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Asked to sign a solar lease on your land? Read carefully.

Rapid improvements in solar technology, combined with certain investment tax credits, have created a rapid expansion in the solar energy field. Indeed, the Solar Energy Industries Association estimates that solar power will account for almost half of the total renewable energy capacity added to the U.S. electrical grid by 2040.

Moreover, a study by a prominent solar developer concluded that utility-scale solar developments may be half the cost of residential-scale (rooftop) ones.

Texas is especially desirable for solar development. Texas accounts for an estimated 14% of all the U.S. technical potential for utility-scale power, and 20% of the potential for utility-scale concentrated solar power. That’s because Texas has wide open space with prime sunlight conditions, a large market and the transmission capacity to exploit that market.

Where do you come in? Many solar developers are working to set up additional capacity in the Lone Star State. They may have contacted you about buying or leasing your land.

These developers have the power of eminent domain in Texas, which means they can force you to come to the table. You do not, however, have to sign the lease they offer you.

Many issues arise in solar leases based on clauses

Before you sign a solar lease, you need to talk to an attorney who has experience in this area. Everything from the compensation structure to how disputes will be resolved is on the table in that lease. For example, you will generally see a purpose clause.

The purpose clause defines what the developer will be allowed to do on your land. It may be simple, such as “this lease is for the purpose of solar energy.” Exactly how that is defined makes all the difference. Your lawyer can help you understand how the purpose clause affects you.

Another part of the lease is a “choice of law and venue” clause. This determines where you would have to sue the company if a dispute arose. You would much rather sue in a Texas court under Texas law. In some cases, however, the choice of law and venue clause in a solar lease may specify that New York or California law applies.

There are a variety of clauses in solar leases that could affect you. Most of them are negotiable. What you need is for someone to negotiate the terms who knows what is feasible and will fight for your goals.

A well-drafted solar lease should address all of your concerns and clearly lay out the rights and duties of each party. Make sure you fully understand the terms of any lease you sign.