Farmers and ranchers don’t have to look far to find income opportunities. Revenue opportunities are often literally on the ground beneath their feet. As landowners, many farmers and ranchers are approached regarding leasing land for generating renewable energy.
Ag producers are diversifying their operations, and insulating themselves from volatile commodity prices, by leveraging their land base. Instead of ignoring that section corner or unused ground, landowners are evaluating using that acreage to host a solar project. These opportunities are not without their own unique challenges. Solar leases involve complicated negotiations. KCoe’s land management advisors offer the following tips for negotiating a solar lease.
What should ag producers do when approached with a solar lease opportunity?
- Seek competent help.
- Search the solar company.
- Address the contract’s duration.
- Understand access rights.
- Think ahead about each step of the project, including who will be responsible for what.
- Be aware of the extent of the solar development on your property.
- Know your landowner obligations.
- Make sure the proposed solar lease won’t interfere with existing leases and encumbrances.
- Look into insurance and indemnification.
- Include decommissioning and reclamation requirements.
Food and fiber aren’t the only commodities U.S. farmers and ranchers will bring to market in the next decade. Look for solar and wind ventures to generate additional income for agricultural producers and rural landowners. Both renewable energy sources are gaining ground as state and federal policies pursue aggressive climate change goals and a greener power grid.
Solar energy has the potential to power 40% of the nation’s electricity by 2035, the U.S. Department of Energy reported in September 2021.
Learn about the opportunities that are available, and how you should approach, review, and ensure a safe, long-term opportunity for your farmland, business, and family in From Policy to Plate: An Outlook on Agriculture.
Contact a KCoe land advisor to learn more.