Solar Lease Payment Value
- Craig Kaiser
- Jul 8
- 3 min read
Understanding the intricacies of solar payment value is crucial for anyone considering or currently leasing their land for solar energy. This FAQ guide is designed to address common questions and provide clear, comprehensive insights into the factors that influence solar payment value and what to expect when leasing land for a solar farm.
How Do Solar Lease Agreements Work?
Before we dive into the intricacies of solar lease payments, it's important to understand how solar leases work. Solar leases are long-term agreements where landowners allow solar companies to install and operate solar panels on their property in exchange for lease payments. The solar developer sells the energy produced from the solar farm to the local utility company.
What are the Benefits of Solar Leasing?
The benefits of solar leasing include generating a stable and predictable income stream through solar lease payments and contributing to clean energy production. Solar leases are typically paid on a per acre per year basis for 25-40 years, depending on what is negotiated in the specific lease agreement. Additional benefits include:
Tax Benefits: Developers can be responsible for property taxes on solar farm land, reducing landowner expenses. All solar lease agreements are negotiable, so whether or not the landowner is responsible for paying taxes during the lease is open for discussion.
Land Use Flexibility: Landowners can typically continue farming or grazing livestock on solar-leased land. This practice is referred to as agrivoltaics.
Long-term Agreements: Solar leases typically last 25-40 years with options for extension, offering long-term financial stability.
Additional Financial Incentives: Landowners may receive annual rent payments and potential signing bonuses, with options to sell rent payments for upfront cash.
Solar Lease Payment Value
The LandApp team frequently receives questions from property owners nationwide regarding solar lease payment values. The most commonly asked questions and answers are outlined below.
How Much Do Solar Leases Pay?
On average, solar leases pay $700 to $2,000 per acre per year without royalties. Royalties are more common in wind lease agreements. Lease rates for solar farms range across the country and are completely negotiable with the solar developer.
What Factors Affect Solar Lease Payment Value?
There are a few factors that affect solar lease payment value, like your property's proximity to energy grid infrastructure and land demand in your area. Being near electrical infrastructure is key. The maximum mileage away your property should be is 4 miles from a substation or a transmission line. If you have a large amount of acreage that can be built on, the distance might be remedied if needed. Buildable acreage is another important factor for solar payment value. Flat land that is not located in a flood zone is ideal for solar panels to be built and supported.
What Factors Go Into How Valuable My Land is For Solar Energy?
There are a lot of factors that affect what you can get paid when you lease land for solar energy, such as the size of your property, distance to electrical infrastructure (transmission lines and substations), topography, and state and federal incentives, just to name a few. Additionally, the size of the project will have an impact.
Larger utility-scale projects could require 100 acres or more, whereas small to medium-scale projects could require 2 – 40 acres. Future needs for electricity in your area, ease of access to your property (highways or farm roads), and supply and demand for solar sites in your area are also factored in. If your land has easy access to highways or farm-to-market roads, your solar rights value could increase.
LandApp provides solar lease estimates for over 150 million properties nationwide. This estimate is calculated using solar irradiance data, incidence angles, topography, distance to electrical infrastructure (substations and transmission lines), local electricity prices, government incentives, revenues, and the cost of production in your area. To see what you could earn by leasing your land for a solar farm, generate your free property report on LandApp's map:
