Solar Lease Agreement FAQs Explained: A Video Guide for Landowners

As a landowner, how are you protected during 30 or 40-year-long solar development leases? Due to their length and often convoluted language, Solar Lease Agreements can be susceptible to misinterpretation. But Lawton Barnwell, one of NLR Solar’s trusted Directors of Land Acquisition, seeks to clarify the nuances of these agreements, explain why they are important and purposeful, and clear some of the fog surrounding terms such as decommissioning, “Acts of God” clauses, and Power Purchase Agreements (PPA).

In this video, Lawton pulls from his well of experience in the solar industry to answer a set of frequently asked questions surrounding Solar Lease Agreements.

If you have any further questions regarding solar leases or anything else pertaining to solar development, please do not hesitate to reach out to us at (904) 906-4113. We would love to hear from you! And if you think your land could be suitable for solar or battery storage, take our complimentary quiz today!

Imagine a Dual Use: Get More Per Acre From Your Solar Farm

When a landowner signs a lease agreement for a solar development, the land is available for use until the development receives final approval and is under construction. The Option Period and Diligence Period can take between 2-4 years. The owner receives payments (usually quarterly) during this time as compensation for holding the option on the property. The landowner can continue to use the property for any purpose during this time and owns any cash crops that might be raised and harvested. The only constraint on the land is that no new structures can be built.

Most landowners assume that once built, a solar farm has a single use – energy production. But that’s not necessarily the case. Some farmers opt to grow crops among the solar panels; some even raise livestock. Here’s what you need to know.

Growing Crops: Agrivoltaics

The term for growing crops on a solar farm is Agrivoltaics, which means using land for both solar energy and crops. This practice benefits farmers, in some cases increasing yields, reducing water use, and adding another income stream to energy production. According to sustainability publication The Momentum, a study by Oregon State University’s Department of Biological and Ecological Engineering indicates that solar projects have shown the most promise when paired with leafy greens (lettuce and spinach) and root crops (potatoes, radishes, beets, and carrots). Of course, the success of any crop is also dependent on planting in the right climate and soil type. Remember that the solar panels may also be shading crops, so shade-hardy plants may be the best choice.

The crops growing under the solar panels may also keep them cooler. They also lower operations and maintenance costs by limiting the need for mowing. The downside is that the cost for installation may be higher since the panel supports will need to be configured to allow crop space. Landowners and developers must also consider worker safety and liability issues when designing an agrivoltaic project.

Sheep: Solar's Perfect Pair

The issue of mowing costs, though, raises the possibility of workers who mow more efficiently than almost any equipment. Many solar developments have successfully employed grazing sheep to keep the land cropped. It turns out that sheep are the perfect height to fit under and around solar panels and can be stocked at the same density as they would be on a field without any panels.

According to BP’s Lightsource blog (dedicated to solar energy issues), “sheep also have just the right appetite for grass and weeds. The sheep efficiently keep the grass and weeds in check, reducing the need for time-consuming, costly, and environmentally unfriendly manual, chemical, or mechanical methods. This ensures clear access to sunlight, allowing solar panels to operate at their maximum efficiency.”

Lightsource BP says that the solar panels help keep the sheep cool. In an Australian study, the sheep living in a solar development spent more time sheltering, resting, and grazing. They also spent less time standing idle, which can be an indicator of poor animal welfare (bored sheep are less healthy sheep). These benefits may even result in more and better-quality wool, according to the study.

The sheep’s output will also fertilize ground cover, which in some developments may protect against runoff and erosion, as well as benefit birds and insects. 

Prior Approval

Adding live or agricultural stock to a solar farm is a way for farmers to increase their income, diversify and maintain the local farming culture, and significantly reduce developers’ maintenance costs. It’s an option worth considering if your land is viable for a solar project.

