The green energy industry is booming in Ohio, and it needs land to grow. That has led local farmers to lease land to solar energy companies for production in greater and greater amounts. It is an exciting opportunity, but one that requires careful consideration before you jump in.
To make the most of your land’s potential for solar power generation, you need to understand the tradeoffs present in each payment structure.
Fixed payments
There are two possible payment plans for farmers leasing land to solar operations: Fixed and revenue-sharing plans. Under a fixed payment structure, the energy company pays the landowner a predetermined amount per acre of land leased. This insulates your income from market forces but it also prevents you from enjoying the benefits of windfall profits if the farm is successful.
Revenue sharing
Under a revenue-sharing setup, the landowner receives a percentage of the revenue generated from the sale of electricity produced by the solar panels. This arrangement can lead to higher income for landowners under the right circumstances, but it does carry more risk.
The National Agricultural Law Center found that by 2019, the energy production from solar power sources had reached 210 megawatts in the state. Of that, only two projects were large-scale installations producing 10 MW or more; the rest were due to the contributions of smaller solar system locations, many of them leased from local farmers or businesses with extra land.
By carefully evaluating the choices for leasing land for solar power, you can establish a financial safety net that spans generations in an environmentally friendly and sustainable way.
