7 Important Factors to Know Before Entering into a Solar Power Land Lease

With climate change and sustainability at the forefront, solar power has emerged as one of the most viable and sought-after renewable energy sources of our time. Landowners across the country are realizing the potential of harnessing solar energy through solar land leases – agreements that allow companies to install solar panels on private properties in exchange for rents or energy savings.

But how does one determine if their property is suitable for solar installation? What factors must be evaluated before committing to a solar land lease? This article explores the key considerations for landowners to make the most out of this green investment opportunity.

Conducting a Solar Site Assessment of Your Property

The first critical step is conducting a comprehensive solar site assessment to evaluate the viability of your land or roof space for solar installation.

  • Consider the total available unshaded area and dimensions – most solar developers require at least half an acre of open land with minimal obstructions. For rooftop systems, ensure your roof’s age, structural integrity, and sun exposure throughout the day can support the weight and demands of solar panels.
  • Thoroughly evaluate sunlight availability as determined by the location, orientation, and potential shading of your property throughout the day and seasons. Unobstructed south-facing spaces with consistent annual sun exposure from mid-morning to late afternoon are typically ideal. East, west, and angled rooftops can work but may generate 10-20% less power.
  • Verify proximity to the electric grid in order to connect the solar power system and feed excess energy back into the grid. Properties located far from existing grid infrastructure may incur higher connection costs to establish a grid tie-in.
  • Identify and study all local zoning laws, permits, utility requirements, landowner association regulations, or other regulatory and permitting processes applicable to a solar installation. It’s prudent to get the required permits and approvals in place before proceeding with detailed system design and installation.
  • Carefully inspect for any physical obstructions like tall trees, chimneys, or other buildings that may partially shade the solar array location during key sun hours, reducing energy output. Even minor shading can hamper production.

While optimal solar sites face south with no shading, even east/west-facing locations can be quite productive and merit consideration if sized appropriately. The key is understanding your site-specific conditions and layout through an unbiased solar professional. Companies that specialize in leasing land to solar farms can provide a detailed assessment of a property’s solar potential.

Researching and Selecting the Right Solar Company

There are many solar developers and installers vying for landowner business and eager to capitalize on the growing demand. Do some in-depth research and due diligence to identify and partner with the most experienced and reputable company for your needs:

  • Look for an established solar company with at least 5-10 years of experience and a strong track record of high-quality solar system design, installation, and activation in your local area. Having completed many projects successfully in your utility territory is a plus.
  • Ask for referrals from the company’s past customers, ideally some of them being your neighbors, to understand their first-hand experience with the company and solar performance results. Reputable players should furnish referrals readily.
  • Take a close look at the company’s financial stability, technical expertise, customer service ratings, complaints if any, and overall business reviews to ensure they will remain invested in the partnership long-term. Poorly rated, inexperienced, or financially unstable companies can jeopardize the entire project.
  • Inquire about the specific solar module and inverter warranties offered as well as any production guarantees. Opt for companies using robust, high-efficiency modules and equipment to maximize savings. Longer warranties provide greater protection of your investment.
  • Establish a relationship with the company management, engineers, and construction team. They need to demonstrate a genuine interest in understanding your needs, providing customized solutions, and delivering on their promises.

Vetting and selecting the right solar partner with demonstrated expertise will pay dividends throughout the 25+ year lifespan of your system.

Understanding the Implications of a Solar Lease Agreement

The solar lease agreement governs all aspects of the relationship for the duration, so it is imperative you review it in close detail before signing:

  • Be very clear on the lease duration or term, typically 15-25 years. Shorter lease terms of 15-20 years may yield lower overall savings and income over time, while very long terms beyond 25 years have more uncertainty.
  • Scrutinize the rental rate or payment structure. Opt for competitive rates that are fixed or escalate by a low percentage annually. Compare lease rates offered by different companies to get a sense of the market pricing.
  • Check for clauses related to insurance coverage, operations & maintenance, circumstances for repairs, replacement or removal of the system, and termination rights for both parties. Understand any liability waivers.
  • Closely review the system ownership implications. Most lease contracts specify that the solar developer retains ownership of the full solar energy system while you own only the power produced. This has implications at tax time and system removal.
  • Study the payment terms including when payments are due, how they are structured (fixed or escalating), and acceptable payment channels like direct bank deposits. Factor in these payment commitments in your financial planning.