Clark Merritt, NLR Solar’s VP of Land Acquisition, says that most developers are open to some type of dual use as long as it doesn’t damage or degrade the panel performance: “If it’s of interest to the landowner, we can certainly broach the topic with the developer. That’s the right way to do it. All parties need to be clear with their intentions prior to any lease being signed.”

If you’re interested in leasing your property to a solar developer and maximizing the productivity of your land, take our solar quiz. Or contact us today for a complimentary site evaluation.

Understanding Battery Energy Storage Systems: A Comprehensive Overview

The battery energy storage system (BESS) market is growing alongside the demand for solar panels, as the need to effectively and efficiently store clean energy is on the rise. Many solar development companies and local utilities are beginning to see the importance of energy storage systems and what role they will play in the future of making clean energy as readily available and efficient as possible. In this video, Clark Merritt, NLR Solar’s VP of Land Acquisition, answers the most common inquiries about battery storage, including a concise explanation of BESS, its operational principles, and the growing demand for it within the energy storage sector.

As Clark mentioned, the criteria for appropriate land for energy storage are considerably more flexible compared to those for solar farms, meaning many more landowners have the opportunity to leverage the value of their land and take part in the clean energy movement. To learn more about battery storage click here, and to find out if your land is right for a battery energy storage system, a solar farm, or both, complete our solar quiz or reach out to us today!

What Happens if an “Act of God” Devastates a Solar Development?

To quote Winston Churchill when the Great Smog of 1952 covered London, “It is an act of God!” Though we nor you should expect anything of such great magnitude to impact your area, the solar development on your land is not immune to so-called “acts of God”. Naturally then, landowners are curious about what happens if a solar development is damaged by a natural or man-made event. The answer to this hinges on the age and profitability of the project.

Protection Through Insurance and Advanced Technology

All solar development projects are insured. There’s a local insurance and liability policy on the project itself, as well as the development company’s umbrella policies. These insurances often include rebuilding or decommissioning bonds. Policies are written to cover damage from storms (hailstorms and tornadoes being the biggest threats), fires, earthquakes, hurricanes, major floods, and terrorism. We’ve even seen a policy written to cover alien invasion, but no claims on that clause have been filed so far.

Solar developments also have ways of avoiding damage. Most have a computerized system onsite that can be activated by an offsite technician if weather threatens the local area. The system rotates the panels to a vertical position, so much less surface area will be exposed to hail or other weather damage.

Assessing Damage: Repair, Rebuild, or Decommission?

If a development experiences minor damage, the insurance policy covers repairs. If the majority of the development is damaged or destroyed, the developer makes a decision about whether to rebuild o decommission the project. The decision is based in part on whether the project has reached its break-even point and how many years of profitability it has left. A project within the last few years of its original term (usually 30 – 35 years) almost certainly won’t be rebuilt and, instead, decommissioning will begin.

The developer holds the liability for both the project site and any damage caused by the equipment at the site. If a solar panel is carried by a tornado to a neighbor’s property, for example, the developer’s liability policy pays for any damage it might cause.

Force Majeure Clauses

Understandably, landowners are often concerned about their income after a damage event. Solar development contracts often contain clauses for Force Majeure or “acts of God”. Generally speaking, for events to constitute force majeure, they must be unforeseeable, external to the parties of the contract, and unavoidable. In most cases, owner payments will be delayed or deferred while the project is being repaired or rebuilt. And payments will resume when the project is back up and running.

If the developer decides to decommission the project, the landowner will no longer receive payments. The land is returned to the landowner, just as it would be at the end of the contract term. The decommissioning and cleanup costs are covered by a bond even if the developer goes through bankruptcy. Usually, the county where the development is located is listed as an additional beneficiary, so they can use the funds from the decommissioning bond to clean up the property.

The Importance of Land Analysis

Fortunately, devastating weather events are rare, and developers assess the risk of them carefully when they evaluate a site. But if they happen, landowners can be assured that there’s a plan in place for rebuilding or reconsidering the project. Here at NLR Solar, we use advanced analysis systems to determine the viability of a land parcel for development, so fill out our solar quiz to see if your land is right for solar or contact us today for a complimentary site evaluation.

