Important factors to consider when signing a solar farm lease

As cities throughout Texas draw away from fossil fuel energy and move toward renewables, conditions have been ripe for landowners to participate. Many solar energy companies have sent out letters and fliers to landowners with enticing-sounding offers.

Now is a great time to consider the issue. Commodity prices are low, and the trade war has taken a toll on many farmers and ranchers. Some of these companies make it sound as if you could make tens of thousands a year with no up-front costs.

Should you consider leasing some of your land to a solar farm developer? How do you know if the company is legitimate? What factors should you be considering? How do you know whether you’re getting a good deal?

The best way to answer those questions is to work with an energy attorney who has plenty of experience negotiating and drafting these types of leases. Ideally, you should work with someone who can independently assess the value of the project and make sure you’re getting everything you deserve.

Some ads for solar leases say you can get anywhere from $125 to $900 per acre per year, according to the Texas Observer. Which end will you receive? That depends on several factors:

  • How close your land is to a substation or transmission line
  • The location of your land
  • The slope of the land and other practical considerations
  • Whether you own both the mineral and surface rights

Be sure you understand all the details

A solar array on your land can change it substantially – so substantially that you may no longer be able to use it for farming. That means you could immediately lose your agricultural tax exemption, and you might be turning entirely in the direction of energy production. Further, if you don’t own the mineral rights to your property, the solar array could interfere with the rights of the mineral owner.

Allowing a solar farm or array on your land means moving in a whole new direction as a landowner. You should fully understand the pros and cons before you sign any lease.

An experienced energy attorney should be able to review any proposed lease, negotiate or renegotiate, draft the lease and ensure the terms are as favorable as possible.