For some producers such as Indiana’s Tom McKinney, adding solar to the farm is a “no brainer” when the output can meet drying demand for over half a million bushels of grain.
While solar has sparked many producers’ interests, growers first need a crash course in understanding solar contract ins and outs, according to Brianna Schroeder, partner at Janzen Schroeder Ag Law. Here are her tips:
1. General Terms
The number of acres, which specific parcels are involved, and other general lease terms should all be spelled out in any land agreement, but sometimes points are missed, according to Schroeder.
“This might be obvious, but when a landowner goes into this negotiation, they need to have an idea of what they want to have included for the project,” she says. “It is important to get everyone on the same page.”
2. Removal Bond
A removal bond is the amount of money a solar company sets aside through a letter of credit or other financial tool to remove all equipment from the landowner’s property once a solar agreement has expired or is terminated.
“Removal bonds ensure the property can be restored back to original condition at any given time,” Schroeder says. “Landowners don’t want to be in a position where a contract is terminated in the middle of the lease and the land is unable to be flipped back due to a lack of funds.”
3. Decommissioning Plan
Similar to the removal bond, a decommissioning plan outlines the action steps at the end of the lease (whether the agreement naturally terminates at the end of the term or ends sooner than that by a default).
“If there’s drainage tile on the property, will they restore it? To what depth will the solar company remove the physical pieces of the project? What will they do with the topsoil? The decommissioning plan spells all that out,” Schroeder says.
4. Accessibility
Schroeder says the most often overlooked solar contract item is land access. She tells her clients to make sure they define what land is considered “outside the fence.”
“If farmer Jen has 1,000 acres, she wants to outline some sort of minimum in the contract, maybe five ten acres or 5 % of the total, to make sure she has access to any contracted land ultimately not used for the solar project,” she says. “And Jen needs to make sure those five unused acres are contiguous so they can be productive.”
According to Schroeder, if these parameters aren’t defined, the landowner could end up with limited access to unused, outside the fence, ground.
