Do your homework before signing a solar lease

Solar energy companies are making a push throughout Ohio, approaching landowners about leasing their property for solar-powered projects. As with other agreements concerning natural gas, oil, wind, pipelines and electric transmission line projects, landowners need to be careful when signing solar power leases. Note that eminent domain provisions do not apply for many solar projects.

Dale Arnold, Ohio Farm Bureau director of energy, utility and local government policy, shares what to consider before signing a lease:

• Research the company. Find out if the company has previous experience in building solar farms in Ohio and other states. Will the company be around to develop the project or will it sell its lease portfolio to another company? Reach out to landowners of those solar projects to get insight into the process and company.

• Involve all family members in the proposal. A solar lease will last decades, affecting the next generation on the farm. What looks like a great retirement opportunity for some could hamper others who continue farming in the future.

• Consider tax ramifications. Taking land out of agricultural production means it will no longer quality for Current Agricultural Use Value (CAUV) status and will be taxed at the much higher utility tax bracket. “Overnight you’ll go from one of the lower tax brackets to one of the highest,” Arnold said. What provisions are in the lease that ensure new tax responsibilities will be paid by the developer?

• What if you later want to sell the property? Be aware that some leases state that if you later sell the property, the solar energy company has first rights to buy it at its own terms.

• Be aware that not all the leased land may be developed. Many leases state they have the right to develop “up to” a certain number of acres. Keep in mind that the actual development, which you’ll be compensated for, may be much smaller. Your ability to continue farming ground held under a lease will be impacted.

• Ensure the lease states the company has a bond or other financial instrument to dismantle the solar project and return the land to its original condition at the end of the lease or if the company goes bankrupt.

• Hire an attorney who has experience with utility and energy market rules, regulations and law.

Contact your county Farm Bureau if you’d like an OFBF expert to hold a meeting about solar, wind, oil and gas exploration, pipelines or other energy development projects in your area.

Working on your behalf

The state requires solar facilities that generate 50 megawatts of power or more to obtain a certificate from the Ohio Power Siting Board. Currently, the board is considering solar projects in Brown, Hardin and Vinton counties. Ohio Farm Bureau has filed motions with the board, asking it be allowed to participate in the approval process on behalf of members. OFBF typically participates in these utility permitting decisions to advocate for basic repair and remediation standards to be included within the general permit. This ensures a basic standard of repair for all affected by the potential project.
Photo: One stop on Hardin County Farm Bureau’s ATV tour in September was Ohio Northern University’s solar farm, which it uses to power nearly 20 percent of its campus.  Photo credit: Homestead Precision Farming, LLC

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