Historically hydropower has been the most used renewable energy resource. Today wind and solar-generated power are rapidly expanding. The development of wind and solar farms is not cost-effective or practical in most populated regions. However, placing these projects in rural locations where the tracts of land are larger and met with less opposition is the ideal model for energy developers.
Southeastern Colorado, like other areas, has become a hotbed for solar development. Our high desert climate with 300 plus days of sunshine per year, affordable land prices, and close proximity to a sizeable coal-fueled power plant has created an influx of renewable energy developers. These companies are seeking land to lease and, in some cases, purchase to help produce the energy that government policy is now demanding. Another factor adding to the interest in solar development is the establishment of high-tension transmission lines in rural Colorado. Xcel Energy is installing the Power Pathway Project to create over 560 miles of transmission lines and four new substations.
If you are considering a solar project on your property, there are many aspects to be aware of. The agreements can be complex, and the development's or developers' long-term viability may be uncertain. Your compensation for the project can also vary significantly, along with how the agreement is structured. Here are five principal factors landowners and potential buyers should know about these projects:
First: Not all projects will be completed. The number of properties that actually get developed for energy is much smaller than the number of properties that go under option. In Pueblo County, Colorado, roughly 1 in 5 properties leased for solar energy production will be developed. Across the nation, that ratio drops. On average, the proposed projects that make it to the production stage vs. those under option is closer to 1 in 10 properties.
Many landowners may receive option payments while the developer competes to win a bid with the local energy company. However, these payments might be all a landowner ever receives for the option on their land. Some landowners agree to an option for lease or purchase on their land, hoping to pocket those option payments, not caring if their land ever gets developed.
Second: The number of acres required for development varies by the developer and the type of project they propose. For large-scale renewable energy projects in my region, I have seen consistent numbers from 600-1000 acres minimum for solar development and 5,000-8,000 acres minimum for wind development. If you own land in close proximity to a substation, there is potential for a developer to place battery storage on that land. In some cases, this could provide an opportunity for income on just a few acres.
Third: Income opportunities to sustain property ownership. Some landowners don’t want to sell their land, and the next generation is not interested in farming or ranching. Maybe the landowner is looking for other streams of income to supplement the current operation of their business. Renewable resource development offers options to do so.
With wind development, landowners can continue to graze, recreate on, or farm the majority of their property while collecting passive income from wind towers that are built on their land. With solar development, the landowner can dedicate a portion of their land to a solar farm, generating large income streams and retaining additional acreage to continue their agricultural or recreational operations. These methods could substantially increase the monetary gain for the upcoming generations but still allow the current owner to retain the land they have worked so hard for.
