Farm Futures logo

Explore the nuances of wind and solar contracts before signing on the dotted line.

Ben Potter, Senior editor

March 5, 2024

3 Min Read
Solar panel and windmill
Getty Images/Eyematrix

There was a time when the concept of renewable energy may have seemed like a fad. That time is firmly in the past. As of 2020, electricity generated by renewables surpassed coal for the first time, when the U.S. created a record 834 billion kilowatt hours (approximately 21% of total production, versus coal’s 19%).

Two of the top renewable energy categories – wind and solar – require a large footprint to operate. Because of that, farmers continue to be targeted by various companies to install turbines or solar panel installations on their property. These deals can be lucrative, and total payouts to landowners has climbed to several hundred million dollars per year.

Even so, contracts for these projects are often confusing to navigate, according to Tom Jennings, partner with the Illinois-based law firm Livingston, Barger, Brandt & Schroeder. And the stakes can be high – wind turbines, in particular, can have contracts that last as long as 50 years.

Jennings encourages landowners to pore over the fine print on these contracts and involve an attorney, if possible. Pay attention to components such as payment plan, term, insurance, taxes, damages, land use and decommissioning.

Land use squabbles are a common pain point for landowners, Jennings points out. He recommends adding a rider to the contract that ensures that substations, battery storage and other extra infrastructure is negotiated separately. You’ll also want to make sure you have continued access to drainage tile and retain your subsurface mineral rights. Also, make sure developers do not leave odd-shaped areas outside of projects.

Related:How to navigate wind and solar leases

“If they’re putting a 50-acre solar field on top of my 100 acres, I don’t want them leaving me something that looks like a gerrymandered map without road access that I can’t get a 24-row planter through.”

Demand is on your side, Jennings adds. Don’t be afraid to ask for what you want.

“You can’t really offend these people if you ask for something,” he says. “You’re not going to run them off, even if they don’t agree.”

The average wind turbine’s footprint takes out just under an acre of land, and solar installation size varies widely. Crop damage is also likely to occur during installation. Make sure a compensation plan is included in your contract. If it’s to your benefit, tie yield losses to actual farm data and not county averages.

Even though most renewable energy projects will stretch decades into the future, it’s important to look at the terms surrounding decommissioning. Also look into a “cure” period for additional compensation due to compaction and fertility issues, which can negatively affect your production potential for several years.

Related:Solar panels help stabilize farm income

According to Jennings, the top two questions regarding decommissioning are:

  1. How much will I get paid?

  2. How is it getting taken down?

At the end of the day, many renewable projects make smart financial sense, and many others may not be worth the hassle. Be sure to put in the adequate amount of homework before making what will be a generational decision on your operation.

Ask these questions

According to YSG Solar, it’s critical to ask plenty of questions before signing any contract to install a solar array. Getting the answers to these questions will help give you peace of mind and help you figure out whether the venture will be a profitable one.

  • Have you worked in this state before?

  • Can you provide references from prior customers?

  • How will the leased portion impact the rest of the land?

  • How long will the lease last?

  • How is rent calculated?

  • How are taxes calculated and handled?

  • Who is responsible for maintenance (including drainage, vegetation, wildlife, buffer zones and fire safety)?

  • Who holds the rights to the land’s natural resources?

Read more about:

Solar LeaseWind Turbines

About the Author(s)

Ben Potter

Senior editor, Farm Futures

Senior Editor Ben Potter brings two decades of professional agricultural communications and journalism experience to Farm Futures. He began working in the industry in the highly specific world of southern row crop production. Since that time, he has expanded his knowledge to cover a broad range of topics relevant to agriculture, including agronomy, machinery, technology, business, marketing, politics and weather. He has won several writing awards from the American Agricultural Editors Association, most recently on two features about drones and farmers who operate distilleries as a side business. Ben is a graduate of the University of Missouri School of Journalism.

Subscribe to receive top agriculture news
Be informed daily with these free e-newsletters

You May Also Like