Key Questions for Evaluating Solar Developers

As the solar market continues to swiftly mature, it can be difficult to know which development companies to trust. With the competition growing, solar developers are flocking to find viable land for solar projects, and landowners are receiving more solicitations than ever. As a landowner, how do you know the developer who’s contacted you is someone you would want to work with for the next 20 to 40 years? Or is someone who is able to get your land developed at all? All of these considerations make moving forward with a developer partner more complicated and often more daunting.

In this video, NLR Solar’s Director of Land Acquisition, Peter Mazeine addresses this concern by providing signs of a capable developer, supplying the right questions to ask, and offering personal insight by discussing the solar lease he had on his own land.

Here at NLR Solar we have worked with multiple developers over the years, so we understand the importance of finding the right match, and how much of an impact a healthy landowner-developer relationship has on the development process. This is a partnership, so if you think your land could be viable for solar development, contact our team to be paired with one of the many qualified solar developers within our network!

How Does Solar Power Transmission REALLY Work?

As a Director of Land Acquisition at NLR Solar, Lawton Barnwell has had dozens of conversations with landowners who are leasing their acreage for solar development. He’s answered countless questions, but a few come up over and over, specifically regarding the technical aspects of the project.

How does a solar development connect to the power grid? Where does the power go and how does it affect my community? As a solar farmer, does that mean I receive free electricity? In short, how does solar power transmission really work? Lawton and the NLR Solar team answer these questions and more.

How Does a Solar Development Connect to the Grid?

One of the considerations for whether a property is suitable for solar development is its proximity to a substation. Large (transmission or utility scale) projects connect by either connecting to a substation or tapping into a transmission line (69 kV or higher). If there’s no substation near enough to the project, the developer will build one. The substation will eventually belong to the local utility after the project is complete, 30 to 40 years from now, becoming part of the permanent electrical grid infrastructure.

Transmission lines transport power over distance; transformers “step up” or “step down” the voltage as it goes from a source to the transmission line and back down to the 120 volts needed for customers’ homes. 

Smaller (community scale or distributed generation “DG”) projects generally connect to distribution lines, which are the same as transmission lines but move electricity at a much lower voltage. They step up voltage in three phases to connect to a transmission line. A distribution or “3 phase” line must be within one mile of the solar property to make connection cost-effective.

Where Does the Power from my Development Go? Who Buys It?

Generally, transmission-level developments move power to the nearest large metropolitan area. The power enters the grid and is purchased by the local utility or by large companies for renewable energy credits. Renewable energy credits allow companies to claim the “renewable” aspect of the electricity and say that a certain percentage of their electricity use came from a renewable source.

Community-level projects’ output stays local; it’s purchased by the local utility to be sold to its local consumers or electrical cooperatives, which sell mostly to residential customers. Local utility customers also have the option to subscribe to green energy programs. For a small monthly subscription, the utility or a third party firm works with solar farms to ensure that the electricity the subscriber’s home uses is replenished on the grid with clean, renewable energy.

Since I’m a Solar Farmer, Can I Get Energy from my Farm at No Cost?

The short answer is, unfortunately, no. Before solar development is under construction, every volt of the electricity generated is under contract from the utility. The Power Purchase Agreement doesn’t allow for any single-user connections, even for the landowner.

It can be complicated to get into solar development, but it helps to partner with a company with expertise in the field. NLR Solar helps inform landowners of the potential for their property and connects them with developers who can maximize its value. Acting as a mediator between developers and landowners, we work to integrate solar development, benefiting not only those directly involved but also the environment and communities served.

If you’re wondering whether your property is suitable for solar development, take our solar quiz or connect with our team to receive a complimentary site evaluation.

What are the Different Types of Solar Projects?

