What farmers and ranchers should consider and ask developers before leasing land
Pursuing a renewable energy project, such as hosting solar panels or wind energy, can offer landowners a stable, long-term income stream. However, these opportunities come with significant responsibilities that can span decades. Understanding these obligations is essential to protect your land, financial interests and legacy.
Below, we outline key considerations with guidance from our members and the SEIA Guide to Land Leases for Solar.
1. Lease Duration and Renewals
Most renewable energy leases run for 20–35 years and often include renewal clauses. This commitment can influence not only your own land use but also what heirs and future generations can do with the property. Landowners should:
- Carefully review renewal terms and opt for conditions that preserve long-term flexibility.
- Consider the impact on future agricultural use or potential development.
2. Decommissioning and Site Restoration
At the end of the project’s life, landowners must ensure the site is restored. Strong contracts should require developers to:
- Remove all infrastructure and restore the land to its original or improved condition.
- Complete restoration within 12–18 months of project closure.
- Provide financial assurances, such as decommissioning bonds or escrow accounts worth 100%–150% of removal costs, adjusted for inflation.
- Use reversible construction methods (e.g., driven posts instead of concrete, permeable roads) to minimize soil disruption.
3. Soil Health Protection
Protecting soil quality during and after the project is vital for future land use. Best practices include:
- Conducting baseline soil surveys before construction.
- Reducing compaction with low-ground-pressure equipment.
- Maintaining permanent vegetative cover during operation.
- Using pollinator-friendly plants or native grasses under solar arrays to improve soil carbon and fertility.
- Considering rotational grazing to maintain soil structure.
4. Insurance and Indemnification
Developers should carry robust liability insurance to protect against damages or injuries. Contracts should include indemnification clauses shielding the landowner from environmental and legal claims arising from the developer’s activities.
5. Tax and Expense Responsibilities
Lease agreements should clearly define who pays for:
- Property taxes
- Insurance premiums
- Other operational expenses
Landowners should also understand potential changes in property tax status when land use shifts from agriculture to energy production.
6. Retention of Resource Rights
Unless negotiated otherwise, landowners should retain mineral, water and other natural resource rights. If a developer requires access to these resources, they should provide fair compensation.
7. Ongoing Land Maintenance
Maintenance responsibilities – such as vegetation clearance, drainage and wildlife protection – must be clearly outlined. Developers failing to meet these standards should compensate landowners for damages or losses.
8. Community Engagement and Local Regulations
Renewable projects must comply with local ordinances and often involve community participation. Landowners can play a role by:
- Engaging in local planning processes.
- Supporting reasonable, balanced regulations.
- Maintaining good relationships with neighbors and local stakeholders.
9. Planning for the Temporary Nature of Projects
While renewable projects feel permanent, they typically last 25–35 years. Contracts should:
- Reflect that the land will eventually return to agriculture or another use.
- Include provisions for full reversibility and restoration.
Hosting a renewable energy project is a long-term partnership, not just a business transaction. By securing clear terms on decommissioning, soil protection, insurance, financial guarantees and ongoing maintenance, landowners can ensure their property remains productive and environmentally healthy for generations to come – while still benefiting from the clean energy transition.
REFA was created specifically to help landowners navigate renewable energy opportunities. By becoming a member, you can get access to resources and guidance from farmers and ranchers just like you. Learn more about what a REFA membership can get you.
