5 Questions You Should Be Asking Before Leasing Your Property for Solar

So, you’re a landowner. And one day, out of the blue, you get a call from a company telling you they’re interested in leasing or purchasing your land to develop a solar facility. The rate seems pretty attractive, but does the whole idea seem a bit too good to be true? Perhaps…

As a manager who has overseen the execution of 600 of these types of leases across 12 states, I can tell you there are some important questions that aren’t being asked. So, I’ve compiled a list of the top five questions landowners should be asking before leasing or selling their property for a solar project:

1. Is that really the actual dollar amount I’ll receive?

The eye-catching number is usually the above market lease rate. In some areas, developers are paying more than $1,000 per acre per year for farmland that you may have been leasing for $250 per year. However, due diligence periods can last two to three years with very little money at risk. Some developers will offer nothing, with the justification that the utility applications are expensive and they want to focus their investment on project development.

It’s true that it takes a while to achieve an interconnection agreement with the utility and there are significant costs involved, BUT it’s certainly fair that a landowner should receive some option money for the time. If nothing else, $1,000 to $2,000 per year is enough to ensure the developer is taking your project seriously. Remember, money talks, so ask for some of it up front.

2. Is the developer reputable?

What many landowners don’t know is that there are numerous small companies with little money and resources who will sign a lease option, then immediately sell the project to a bigger developer. While this isn’t always a bad thing, – because the little guys have great personalities, and like to hustle – you’re introducing a middleman who will be taking a big bite out of the profits and doesn’t have all the information.

So, make sure to look for companies who are designed to develop AND HOLD these projects long term. The best way to check on this is to ask how many projects they’ve constructed and how many they currently own! Also, check on the assignment language in the lease, and make sure that the developer can’t just flip the contract to anyone they choose. If you press them on it, legitimate developers will agree to some limitations or remove the clause altogether.

3. Should I lease or sell? Or both?

I’ve heard countless landowners say they have more interest in selling their properties rather than entering a long-term lease. Developers are happy to accommodate, assuming you will accept a low option premium and give them time to complete their interconnection and permitting before closing. However, what landowners don’t think about is that if you enter a long-term lease AND the project gets developed, then you can sell your property with the project on it as an investment property with a long-term revenue stream backed by a utility company.

For example, let’s say your property is worth $5,000 per acre for farming, and the developer wants to pay you $10,000 per acre for a purchase option. You may be able to get $15-$20,000 per acre if you go the lease route, then later sell the property to an investor.

4. Should I wait?

If you’ve ever seen the movie, “There Will Be Blood,” you’ll remember the scene at the end where Daniel Day Lewis is explaining to a man – who thought his property was valuable for oil deposits -that it is was worthless due to drilling on surrounding properties that extracted all the oil from under his land. Solar projects are not much different than the man’s situation in that the power needs to run through a substation, and substations can only handle so much power.

So, if you have a neighbor up the street who leases their land and an application is filed ahead of you, then they may take up all the power on the property, rendering your land useless for solar. Of course, you need to do your due diligence, but these offers have a timeframe.

5. Should I shop around?

When the solar craze hits your area, it may seem like the gold rush and you’re sitting on the mine. You may be tempted to shop around for the highest lease rate, but beware! The solar power purchase agreements issued by the utilities are often awarded by competitive bid. If the land lease rate is too high, then the project cost increases. This will then require the Power Purchase Agreement (PPA) rate to be higher and bump the project out of contention.

Legitimate developers will recognize this and limit the rate they’ll pay. But often, it’s the smaller developers who will pay whatever it takes to tie the project up, only to have it sit on the sidelines when the awards are announced. The best way to get around this is to do your research on the developer. And just like with any company, a successful track record is usually the best indicator.

Always make sure to do your research beforehand and keep these five questions in mind when deciding whether to lease or sell your property for a solar project. If you’re already an owner of a project, NLR Commercial has resources to connect you with a list of qualified buyers. Our leading real estate firm has identified and secured over 600 properties since 2013 for lease options.

