How Much Will Energy Developers Pay to Lease Your Land or Roof?

The sunnier your plot is, the more your plot is worth to a solar developer (look up the solar irradiation of your plot here). Some locations, such as West Texas, are also windy in addition to being very sunny, representing a double opportunity that some Texas landowners who work with us are able to leverage.
That said, solar energy has come far enough that even if you live in a cloudy place, solar could still be a great option if the regulatory environment is right. This is certainly the case for the Northeast of the United States, Germany, the Netherlands and the UK. The surprising result is that solar projects are often more attractive in cloudy places with favorable legislation, than they are in sunny places that don’t favor solar (e.g., Middle Eastern countries with cheap, subsidized fossil fuel based energy).

Aside from the local climate, you should consider the impact of shading on your plot. If there are buildings, trees or other objects adjacent to your plot, these could possibly cast shade on your plot, reducing the available solar energy. If objects are on the north side of your plot, their impact on shading will be minimal, since the sun is in the southern part of the sky (the opposite is true if you live in the southern hemisphere). The NOAA solar position calculator can show you the position of the sun at your location at different times of the year.

Proximity to grid infrastructure:

Contact us to find out if your land is next to power lines that can host a solar project.

Residential rooftop solar projects can connect to your home’s existing grid connection, so access to the grid is not an issue. If you own a plot of land in a suburban or industrial area, you can be confident that grid connection infrastructure exists near you.

For larger solar projects in more remote areas, the cost of the grid connection is often the factor that determines the economic viability of the project. If there is a transmission or distribution line near you, this is a huge advantage. Ideally, the power line’s voltage should match the project size. For example, a 3 MW distributed energy solar farm would connect at medium voltage (33 kV) while a 300 MW utility scale solar project would connect at high voltage (230 kV). A high voltage power line in the vicinity of the 3 MW project would not be useful, since interconnection costs would be too high. Another important factor is injection capacity, since the grid could be congested at the point where a project seeks to connect.

Land features, soil type / roof structure:

Both topography and ground type matter. If your land is rocky or swampy, it will be more expensive to build support structures for solar panels. If your land is covered in vegetation or other objects, costs for a solar project could increase if obstacles need to be removed. Hilly land can normally be used, but may have disadvantages related to shading. Even lakes or other water surfaces can be used for floating solar projects.

If you own a roof, the angle of your roof will make a difference, since a south facing roof will catch the most sun (in the northern hemisphere). Most rooves can support solar panels, but older or weaker structures may need to be reinforced.

Regulatory environment related to solar:

Almost any plot can be turned into a solar project if there are sufficient incentives in place. The cloudy Netherlands still have a feed-in tariff, fostering a boom in solar development with double digit growth from 2013 to 2023. Many sunnier places remain far behind in solar. Renewable Portfolio Standards adopted by many US states, or other policies such as direct transfers or preferential tax treatment are common around the world, and often play a big role in renewable energy projects. Renewable energy subsidies are only a fraction of fossil fuel subsidies, but have a strong impact at around $166 billion per year (globally).

Market related factors:

Just as real estate prices depend on market movements and the local and national economy, lease rates for land will also fluctuate based on these factors. If an area attracts the interest of energy developers due to attractive local regulations (e.g., flexibility on rezoning or tax breaks), then lease rates will go up. Conversely, if you wait too long and many projects have already been built, the grid could have become congested, rendering solar projects less attractive.

Alternative uses for your land:

Although leasing land out for a solar project is normally more profitable than farming, there could be other, more lucrative uses for your land, especially if it is zoned for industrial use or if it is rich in natural resources and a company is willing to mine it or drill for oil. The same cannot be said about rooves, since a solar project really is the best way to monetize roof space.

For many farmers, the agricultural markets bring great uncertainty. An agricultural commodity such as soybeans could be very expensive one year, but drastically fall in price the next, as occurred due to the US / China trade war from 2018 to 2020. This unpredictability can often lead farmers into debt or bankruptcy. The great advantage of a solar land lease is that lease rates are fixed and guaranteed for the duration of the lease, which is normally 25 years or more.

It is also possible to continue using a piece of land for agriculture even as it hosts a solar project. Grazing animals such as sheep around solar panels is an example of symbiosis: the panels provide shade to the sheep, and the sheep eat the grass around the panels, preventing vegetation growth from obstructing the panels. Such “agrivoltaic” systems are becoming more common, and allow a more economical form of vegetation control than mowing the grass. The world’s electricity demand could be supplied by covering only 1% of the world’s farmland with solar panels, and agrivoltaic systems could even help their farms by shading crops that are more sensitive to the sun, and reducing water loss. Governments are starting to recognize this, and rezoning farmland to allow the inclusion of a solar project is becoming easier across the United States.