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Penn State Extension: PA Landowners Guide To Utility-Scale Solar Leasing

Penn State Extension has published a Pennsylvania Landowners Guide To Utility-Scale Leasing to inform landowners on terminology, background information, and considerations to make when approached to lease their land for utility-scale solar.

What follows are excerpts from the Guide--

Thousands of Pennsylvania landowners were contacted in 2019 through 2021 by solar developers interested in a lease or purchase option to develop solar arrays on these properties.

We expect this trend to continue.

These inquiries are not limited to any section of the state but have been limited to properties near accessible infrastructure (high-voltage power lines and substations).

This is often a long-term commitment that could last 25 to 40 years (with a lease and extension option).

Landowners are usually the first people contacted in a community about a proposed utility-scale solar development.

Solar leases are a private contract between a landowner and a solar developer. If the solar developer is going to disturb more than one acre, a permit is required.

Pennsylvania DEP only regulates earth disturbances like stormwater management and Erosion and Sedimentation (E&S) control. See DEP’s Chapter 102 Permitting For Solar Panel Farms.

PJM (Pennsylvania, New Jersey, Maryland Interconnect) administers the process for evaluating and approving requests by developers to interconnect new energy resources, including grid-scale solar projects, into the regional transmission system.

This process involves multiple stages of technical reviews of how the proposed project will impact grid operations.

The PJM review process does not consider local land-use regulations that may affect the ability of the proposed project to be permitted and ultimately constructed.

Local governments in Pennsylvania can regulate land use, including utility-scale solar development. This is the developer's burden to work with local governments for utility-scale solar.

The most common lease term is 25 years before additional options that may continue this lease. Many solar panels are under warranty for 25 years.

Lease agreements also might include 5- and 10-year options to extend the lease (and some have multiple extension options) for the developer – this option is typically an option for the developer, not the landowner.

Lease agreements tend to offer payment on a per-acre basis for land used for the solar project. The amount offered has varied a lot across Pennsylvania. Landowners and their attorneys may be able to negotiate better rates than the initial offer.

Some Concerns That May Affect Landowners

These items may affect solar lessors (the landowner) but may have no or less effect on those who sell their properties for solar development.

-- Maintenance – Maintaining vegetation around solar panels can be done through mowing, spraying herbicide, sheep grazing, or a combination of any of the three. Landowners may wish to have the first right of refusal (or another arrangement) to maintain the property inside the solar array's fence. Another consideration is access for those performing maintenance activities. Other maintenance activities will be less frequent but could include inspections and maintenance of electrical connections and components.

-- Termination, Removal, and Restoration – Most solar lease contracts have language for restoring the property to its original condition following the lease period (and possible lease extensions). Your attorney should review and consider how this provision will be enforced decades into the future.

-- Water Runoff – Some evidence suggests that rain and snow coming off panels can be absorbed by the soil and vegetation below. Still, landowners may wish to consider language in their contracts that will advise parties to the contract on how they may respond if erosion takes place within any of the areas occupied by solar panels or Right-of-Ways.

-- Placement and Access to the rest of your property. Most options are written to allow solar developers access to all your property but may only obligate them to pay for the portion that they use. Landowners may wish to make sure that this does not diminish the use of areas of the property they are not paid for.

-- Use of property. Many lease agreements may allow the developer to use the property (outside of the leased area) for a variety of reasons, e.g., access roads and equipment storage. Good contracts should spell out allowable reasons and restrict access to anything the property owner is not paid for.

-- Bankruptcy, non-payment. Most of the investment into developing a solar facility is upfront. Two periods may carry some risk of non-payment: during construction and toward the end of life for the panels. Landowners may wish to have language in their lease that addresses non-payment.

-- Noise – Solar panels create no noise, but there may be equipment that creates some noise (inverters and cooling fans). While these items are not known for producing loud noise, the placement could make a minor difference relative to houses.

-- Glare – Some solar panel glare might occur, but panels are designed to absorb sunlight, not reflect it. Most glare occurs when light is at a low angle.

Solar lease contracts are lengthy and complicated. Many other potential issues can appear in a lease contract.

Landowners considering leasing their property should determine what they want and don't want in their lease contract and present this information clearly to their legal counsel.

This decision could be in effect for decades and should be considered as such.

Click Here to read the entire Guide.

Related Articles:

-- Lawrence County Farmer Fights For Land Rights, Stands Up To Township Ban Of Solar Panels On Farms; Attorney General Reviewing Issue

-- Nextracker And BCI Steel Renovate Abandoned Pittsburgh Steel Factory To Serve Growing U.S. Utility-Scale Solar Market  [PaEN]

-- Sign On To REAL Energy Freedom For Pennsylvania - Petition To PA Lawmakers  [PaEN]

[Posted: July 2, 2022]


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