In December of 2016, the State of Illinois dramatically altered the renewable energy landscape by adopting a comprehensive plan designed to substantially increase renewable energy development within its border. The new legislation, referred to as the Future Energy Jobs Act or Public Act 99-0906, is not perfect, but it is reflective of the significant growth in and greater appreciation for the benefits of renewable energy that have occurred in just the last few years. Photovoltaic systems, more commonly referred to as “PV systems” or “solar panels,” represent just one of the technologies emphasized in the legislation. PV systems with a nameplate capacity greater than 2 megawatts (“MW”) are considered utility-scale projects under the new legislation. Solar projects of this size are also sometimes referred to as solar farms.
The United States Energy Information Administration (“EIA”) lists only three currently operating solar farms in Illinois. The 9 MW Exelon Solar Chicago project began operation in Cook County in 2010. The 2.6 MW Rockford Solar Farm and 20 MW Grand Ridge Solar Farm both began operation in 2012 in Winnebago County and LaSalle County, respectively. Not reflected on the EIA list is the 4.68 MW University of Illinois Solar Farm in Champaign County, which began operating in 2015. Under Public Act 99-0906, the number of solar farms in Illinois is expected to grow significantly.
Although Public Act 99-0906 only became effective June 1 of this year, solar farm developers have been contacting Illinois landowners for the past several months as they seek sites for their projects. Solar farm developers active in Illinois include Borrego Solar Systems, Inc., Community Power Group, Cypress Creek Renewables, E.On, Invenergy LLC, juwi Inc., NextEra Energy Resources, Renewable Energy Systems Ltd., and Wolcott Energy Group. Many of these developers are often interested in agricultural land for their projects; but rather than purchase land they seek multi-year land lease agreements with landowners. As with any long-term agreement, it is important to consider the terms of a solar farm land lease before signing. Careful review of the terms and sensible negotiation between the parties can produce a solar farm land lease that is fair and beneficial to both the developer and landowner.
Parties often focus on monetary terms in an agreement, but that is not the only aspect of a solar farm land lease that warrants serious consideration. Another significant aspect pertains to restoration of the land when the lease ends. For land used to cultivate crops, or adjacent to such land, consideration should also be given to how a solar project may affect drainage. To whom a developer may transfer its rights to develop and operate a solar project warrants attention as well. Any new owner/operator should have some experience with developing and operating solar projects. Access to land not used for the solar project and whether a developer will consider dust from farming operations a problem for the solar panels should also be considered. Other issues that may arise in solar farm land leases include easements related to adjoining land, liability insurance, removal and replacement of fences, exactly which land rights are included (eg: water and/or mineral rights), and division and payment of taxes. Developers and landowners alike should be aware of these and other issues that may arise in solar farm land leases and contemplate what is important to them. Whether working on their own or with experienced counsel, developers and landowners should be able to address these issues and come to a reasonable agreement benefiting both parties.
If you have questions concerning solar farms or solar farm leases, feel free to contact us.