Source: Author’s expertise and experience.

Carefully analyzing the agreement before signature protects your interests and sets clear expectations between both parties from the outset.

Designing and Sizing Your Solar System for Optimal Returns

  • Work with your chosen solar provider to determine the ideal system size for your available space, energy usage, and budget. Strike the right balance between upfront costs, energy offset, and return on investment.
  • For net-metered properties, size your system to offset about 60-80% of your annual energy usage. Oversizing far beyond your needs provides diminishing returns.
  • Model different panel tilt angles and orientations during system design to optimize energy production at your location based on site specifics like roof angle and shading.
  • Consider incorporating an energy storage system to get maximum utilization of the solar power generated during daylight hours. 

Right-sizing your solar array while leveraging available incentives provides greater energy independence and financial payback.

Maximizing the Return on Your Solar Investment

Entering a 20+ year solar lease is a significant investment. It is prudent to negotiate lease terms and incentives to maximize your long-term profitability:

  • Compare financial models and calculate savings from multiple developers. Lean towards lease options providing greater overall energy cost savings, quicker payback periods, and higher long-term returns.
  • Negotiate to reduce rental rates if you provide additional property amenities like usage rights to adjacent land, grazing pastures, or sporting facilities.
  • Discuss possibilities to sell excess solar power produced back to the grid through net metering or similar programs. This can provide energy credits or payments to enhance cost savings.
  • Understand the annual lease rate escalator and negotiate a low, fixed percentage increase where possible. Escalator caps around 1-2% are preferable.

Prioritizing Sustainable and Ethical Practices

While the financial benefits certainly attract many landowners to solar, adopting long-term sustainable thinking should also be an important priority:

  • Inquire about the solar company’s decommissioning practices. Panels should be responsibly recycled at end-of-life rather than disposed of in landfills which can leach toxic metals over time.
  • For solar developments on pristine agricultural or forested land, ensure impacts on the surrounding ecology and wildlife are minimized through conscientious site selection and planning.
  • Understand the developer’s energy storage system plan for your site. Modern net-zero solar projects typically incorporate battery storage to maximize usage of the emissions-free energy produced during daylight hours.
  • Explore integrating electric vehicle charging capabilities using your solar power. As EVs become mainstream, your solar system will provide convenient sustainable charging.
  • Discuss the possibilities of transitioning any backup generators you may have to emerging clean energy alternatives like green hydrogen or biofuels to further reduce your property’s carbon footprint.

Adhering to ethical green principles and minimizing ecological impact ensures your transition to solar sustains the planet too.


Entering a solar land lease agreement to install panels on your property can be a smart and rewarding decision if done systematically and with diligence. Be sure to thoroughly assess your site’s solar potential, vet solar energy partners, negotiate favorable lease terms, maximize savings through incentives, and embed sustainable thinking for a prudent and future-focused solar investment that benefits both your wallet and the planet. With sound information and foresight, you can unlock the full potential of your land resources to power your life. 

Frequently Asked Questions

How do I accurately estimate the potential bill savings from installing solar panels?

Your potential savings depend on multiple factors like system size, lease rates, site-specific sun exposure, shading, and your current energy costs. Have the solar developer conduct an on-site evaluation and provide a savings projection tailored to your unique property conditions.

Should I buy solar panels for outright or lease them? What are the tradeoffs?

Purchasing solar equipment outright has a higher upfront equipment cost but provides greater lifetime energy savings. Leasing arrangements have minimal upfront fees but provide lower overall savings over the lease term. Carefully weigh the upfront costs vs. long-term savings and make the optimal choice in alignment with your budget and savings goals.

For leased solar panels, what kind of maintenance and repairs am I responsible for as the landowner?

For leased solar systems, the solar company is contractually responsible for all regular maintenance, monitoring, repairs, and replacement of defective parts over the entire lease term. Landowners may only need to keep the solar panels clear of debris like snow, fallen leaves, or tree shade that may obstruct sunlight access. Read your lease agreement thoroughly to be aware of any exceptions.

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