When land is developed for solar projects, the process generally follows these steps:
Initial Site Visit
The developer visits the land they want to lease and develop. The size of the land they’re looking for will depend on how many megawatts (MW) of solar panels they want to install. If they want to install one MW of panels, they’ll need about six to seven acres. If they want three MW, they’ll need 18-21 acres, and if they want 10 MW, they’ll need 60-70 acres. If your land has the amount of acreage they are looking for, they will evaluate your land for these four characteristics:
- Amount of land available
- Amount of sunlight the land receives
- Proximity to grid infrastructure
- Quality of soil
If the initial visit is successful, the developer will make an offer to lease the land for their solar farm. That begins the leasing process and lease agreement negotiations.
Letter of Intent
The developer may make their offer through a letter of intent (LOI). The LOI will outline the developer’s terms for leasing the land, as well as any problems that need to be addressed before the solar farm lease and development can begin. This can include clearing the land of obstructive powerlines, for example. All of these issues should be addressed to meet the developer’s solar farmland requirements.
Many developers will use a lease option instead of a LOI to negotiate a solar farmland lease. At this point, the landowner should employ legal counsel to help them understand and work through the negotiations. In a lease option, the landowner gives the developer up to two or three years to exercise the lease on the land. The lease option agreement will outline which party pays taxes on the land, whether payments will be made during the lease option period, and what will happen to the land if the developer decides not to develop the project there.
If the developer decides to lease the land, each party should work with their respective legal counsel to finalize the lease. The landowner and the developer should collaborate to determine how the land should be used for the project. They should also figure out how rent is calculated: Will they base rent on the amount of acreage leased or the amount of power (in MW) in the systems? The landowner should read the finalized lease carefully and go over it with their legal counsel.