A Landowner’s Guide to Solar Leases
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Maine’s solar policy recently became much friendlier to offsite solar farms, and now solar developers in Maine and across the country are looking for sites to build such farms. This offers a triple win for Maine’s economy – an economic opportunity for landowners, solar developers and their workers, and for the recipients of solar power who’ll be able to enjoy decades of competitively priced, clean energy.
However, with this exciting opportunity comes some potential pitfalls, and this guide highlights some of the top things ReVision Energy thinks all landowners should consider as they evaluate leasing their land for a solar project.
What is a Solar Farm and Why Would You Want One?
For nearly all of Maine’s solar history to date, solar projects made the most sense to build at a solar recipient’s location, either directly on their roof or at an adjacent piece of land. This works well for many kinds of projects, but excluded sites where for any variety of reasons, rooftop solar was not a good fit. For example, a school or business might be located in-town and have inadequate roofspace to make a serious dent in their bill with a rooftop solar project.
Under Maine’s new solar policy, it suddenly became both logistically possible and financially attractive to build a solar farm. In a solar farm situation, someone who wants solar can have solar built for them at an offsite solar farm. They’ll agree to purchase the power generated from the farm, which is all generated in an ideal solar location, fed out to the grid, and benefits the recipient in the form of a bill credit. Generally the project is financed by a third party who pays to build and maintain the solar array, and then sells the power at an agreed-upon price to the recipient, almost always lower than what they currently pay for grid power.
Who’s a Good Candidate to buy from a Solar Farm?
- Municipalities of all sizes – cities, towns, etc.
- Quasi-municipal entities, e.g. water districts and schools.
- Medium to large businesses.
- Nonprofits with sizeable electric loads.
- Everyone who wants to save money on their electric bill!
What kind of Land is a Good Candidate to Host a Solar Farm?
- Relatively dry, non wetland habitat.
- Not ledgy or mountainous.
- Near 3-phase power. 3-phase means that there are three supply lines for electrical service, vs. a single line.
- Unencumbered by mortgages or other deed restrictions.
How Does a Solar Land Lease Work?
In order for there to be a solar farm, there needs to be a parcel of land on which to build it! Hence, solar developers and landowners need to develop solar land leases.
While there’s a lot of detail to it, at its heart a solar land lease is a legal document wherein a landowner grants rights for specific kinds of development to a solar developer in exchange for monetary benefits.
But, “here be dragons.”
As Maine’s solar market has improved, it’s attracted solar developers nationwide who may not be committed to Maine long-term, or to responsible land-use development.
With a hot ‘land grab’ going on, ReVision recommends all landowners use common-sense and proper due diligence before entering into a land option with a solar developer.
Here are some of the questions we think all landowners should be asking solar developers:
- Who are you and what is your track record in Maine? How long do you expect to be in the Maine market? Will you be here 20 years from now?
- Help me understand this land lease. What happens in the event you do not end up actually building a solar farm? What happens if I want to get out of this lease? How long is the lease actually for?
- Who are you (the person selling me the lease)? Are you compensated based on meeting a quota? Are you selling this lease on behalf of another party? If you disappear, and there’s an issue, who will I talk to for help?
Solar Farm Options Offer an Opportunity to Support Working Farmers
While landowners face pitfalls if they sign up for a solar lease with poor terms (too little money for too much control of their land, etc.), it also provides an economic opportunity that is extremely helpful for rural Maine working farms.
We share the belief of our allies in the environmental advocacy sector that solar farms are best sited on locations that are not prime farm soils. Many opportunities exist to build solar farms on old gravel pits, landfills, etc.
However it’s also incorrect to suggest that the aims of agriculture and solar farms are antagonistic to each other. In fact, solar farms are compatible with pasture grazing and evidence from the work done in the UK suggests pasture in a solar farm is actually of higher agriculture value than that of unmanaged field acreage. It also provides prime pollinator habitat.
The economics of running a small family farm in the 21st century are challenging, to say the least. Aging farmers are struggling to figure out how to pass their farm along across generations, even if there is a willing family member or other younger person eager to take on the farm. Farming is a slim margin business at the best of times, and is especially stressed now in an era of punishing tariffs and escalating fuel costs.
In this context, solar farms offer an attractive, low-impact revenue source for farmers and other landowners. As previously mentioned, solar farms can potentially be multi-use, and require little to any maintenance (and what maintenance is needed is generally the responsibility of the solar developer). What the landowner gives up in terms of a limited amount of acreage, provides reliable annual revenue that can range into the $10,000s depending on the size of the parcel.
ReVision Energy’s origins are in Maine and we are deeply committed to responsibly taking advantage of the economic and environmental opportunity unlocked by recent modernization of Maine’s solar policy. Unlike developers “from away,” we have a vested interest in seeing our local communities prosper because we live and work here. Everyone you’ll meet at our company is literally an owner. We are driven to do this work because we want to see Maine transition away from fossil fuels, not because conditions looked ideal on an Excel spreadsheet.
We’re driven by our mission – to lead New England’s solar transition – but also to support you, the landowner, in accomplishing your goals around managing your land for the long-term, whether that be for conservation, working farm, or other ends.
We’re grateful for you to consider us as a partner as you look at a land option on your property, we promise to:
- Only enter into an agreement for a land option if there is very strong likelihood that we’ll follow through and develop the solar project.
- Communicate with you at every step of the way and have our amazing team of employee-owners at the ready should questions arise throughout this journey.
- Explain what it is that’s in our solar land option and not sneak in confusing legalese provisions.
- Never present an option to you that we would not be comfortable having a friend, relative, or neighbor sign.
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 it’s a good deal? Got other questions? Get in touch!