Leasing Land for Solar Farm in Oregon Explained

Leasing Land for Solar Farm in Oregon Explained

Solar farming is increasing in popularity in Oregon, and it can be a great way to bring in extra income. However, it’s a big commitment to make and navigating a solar farm lease can be tricky, so we’ll break it down.

What is Solar Farming?

The premise is relatively simple: solar energy companies lease parcels of land from landowners and build racks of solar panels on that land. The solar panels harness energy from the sun, which is then converted to AC power and the solar company sells the power to the utility company that controls the local power grid. Solar farm leases usually last 20 to 30 years and can be renewed for 50 or more total years. When the lease ends, the solar company comes back to remove the solar panels and equipment, and return the land to its original state. Landowners receive compensation for allowing the solar companies to build on their land.

How Small Can a Solar Farm Be for Leasing Oregon Land?

Most solar companies need at least five acres to make a feasible and operational solar farm, although rules and regulations differ by county. Statewide rules currently prohibit the construction of solar power farms on farmland soil that is determined to be Class 1, Class 2, prime, or unique -- unless a solar company and landowner can establish a dual use for the land, such as beekeeping in additional to the solar farm. In that case, up to 20 acres can be designated for solar farming. However, some counties are even more stringent and do not make allowances for dual use. Be sure to do research for your specific county and soil type.

How Much Can You Make Leasing Land for a Solar Farm?

This depends on the location and quality of the land you are leasing out, but the most optimal parcels of land can bring in up to $4,000 per acre per year. Solar companies negotiate their lease rates based on an evaluation of the land.

What Makes Good Land for Solar Farming?

First and foremost, the land must receive enough sunlight annually to warrant a solar farm. This means that there should be as few obstructions as possible that might block sunlight -- for instance, buildings, trees, and other objects that cast significant shadows over the land.

Secondly, there must be enough land available to create a viable farm: at least five acres as we previously mentioned. The solar companies need enough land not only for the solar panels themselves, but also for the accompanying equipment, including wiring, inverters, and transformers.

The topography of the land is also important, since it’s much easier to install a solar farm on a relatively flat and stable parcel of land than it is on hilly or unstable land. Solar companies take into account any development necessary to prepare the land for solar farming, and if there are too many obstacles, it may not make financial sense to place a solar farm there.

The solar company will also investigate the proximity of the land to the existing power grid and access roads. It’s extremely expensive to build roads and to extend the power grid to an area where it doesn’t already exist, and both of those processes require permits, careful compliance with local laws, and intense labor. If neither of these infrastructure elements exist at your property, it will most likely not be deemed suitable for a solar farm.

Finally, the classification of the soil is brought into question. As we mentioned, it’s prohibited by the state of Oregon to build solar farms on certain types of high-value farmland.

Are Solar Farms Dangerous or Noisy?

The short answer is no to both of those concerns. There is obviously some noise associated with the actual construction of the solar farm, but once it is installed and functioning, the only noticeable noise comes from the inverters, and is no louder than a typical air conditioner. Solar energy creates no greenhouse gas emissions and is a totally renewable energy source, so there is no danger to your health and, in fact, solar energy contributes to better overall health.

Things to Consider Before Signing a Solar Farm Lease

Be sure to get everything in writing in the lease documents. Verbal agreements or arrangements will carry no legal weight and, since these leases are often anywhere from 20 to 50 years, it’s critical to have every aspect of the agreement in writing and easily understandable to any future parties who may become involved in the lease.

The lease should also clearly state that the solar company is responsible for paying for any increases in real estate taxes that may result from the installation of a solar farm. Additionally, a solar farm can cause land to lose its Current Agricultural Use Value status since it will no longer be solely used for farming, so make sure that the lease requires the solar company to pay any recoupment that may be necessary.

Lastly, the lease must include specific directives about the removal of the solar farm. The most ideal scenario is to have the solar company set up an escrow account specifically for the removal process when the lease is up, which ensures that you as the landowner will not be stuck with the expensive removal process.