If you’re a landowner interested in having your property evaluated for solar or looking for the perfect buyer, please contact us for a free site evaluation.

Back to Basics: How a Solar Farm Works

Solar energy is plentiful, an abundant resource that has enormous potential for the future. Solar makes up a relatively small portion of the overall energy production in the United States, but that’s rapidly changing. Using solar energy allows individuals and business owners to save money on electricity while also reducing their carbon footprint. What’s more, solar power is a clean, renewable resource as well as the most readily available energy source.

With those being the benefits, why isn’t it more widely used? The answer is at least partially due to the inconsistency of solar power and the lack of storage. Let’s look at the basics of solar energy, along with the pros and cons.

Solar Energy is Efficient & Eco-Friendly

Solar energy is created by the sun at an impressive rate. Research from the U.S. Department of Energy estimates that enough sunlight hits the surface of the earth every 90 minutes to power the entire world’s energy needs for a year. Among renewable resources, solar energy is probably the most efficient.

Solar energy is much more environmentally friendly than traditional methods for generating electricity. If you’re a landowner, allowing your property to house a solar project may be an environmentally friendly and practical way to gain a new a revenue stream.

Here’s How It Works

A developer acquires a site lease on a property, builds a solar project, and establishes a long-term contract to sell the power back to the local utility. During the operating term of the project, which is typically anywhere from 25 to 40 years, the landowner is paid a fixed rent. It usually takes between 18 and 24 months from the time the site lease is signed to the time that the solar system is operational.

This situation is beneficial to the landowner because it provides a long-term fixed income and costs the landowner nothing. What’s more, during the lease period you as a landowner can use your property however you wish, even continuing to farm under certain conditions.

Would Solar Be A Good Fit for Your Property?

A site typically needs to be flat, clear, and dry to become a solar farm. That’s not all there is to it, though. Solar farms can range from as small as 5 Acres up to more than 1,000 Acres. It takes four to eight acres of suitable land to generate 1 MW of power, and while some community solar projects only require 1 MW, most developers are working to create solar projects of 10MW or greater, so they often combine several neighboring pieces of land to create a large enough site.

Your property doesn’t have to be completely flat to generate solar power. In fact, if it has a slight slope to the south or the east, that may be beneficial because it increases the sun exposure. Regulations vary from state to state but, in general, a solar farm cannot be constructed within a 100 or 500 year floodplain and cannot contain any wetlands. It must also be conveniently located to the utility’s infrastructure, adjacent to three-phase distribution lines and, ideally, close to a substation. The closer the solar farm is to a substation, the less energy is lost as it travels to that substation.

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 match landowners with solar developers to build utility scale solar projects. With our extensive access to the NLR agent network, we can help inform landowners of the potential for their property and connect them with developers that can maximize its value. Acting as mediator between developers and landowners, we work to integrate solar development, benefiting not only those directly involved but also the communities served and the environment.

If you’re interested in being a part of this exciting new push toward sustainable energy, contact us through our website!

Why are Substations Important?

Solar energy development is gaining ground in the United States, and with good reason. It provides clean energy and reduces the user’s carbon footprint. It makes sense that many landowners would be excited about the idea of using a portion of their property as a solar farm, but there are many factors that come into play in terms of a project’s viability. One of these factors is appropriate substation access.

What are substations, and why are they important?

With any source of electricity, whether a traditional electrical plant or a utility-scale solar system, substations serve an important purpose. While a house needs roughly 120 volts of electricity to operate safely, transmission lines from power plants can carry extremely high voltage. A transmission line may have 34,500-500,000 volts running through it, and if all that power were to flow into one house, the results would be deadly. A substation serves to step up power to high voltages for travel between long distances and steps down the power to a safe voltage for human use at the commercial and residential level.

An electrical substation converts voltage from high to low thresholds, or low to high, which is vital because voltage varies significantly. This type of facility is designed to regulate energy throughout a certain region, sending power back and forth from suppliers to consumers. Solar farms use solar panels to utilize energy from the sun and then take that power and send it out to homes and businesses throughout the area. Many think of it like a switching station that the utility can control.

