewable energy to power their homes and businesses, many landowners are being approached to lease their land for a solar project. To make this decision easier, OYA Renewables has outlined everything you should know before leasing land to a solar developer or other renewable energy company.  

What Does It Mean to Lease Your Land for Solar?

Leasing your land for solar means allowing a solar company or developer, like OYA Renewables, to design, permit, construct, and operate a solar energy system on your property in exchange for payment or compensation, typically for a set period (e.g. 25 years). The landowner typically receives annual lease payments or in some cases, may even sell a portion of their land for the solar project. The lease payments become a source of passive income for the landowner and help increase the use of clean energy. 

The Benefits of Leasing Your Land to a Solar Developer

Generates a Second Income Stream 

One of the biggest pros of leasing land for solar is the financial stability offered through these long-term annual payments. This can be especially beneficial for landowners looking for a way to supplement their farm or retirement income. At OYA Renewables, we are committed to offering competitive solar land leases to farms and other landowners to secure long-term fixed income while also combating climate change.  

Promotes Sustainable Farming Practices

Land stewardship is of paramount importance to OYA and when done properly, leasing land for solar can be a net positive in many ways. Agrivoltaics, which centers around dual use of the land, is a great example of how solar developers are actively promoting sustainable farming practices in several ways. 

1. Sheep Grazing 
   Livestock grazing is used for vegetation management on solar sites instead of moving the plants, with sheep being the preferred animals due to their behavior and size: they fit easily under solar panels without disrupting the sit’s functioning. 

2. Pollinator Friendly Planting 
   Planting pollinator-friendly ground cover is a best practice for solar development as it benefits nearby farms and creates suitable habitat for bees, butterflies, birds, and other insects. 

3. Selective Hand Harvest Crops 
   Certain crops thrive under the shade of solar panels, such as tomatoes, carrots, squash, lettuces, berries, and other market gardening crops. Agrivoltaic farming is mutually beneficial for landowners and solar farms. A 2019 y found that the crops tests under solar panels were 100 to 300% more productive and the shade provided by the panels reduced water consumption by 157%¹.  

When you install solar on your land, you are playing a key role in helping to reduce your community’s dependence on fossil fuels which contributes directly towards combating climate change. This aligns with sustainable farming practices, which aim to minimize the impact of farming on the environment.

Lowers Energy Costs

Leasing your land to solar can lower energy costs by increasing the availability of renewable energy, and like Community Solar, it can help underserved communities access solar power. 

Solar energy can decrease the cost of energy in a few ways. First, since sunlight is a free and abundant resource, once the infrastructure is in place, the ongoing cost of generating electricity from solar power is much lower than traditional sources that require fuel. Second, solar panels have few moving parts, which means they require less maintenance and have lower ongoing costs. Finally, advances in solar technology have made solar panels more efficient, meaning they can generate more power with less equipment. This increased efficiency can result in lower overall costs, as fewer materials and resources are needed to produce the same amount of energy. As a result, the decreasing cost of solar energy is making it increasingly competitive with traditional energy sources, which is great news for the transition to a more sustainable energy future. 

Moreover, some solar companies offer Power Purchase Agreement (PPA) to the landowner, where the solar company will install, operate and maintain the solar panels on the land and sell the generated electricity to the landowner at a reduced rate. 

Other Considerations for Leasing Your Land for Solar

Requires Long-Term Commitment   

The length of the lease is on one side a long-term financial gain but may also be a point of hesitation for landowners when choosing to lease a portion of their land for solar. The lease requires the landowner to dedicate a portion of their land to solar for a set period, typically 20-25 years. During the operational period of the solar farm, the use of that portion of the land is limited and may require permission from the solar company. Some landowners may generate additional income from vegetation management or snow removal, even if they no longer farm the land.  

Use of the Land Changes

Leasing your land for solar may change how the land is zoned according to government agencies having jurisdiction. Before entering a lease it’s crucial to understand how the change in how the land is used can impact the benefits you receive from government agencies. 

Property Taxes: The portion of the land may be taxed differently which can vary according to the county, municipality, or state in which the land is located. Landowners need to ensure their solar land lease makes any increase in Property Taxes associated with the solar farm the responsibility of the solar farm owner. 

Agricultural Programs: The portion of the land leased for solar may change how much of the land qualifies from participation in agricultural programs, such as conservation easements or subsidies, that require the land to be used for farming or ranching. 

Zoning Regulations: Solar developers typically check the zoning regulations before entering into solar leases with landowners. It may be helpful to check with your local zoning regulations to see whether there are any that address solar development. An example would be the required easements, the space between the solar farm and any other structure, roadway or water, which may have different requirements based on the municipality or county.  

For some landowners, the benefits of leasing their land for solar, such as the lease payments, may outweigh the potential drawbacks. However, landowners need to be aware of these potential issues and weigh the pros and cons carefully before entering into a lease agreement.