The key to understanding what makes your land viable for a solar project and what kind of revenue you can make from a solar lease agreement is knowing the different solar project types. How do smaller-scale projects, like distributed generation (DG), differ from large-scale projects, like transmission? And where does battery storage fit into it all?

In a recent video, Clark Merritt, NLR Solar’s VP of Land Acquisition, talks through all the different solar project types and provides insight into what factors determine solar viability as well as profitability.

You can access the full video below:

Curious about whether your land meets the criteria for DG, transmission, or battery storage projects? Contact us at NLR Solar! Since 2015, our team has identified sites for solar projects and helped secure land agreements with the country’s top solar developers.

Is a Solar Development Deal Too Good to be True?

You’ve probably heard it many times: if a deal sounds too good to be true, it probably is. When some landowners first see what they can earn on a solar project, they’re skeptical. They’re surprised to learn that they can earn three, four, sometimes ten times what they’re earning on an agricultural lease or by farming their land. We’re answering the number one question on many landowners’ minds: Is solar farming too good to be true?

Simple Economics

With the exception of a few crops, most agricultural landowners find that their revenue per acre can increase dramatically with a solar project. It’s a matter of simple economics. The cost of solar panel materials and supplies has come down by about 90 percent over the past decade, making solar projects more attractive and profitable for developers. That means more competition for viable sites, and that’s good news for landowners.

Solar development agreements are lucrative for landowners; the tradeoff is the length of the agreement. Solar projects usually last 30 – 40 years, so the landowner commits to the agreed-upon revenue for that entire time.

It’s possible that markets could change and make a specific crop more profitable. But it’s also very possible that weather, disasters, or negative market or policy changes would make crops fail or fail to yield profit. Farming is hard work and unpredictable. A solar project is a way to diversify your land investment (reducing risk) and to guarantee a predictable stream of income over several decades. Most landowners find that a solar agreement makes good economic sense.

Owner's Rights

Landowners receive revenue even during the due diligence and construction period, which can last several years. The landowner retains the right to harvest any crops on the acreage up to the point construction begins, and the developer will pay market price for any crops that can’t be harvested if the timeline changes. The landowner also retains the right to sell the property at any time; the developer’s contract would remain in place with the new owner.

Farmer's Status

Farmers are sometimes concerned about losing their identity as farmers, but that’s not the case. They’re usually committing just a portion of their property, leaving the rest available for traditional crops or other uses. And of course, solar farming is still farming – you’re just farming the sun.

When the project is decommissioned, the landowner can resume whatever activity the land was being used for. Or it’s possible that the solar infrastructure that has been established will be an asset in negotiating with another developer after the current project ends.

Here's Where We Come In

At NLR Solar, our job in site acquisition is to make sure a landowner has all the information they need to make an informed decision on whether solar development makes sense for their property. We’re careful to outline all the economic benefits, along with the commitment and the pros and cons of the deal. Complete transparency is in everyone’s best interest.

Farmers are part of an essential national supply chain. That doesn’t change if you become part of the energy supply chain. Energy is essential to the economy, and landowners are rewarded for adding it to their holdings. 

If you’d like to learn whether your land might be suitable for a solar project, take our complimentary solar quiz!

How Does Solar Farming Affect my Topsoil?

One of our most frequently asked questions from landowners, primarily farmers, surrounds the treatment of topsoil during the life of a solar project. Once the lease is signed, and solar panels are installed in the ground, how is the topsoil treated? And is there hope for returning to traditional farming after the end of the lease term? Our team recognizes that this is a very important concern, as topsoil plays a massive role in successful farming activities. In a recent interview, Dan Reiss, one of NLR Solar’s experienced Land Acquisition Managers, provides the details concerning solar farm maintenance, including everything from initial construction to decommissioning.

You can access the full video below:

NLR Solar’s mission is to help our clients recognize the potential for their land and reach win-win agreements with qualified developers. Contact our team today to discover the value of your land and receive a complimentary site evaluation!