If you’re trying to develop your property for solar use, you’ll need a substation or transmission lines nearby, depending on the size of your property. When the infrastructure is located far away, a dedicated line, called a generation tie, will have to be constructed, at a cost of about one hundred dollars per foot. Because this cost is paid by the developer, a solar project that is far from a substation is not going to be as appealing as one that’s closer and more cost-effective.

It can be complicated to get into solar development, but it helps to partner with a company with expertise in the field. NLR Solar is a Division of National Land Realty (NLR), which is the most innovative and fastest growing land consultant firm in the United States. With our extensive access to the NLR agent network, we can help inform potential landowners about their property and connect them with developers that can maximize its value.

Connecting landowners with developers helps both parties make the most of their resources. Acting as mediator between developers and landowners, we work to smoothly and successfully integrate solar development, benefiting not only those directly involved but also the environment.

If you’re interested in being part of this exciting new push toward sustainable energy, contact us today!

Could Solar Power Help Save the World?

You have probably heard politicians and climate change experts bemoaning the future of our planet. Many argue that humankind has waited too long to take action, and now there is only the “slimmest of opportunities remaining” to avoid total environmental chaos. But it might not all be doom and gloom after all, thanks to solar power.

Greenhouse Gas Emissions and Climate Change

Fossil fuels are a major source of greenhouse gas emissions that trap heat and send the earth barreling toward 2.7 degrees F above preindustrial temperatures—the point of no return that could make it impossible to get the climate back to normal.

Fortunately, switching to renewable energy reduces greenhouse gas emissions without asking society to return to the Stone Age. The idea that people could rely primarily on renewable energy isn’t naively optimistic—it could actually work thanks to the falling costs and skyrocketing installation rates of solar panels.

Falling Solar Prices

Starting in about 2016, solar prices suddenly started to drop. It rapidly went from being one of the most expensive energy sources to one of the cheapest. Today, producing one megawatt-hour (MWh) of electricity using solar photovoltaics (PV) costs about $50 compared to $102 for coal.

In 2009, it cost $350 for PV energy, while coal remained around $102. This clearly indicates that the time of solar has arrived, which is great news for the entire planet!

Skyrocketing Solar Installations

Power producers have been responding to lower costs with an explosion of solar projects. Indeed, the US increased its solar power capacity by about 50 percent in just the past two years, now totaling over 100 gigwatts (GW). If the exponential growth of solar continues—along with the corresponding phasing out of fossil fuels and accelerated transition to electric vehicles—greenhouse gas emissions could possibly fall at the rates needed to avoid the worst impacts of climate change.

Now is the Time to Act!

The mainstream view is that it’s already too late to decarbonize the atmosphere fast enough to avoid permanently rising temperatures and trouble for the earth’s oceans and wildlife. But remember that just a decade ago, the current plateauing demand for coal and plunging solar prices were also outlandish. That’s why you should never say never—and stop waiting for others to drive change!

If you’re a landowner, you have the opportunity to make a positive impact on the climate by putting unused acreage to good use as a solar farm. Not only can this decision help save the world, but it can put good money in your pocket as well. Many solar developers are willing to offer lease fees that far exceed the per-acre earnings from traditional farming and ranching.

For help negotiating and navigating what can be a complex process with potential solar developers, turn to NLR solar. We have been helping landowners sign fair, profitable solar farm leases since 2014.

Determining your site’s solar suitability is the first step, so contact us today to schedule a free, comprehensive evaluation.

The Cost of Solar is Decreasing

Solar is more affordable, accessible, and prevalent than ever before. Its growth over the past dozen years has been staggering, from just 0.34 gigawatts (GW) in 2008 to more than 100 GW today. That’s enough to power 18.6 million American homes.

While these figures sound impressive, solar only accounts for just over 3 percent of electricity production in the United States. This percentage has been slowly rising for over a decade. Still, analysts have long pointed out that a more robust transition to solar will only happen when this renewable energy source becomes cheaper than traditional fuels. Well, that day seems to have arrived. Indeed, recent rapid cost decreases could be a sign that the world is on the cusp of an energy revolution.

