Rates climb for farmers leasing land for solar

As leasing farmland to solar companies becomes increasingly common, its impact on industry expansion and investment is up in the air. 

Around one in five farmers has discussed solar leasing in the last six months, according to the Center for Commercial Agriculture at Purdue University. More than half of farmers approached for solar leasing were offered $1,000 per acre, and about a quarter were offered more than $1,250 per acre. 

The rates may go even higher, Michael Langemeier, associate director at the Center for Commercial Agriculture at Purdue, told Equipment Finance News. 

“We’ve been hearing anecdotally that there is some rates over $1,500,” he said. “It just tells you there’s a lot of activity out there.” 

The Center for Commercial Agriculture will be expanding its report, asking farmers whether they’ve been approached with offers of more than $1,500. 

Another key question is whether farmers are using the lease revenue to grow, Langemeier said. If so, investment in equipment may grow, too. 

“These larger farms that are expanding, those are the people buying the new machines, and so I don’t know how that’s going to play out.”  — Michael Langemeier, Associate Director, Center for Commercial Agriculture at Purdue

Financial stability  

HW Farms in Augusta County, Va., grows corn, soybeans and alfalfa, as well as raises livestock. Leasing farmland to solar companies came after many offers, co-owner Steve Wine told EFN. 

Wine was initially hesitant, but the current contract to lease 34 acres — around 37% of the farm — provides him with a stable revenue stream while allowing him to continue the farm’s livestock and crop sale, he said. 

“We love what we do, so we want to keep on,” Wine said. “This was one way.” 

Wine said he couldn’t give out specific rates per his contract, but said the land was making “significantly more than we could crop it for.” 

The company signed a 20-year lease in 2020, and HW Farms is paid annually. Setup, maintenance and eventual removal of the panels are all handled by the energy company, Virginia-based Dominion Energy, Wine said. 

Wine has no intention of exiting the agricultural industry, he said, but expansion isn’t on his radar either. The farm is just able to better maintain itself with solar leasing due to rising costs, he said. 

“Things have gotten so expensive and hard to do. It would be great to upgrade. We have a lot of old equipment.” — Steve Wine, Co-owner, HW Farms

Owning, not leasing, solar may also provide a means for farmers to cut costs and expand. 

Sustainable farming 

 Hubbard LLC, a chicken farm in Walpole, N.H., has barns and farmland entirely sustained by solar panels it invested in and maintains, Lucas Harrington, director of pedigree operations, told EFN. 

 “We’re investing over $1 million in solar,” he said. “We will have a payback on that within three years after the federal incentives are applied.” 

Federal tax credits offer around 30% of the total installation cost of construction that starts between 2023 and 2033; however, farms must own the solar panels to take advantage of these credits. 

 The money the farm saves through its solar usage gives it the option to save or invest in digital equipment, Harrington said.