A Solar Land Lease Is Step One Toward Securing A Power Purchase Agreement For A Solar Farm Development

 

There are various activities underway in the California legislature, California PUC, and also at the top three power companies to allow solar PV farms in the 1-20MWp scale. In addition, the California Renewable Energy Transmission Initiative reflects additional projects in excess of 100MWp. Commercial Solar Design believes the mandatory 33% alternative energy generation mandate coming from the Governor of California makes this sort of Solar power farm viable in the short-term and long term. This information is dedicated to twenty MW solar power projects on 140 or more acres.

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A lot of solar farm development teams try to find the right piece of land and offer a solar land lease on the acreage. Plenty of land owners are not enthusiastic about selling but consider leasing. Upon close scrutiny the landowner finds out that the lease strategy is not very good.

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A solar land lease option ties up your acreage for 3 years and then if the venture is built an additional 25 years at a fixed rate. As most power purchase agreements don't offer an escalator many solar land lease don't offer one either. The solar farm groups wish to maximize their earnings at the cost of the property owner. After three to four years the landowner tires of the lease yet is stuck for the rest of Twenty years.

There's a new program that deals with this challenge in a number of ways as described within this article.

The property owner participates directly together with Commercial Solar Design as a co-developer. Owner's contribution incorporates a limited $550-775K to pay for permitting, application fees as well as other costs. A lot of this expenditure is a utility company deposit of $20K/MW requested. Example. 20MWp application involves $400K down payment.

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One of the most important elements of this program could be the legal framework as well as professional work needed to compliment the earliest development work so a project can be shovel ready. By operating together the landowner keeps expenses down but more to the point participates in the benefit from the project well beyond a straightforward lease fee.

If the project is close to receiving a power purchase agreement it is offered to investment groups that are positioned to finance however not operate the solar farm project. Such groups come in and do the heavy lifting financially by providing the building funds etc. The main element to any project is always to have the permitting to build plus a power purchase agreement.

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Once the project funds the property owner gets his initial investment outlay back 2x. The acreage lease is negotiated at a competitive rate plus the landowner will get an equity position within the project. The future equity position is of excellent value but can be negotiated like a one-time net current value buyout.

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Another possibility for 20MWp solar farms involves the scenario in which the property is owned by a person or investor team who finance the whole project internally. Commercial Solar Design offers complete solutions from permitting to interconnection and continuing O&M.

A Solar Land Lease Is Step One Toward Securing A Power Purchase Agreement For A Solar Farm Development
Once the project is close to obtaining a power purchase agreement it's offered to investment groups that are positioned to take a position although not operate the solar farm project. These groups come in and do the hard work financially by providing the development funds etc.

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