Solar-Powered Electricity Costs Less Than Coal

A levelized cost of energy (LCOE) analysis released in 2018 revealed that producing one megawatt-hour (MWh) of electricity using solar photovoltaics (PV) costs about $50. By comparison, producing the same amount of coal-fired electricity costs $102. The implication is clear—why would energy producers build more expensive fossil-fuel-powered plants when they could build cheaper, cleaner solar farms?

How Much Solar Power Does the US Need?

The response to decreasing solar costs is evident when you consider that more solar projects are being installed than any other type of renewable energy source. Indeed, the US has added about 36 GW of solar energy capacity in the past two years. This exemplifies the role solar plays in the transition to renewable energy and the fight against climate change.

The United States is trying to slash its carbon emissions to half the levels seen in 2005 by the end of the decade. How much solar power is needed to reach this goal?

Consider that with just 22,000 square miles of land—roughly the same surface area as Lake Michigan—solar farms could produce enough electricity to power every home and business in the country. Many of the United States’ solar panels are also installed on rooftops with essentially no land-use impacts. An estimated one in seven US homes will have rooftop solar panels by 2030, reducing the land-use requirements for solar farms even further.

Take Advantage of Decreasing Solar Costs

The drastic decline in solar prices over the past few years has increased the demand for solar farms. If you’re a landowner, consider leasing your property to a solar developer. The potential lease fee could far exceed the per-acre earnings from traditional farming and ranching. Plus, solar farms contribute to the renewable energy revolution and help ensure cleaner air and water for future generations.

The abundance and potential of solar power in the US is staggering. Now is the time to get involved! For help negotiating a deal with potential solar developers, turn to NLR solar. We have been helping landowners sign fair, profitable agreements since 2014.

A free, comprehensive evaluation tells you how suitable your land is for solar development, so contact us today to get started!

Energy Storage Investment Opportunities

There are a lot of misunderstandings out there regarding battery banks for energy storage. We’re here to put your concerns to rest and tell you about the energy storage investment opportunities for landowners.

Clean Energy & Battery Storage

Three primary types of clean energy are used today—solar, wind, and hydropower; nuclear power is arguably clean minus radioactive waste, but it’s not renewable considering the fuel that is required is not renewable. Batteries can be used in conjunction with solar panels, wind turbines, and hydroelectric dams, allowing energy to be stored for a short time, then ultimately pushed onto the power grid at an optimal time rather than becoming wasted energy.

Many people know about this battery storage application in the renewable energy space, however, fewer people are familiar with stand-alone, utility-scale Battery Energy Storage Systems (BESS). These installations contain energy banks housed inside shipping containers or similarly shaped steel structures. Each cluster is connected to a substation to help manage supply and demand for the local electrical grid. The batteries pull power off the grid and store it when energy demand (and therefore the price) is low. Then, they push power onto the grid based on signals from substations when energy demand is high.

BESS projects are valuable resources that are already acting as worthwhile additions to our country’s electrical grid infrastructure. Here’s how they benefit everyone involved:

  • Customers enjoy more consistent electricity rates as well as seeing the ultimately lower priced energy given they aren’t paying a rate that accounts for wasted energy.
  • Utilities reduce costly energy losses.
  • The grid becomes more resilient during peak demand because, unlike gas peaker plants that take up to 10 minutes to react, a BESS can respond to changes in energy load or generation in milliseconds.
  • Developers profit by buying energy at a low rate, storing it in the batteries, and selling it to the utility company when power generation capacity is lower than demand.
  • Landowners lease their land to developers with lucrative results.