Solar Development Agreements Explained

Entering an agreement with a solar project developer can be daunting; the contracts are complex, and the agreement is designed to last decades. Our team has broken down the most common agreement terms and outlined what landowners can expect. 

First, it’s important to note that although there are only two parties to the agreement (the landowner and the developer), the document contains language and clauses designed to address the requirements of the two silent stakeholders in the project: the finance party (lender) and the utility. Both have a vested interest in the success of the endeavor, and developers must make sure they fulfill their expectations – or the project won’t be feasible at all.

With this in mind, you will find much of the standard agreement language is required by the financial and utility entities that make the project possible. There will also be language that will allow the developer to adhere to the requirements of the government entity or entities with jurisdiction over the zoning, taxes, incentive programs, and other considerations: the state, county, and/or township. 

The due diligence or “option” period for a project is long, often taking years, and some landowners wonder if this is the period where the developer decides if they want to do the project. We can clear that up right now; the developer wants to do the project. The due diligence period is to determine if they can get the project done. It may seem redundant, but the studies, surveys, and approval process required are in place to protect the land and the community around it.

Here are the issues that landowners often ask us about that directly relate to their interests.

Taxes

Generally, the landowner’s property taxes should not be impacted by the project. In many cases, the project’s boundaries will be carved out of the property parcel, creating a special tax parcel that will be taxed based on the new usage and the improvements. This does not imply a subdivision of the parcel, which is typically not necessary, rather a tax parcel number that would be the responsibility of the project owner. The increase in taxes based on the construction, maintenance, and operation of the project will be the responsibility of the developer.

Crops

When applicable, the solar agreement should include language to account for crop damage/loss reparations, either during the diligence period or for construction. Damage during the diligence period is very unlikely. That said, the developer should not have a problem including language providing that protection. Damage during growing or harvest season due to construction should also be covered. Typically, the developer will either pay for the crop area they affect or simply wait until the harvest is complete to begin. Documented market value is the standard reparation.

Decommissioning

Despite their length and scope, solar facilities are temporary in nature. Language for removal, restoration, and/or decommissioning should be in the agreement.

Decommissioning is actually a relatively simple process. Contrary to what many people imagine, ground mounted solar projects are minimally invasive to the land. In most cases, pilings are driven to a depth typically in the six to eight-foot range. The panels are installed above ground on those pilings. The panels are large and spread out. Remarkably, only 1/200th of every acre utilized is penetrated by the pilings. The landowner should be able to resume the original (or new) commercial activity very quickly after decommissioning.

Transfer of the Agreement

Some landowners worry about a transfer of the solar agreement to another developer during the course of the contract. This is a common practice, just as residential mortgages are often sold several times during the course of a 30-year loan.

We can reassure you that the entities able to purchase projects are limited, and they’re usually bigger and more established companies than the original developer. They will be just as capable of operating the project and the terms of the agreement will be honored to the letter by the new company, so there’s no cause for concern.

By the way, the landowner has every right to sell the property during the term of the project, as well. The agreement exclusively pertains to the land, and both parties have the right to transfer their interest to someone else during the course of the project.

Contracts are designed both to outline the rights of both parties and to protect them. They also limit the parties’ ability to change the terms unilaterally; the developer can’t decide to add on acreage or change the payment schedule, for example. Similarly, the landowner can’t build or grow something that blocks the sunlight from the panels.

These are common sense provisions that an agreement takes time to spell out, along with provisions for flexibility and compensation for changes that the parties have to make. It’s in everyone’s best interest to have a specific and comprehensive agreement in place. It protects the financial interests of both parties and mitigates the risks to the project’s success.

We're Here to Help!

Are you a landowner interested in solar leasing, but not sure where to begin or what development company to trust? That’s where NLR Solar comes in.

Acting as a mediator, NLR Solar seeks to assist both developers and landowners to integrate solar development, ensuring that each party experiences satisfactory conversation and establishes a comprehensive agreement. With over 1,000 land agreements negotiated, you can trust our team to get your conversation started.