Here are four situations where leasing your land to a solar developer might be the best course of action.
1. You want to move on. Over time, our needs and desires change. Maybe farming or ranching is no longer the right occupation for you. Perhaps you’d like to do something less physically demanding. Perhaps you’d like to move to a city to be closer to your children or relatives. Perhaps it’s time to retire. Or perhaps you want to live somewhere different or try a new line of work just for the sake of change. If you’re ready to move on, you might want to sell or lease your farmland, whether to a solar developer or to another farmer.
2. Your land is no longer viable for farming. A variety of natural and market factors affect the viability, and thus the value, of farmland, from droughts and other climate change impacts to foreign competition and shifting consumer preferences for certain foods. Not all farmers can profitably transition to other crops. In this case, selling or leasing your land to other farmers might not be viable.
3. You want to generate more income than you do now. Even if your land is productive for farming, the profit you make per acre might not be as high as you could make by leasing your land to a solar developer. Keep in mind that you never have to dedicate all of your land to a solar farm. This way, you could continue farming on some of it and receive a guaranteed income for the remainder of it.
4. You want predictable income. A key benefit of a solar lease is that the income stream to you is fixed and long-term. Agricultural production is unpredictable and market prices fluctuate over time. This makes it hard–sometimes impossible–to plan for your financial future. Solar farm operators, in contrast, will pay you a fixed fee per acre for the life of the contract, which can be as long as 30 years (and could be extended after that). The fee the operator pays you can also increase with time to compensate for rising inflation (this is called a “multiplier” or “escalator”).