Why Landowners Should Invest in Energy Storage Systems

The only way stand-alone battery storage can be constructed in your community is if local landowners get involved. In order to build a BESS project on your land, it must be:

  • Located within extremely close proximity of a substation
  • At least one or two acres in size (most projects can be constructed on 10 or fewer acres)
  • Relatively flat and not located in a wetland environment
  • Accessible from a road for construction and maintenance purposes

These prerequisites are much more flexible than those needed to build a solar farm. For instance, because of the low acreage requirements, you have the opportunity to construct a BESS project even if you don’t own hundreds of acres of unused land. Plus, while solar power arrays are typically limited to rural areas, battery storage is common, and more valuable, in urban settings where substations are more numerous. Energy banks can even be installed on an existing foundation, such as a vacant parking lot.

Utility-scale energy storage is such an up-and-coming technology that few states have BESS programs in place for development incentives. This means many landowners will have a chance to participate in the future, even if they miss the window for other energy opportunities.

Leasing land for a BESS installation can prove incredibly lucrative for landowners, especially with the typical long-term lease ranging between 20 to 40 years. And remember, the developer is the one responsible for inspecting and maintaining the system, not the landowner.

How Battery Energy Storage Systems Benefit the Environment

BESS projects are far less invasive than other forms of power generation. In fact, they have the lowest impact of all clean energy sources. Here are the environmental benefits of battery energy storage:

  • No waste products: No fuel is consumed onsite, so every BESS installation has zero emissions. This means nothing harmful leaks into the air or soil, local water sources are preserved, and the batteries don’t give off radiation.
  • Not disruptive to neighbors: Battery banks can be easily hidden by landscaping to provide an unobtrusive installation. They also make limited noise, think sounds equivalent to a residential HVAC unit, and have no moving parts. These qualities ensure the project does not disturb uses on adjacent properties.
  • Low land impact: Once the system has completed its lifecycle, or you choose not to renew your lease when the contract expires, the installation is easily removed. Much of the equipment is recycled, and the land returns to its original condition.

Learn More about Investing in Energy Storage Solutions

If you have unused land that meets the basic requirements for a BESS project, you have a great chance of finding an interested energy developer. However, this doesn’t mean you should sign on the dotted line with the first company that comes knocking.

NLR Solar can help you negotiate a profitable energy storage deal that will benefit you and your family for decades to come.

Determining your land’s suitability is the first step, so contact us today to schedule a free, comprehensive evaluation.

How Much Land is Needed to Build a Solar Farm?

If you are like most landowners, the idea of solar development is somewhat new and you probably have some common questions about how the development process works. You’re not alone in this, because one of the most frequently asked questions is, “How much land is needed to build a solar farm?”

What are my solar options?

Most people either envision solar panels on their roof – which may consist of a handful of panels – or the giant solar farms you can spot from an airplane flying over Arizona. This really is part of the beauty of solar energy – it’s a modular system that can be built as large or small as needed to fit the energy need of that area. In the first case, a single house – in the latter case, an entire town.

You’re probably wondering because you have a plot of land that you think may qualify for a solar project and you are in an area that is experiencing an uptick of development activity. Both of these are most likely related to what the industry calls “utility scale” solar development – which basically means that the energy is sold back to the local utility and then distributed to the energy customers in the area. These are the types of projects that private developers are seeking to lease land for projects.

Now, there are typically two different size projects – Transmission Scale and Distributed Generation (DG).

Transmission Scale

The Transmission Scale projects are the larger of the two and typically require a minimum of 150 useable acres up to 600 acres or more. These projects connect to transmission lines (high tension power lines) and need to be large because there are significant costs associated with connecting to the powerlines and the project needs to be large enough to find the efficiencies of scale (remember that one from economics class?).

Distributed Generation

The DG projects are much smaller – ranging from 10 to 50 useable acres. Most of these will tend to be on the smaller side of the scale and tie into the smaller power lines (3 phase or “distribution lines”).

What is a "useable" acre?

I mention the term “useable” acres because it’s important to know that land covered by wetlands, excessive floodplain, heavy slope or other uses that make the property un-useable for solar obviously cannot be built upon.

