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Solar farms: land lease prices

8/12/15 @ 9:10 PM
ORIGNAL POST
Brother of the brush
User since 1/22/12
I had a solar company approach me about leasing my land out for solar power to then sell back to the power company. I live right next to a power station. The lease would be a 20 yr. lease. My question is, what would be a reasonable price per acre to lease land for solar? They would lease a minimum of 20 acres. This is in central Wisc. and is being farmed at the moment. Any insight would be appreciated.

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8/13/15 @ 6:59 PM
Brother of the brush
User since 1/22/12
Thanks for the input. The initial offer was 400 to 600. After talking with our local elec. company, he said 800 to 1000 would be more in the ball park. Theres going to be another solar company getting into the mix so I may wait to see what happens there. All I want is a fair price, I don't want to settle for say 600 and hear others in the area are getting 1000. The way it sounds, this is going to happen in many areas. There will be no concrete involved, pillars will be driven in and will be removed at the end of the lease. I was just hoping someone else would be in this situation to give advice. The solar companys are only giving the electric companys a bid on the cost of power from the solar array so if the cost is too high, the electric company will find someone else. On the east coast, the going rate is 1500 to 3000 per acre so there must be some sort of profit in solar.

8/13/15 @ 12:19 PM
lazyfishr
lazyfishr
User since 5/29/06
I would get an idea of what this is going to look like. This is your house, will you want to look at this thing every single day, for 20 years. I won't lease the field behind my house to anyone that wants to plant corn on it. I like the view out my windows and the last thing I want to do is look at a wall of corn.

8/13/15 @ 10:08 AM
BeerTownFyreman
User since 6/15/01
As mentioned, you should at least be making what your AG lease is... and don't forget to add in the increase in property taxes, as you will no longer be assessed as AG. You may need to go through a zone change too, if your zoned.

My first question, is why are they not offering to buy? Given the large investment being made in equipment, and the length of the proposed lease, why wouldn't they just offer to buy it outright? With a 20 year window, it would make more sense to me to offer a buy-out instead of a 20 year lease. The little I know about these larger solar fields, the land purchase would be less than the equipment investment.

A lot of other good questions brought up too. Future uses? Infrastructure left behind? Access and trespassing (by you)?

We don't have enough info to throw out a solid number, too many variables. Ag land in some areas is over $300/acre/year. It depends on your particular situation.

If your interested, perhaps getting in as an investor/partner would be good. You can negotiate a base price (minimum match for AG lease and property tax change) and get in on a profit sharing? Perhaps you could get something based on production... so much per kWh?

If it was me, I'd be hesitant. Too many questions.

8/13/15 @ 9:09 AM
mendota
MEMBER since 12/19/01
At 10k/year, I wonder if solar has any payback. Did they say how big an array they are contemplating?

The other way to approach the problem is to figure how much THEY are making off your land.

8/13/15 @ 8:47 AM
Short Fat Bald Sexy Guy
Short Fat Bald Sexy Guy
User since 6/27/08
$10,000/year plus a 3% increase per year.

A 20 year commitment is a very long time. That's worth quite a bit a money just for the length of the lease.

Then there is another big issue. What will be the condition of the land after 20 years? Theoretically it should be ready for farm crops again. What will they be putting on this land other than solar panels? Will they be laying any concrete or constructing any buildings? Will they be installing a road to access the site? All of this stuff could cost some big bucks to be removed if they do not renew the lease after 20 years. The lease should state they are responsible for this.

Farm land rental rates are probably less than $150/acre/year. $10,000/year puts the 20 acres at $500/acre/year so it's a big step up. Of course taxes are paid on the rent and on the land, so you are getting less than 10 grand. I wouldn't commit to a lease that long for under 10k/year. Maybe you can squeeze them for more.

8/13/15 @ 7:41 AM
Cold Front
MEMBER since 7/9/01
What would you expect to make off the 20 acres over the next 20 years, if you leased it out for AG? Make that computation first and then add for the risks you will taking. EX. If they go under, who clears the land? How much would it cost? Does it affect the value of your other land? Is there a hazardous waste exposure etc. Mrt.

8/13/15 @ 6:30 AM
SnakeSter
SnakeSter
MEMBER since 7/9/12
How much are they offering? How much do you get from farmers? Maybe the farmers will bid with the Solar guys to get you a higher price!

DISPLAYING 1 TO 8 OF 8 POSTS
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