Local Regulations & Restrictions

Finally, and most importantly, the utility scale solar development industry on a state level is dictated by regulation and subsidized programs. It’s the reason that one area could be booming and just over the state lines, there is nothing happening. These programs often specify which types of projects will qualify – either DG or Transmission Scale. So, depending on your area, the only viable project may be one or the other.

If you would like to learn more about the solar activity in your area please feel free to contact us and we’ll perform a free site review of your property.

4 Keys to Getting Community Buy-In

President Biden was elected on promises that (among other things) he will launch a Clean Energy Revolution in the United States that would eventually help the country achieve the ambitious goal of net-zero carbon emissions by 2050. Rystad Energy has estimated that we would need about 13,412 square miles of land to install all the solar panels needed to help bring about this great transition from fossil fuels to renewable energy.

Some alarmist voices have raised concerns as to the availability of land to achieve said objectives. At NLR Solar we do not share that concern. While the required space does speak to the imagination, the room we need is still only about 0.43 percent of the total land area of the contiguous 48 states. By 2050, 89 percent of the U.S. population will live in urban areas. Leave these urban areas, and you will find enough space for the solar farms we will need.

 

NIMBY

It is not the scarcity of land that will give us trouble, but a phenomenon known as NIMBY—an acronym for the phrase “not in my backyard”—where everybody likes the idea of solar farms, but nobody wants to actually live next to one.

I have seen so many promising projects crumble to pieces because the local community would not approve of the development. Developers throughout the country and of all kinds will eventually find themselves stuck with the task of having to convince local communities to be okay with certain projects. Solar projects in particular can elicit resentment with a few individuals at first, even though ultimately they will benefit the entire community.

A great example is one recent project based in Rhode Island. The local community was in favor of solar energy, but when it came time to decide where the solar farm would be, nobody wanted to have it close to their own home. They said it was “unsightly!” The only destination nobody seemed to object to was the landfill. The citizens had to be convinced that the farm could not be placed there because it was not anywhere close to a power line or substation. So what can developers do to sell the local community on welcoming a new solar farm in their community?

4 Keys to Selling Solar Energy

Be Transparent

Developers should not sugarcoat any part of the project. Be open about what will end up where and how it will look, but also be transparent about why certain options are simply not available. You can not simply put a solar farm in the middle of nowhere, even if intuitively the word “farm” might make you believe otherwise. You need a solar farm to be close to either a substation or power line. So, explain to people what criteria need to be met by the location where the solar farm is going and why and how the location you have in mind fits the bill perfectly.

Give People A Voice

Allow people to voice their concerns and listen to their grievances. Sometimes their grievances will be based on information you will be able to correct (one common grievance is that the solar farm will take agriculture out of production). Sometimes people will be well informed about the facts, but you will still be able to explain to them why they should embrace the project. Also, listening to concerns and questions is poised to help you further tune and expand on your communication. You will learn quickly where you have been incomplete, inconsistent or not transparent enough.

Inoculate Against Firebrands

The large majority will not go up in arms against a solar farm, however, there will often be one or two firebrands (usually the immediate neighbors) who will stir up emotions and risk triggering an escalation of protests. You can – and should – not silence your detractors, it is better to apply what psychologists have called an “inoculation” technique whereby you are up front with your audience about possible objections and then explain why those objections are ill-informed.

Give Back to the Community

When PILOT programs are in place—”Payments In Lieu Of Taxes”, an arrangement where the developer pays a sum of money to the local municipality to compensate for tax revenue losses that will come with the tax exempt use of the real estate—some of the monies paid by the developer can easily be used to invest in the local community. While it is not the developer per se who will decide on how the money will be allocated (a new park, books for the library, new equipment for the football team, etc.), there is no reason why developers should feel shy about presenting the projected investment of additional resources in the local community as an important benefit offered by the project.

The Bottom Line

There is no lack of room in the U.S. to fulfill its solar energy needs in the future, however, developers will continue to need to communicate transparently, give people who are concerned a voice, inoculate (where necessary) against firebrands and explain the benefits of the PILOT program in place.

If you’re interested in being a part of this exciting new push toward sustainable energy, contact us through our website!