It’s happening all over West Texas. Solar energy companies are trying to increase their capacity, and the easiest way to do that is to build utility-grade solar arrays. That means they need land, and they’re offering Texas landowners premium prices to lease it. Have you been contacted by a solar energy company about leasing your land?
If you have, don’t make a snap decision. It’s important to understand whether the offer is a good one, monetarily. You’ll need someone with some experience to help you decide if it is. It’s also important to understand what rights you would be giving up during the course of any lease.
You may be presented with a lease that was written by the solar energy company’s lawyers. It could be one of a hundred boiler-plate lease agreements that have been seen around Texas over the years. Be sure to have your own attorney look at the lease and identify your rights and obligations before you sign anything.
The purpose clause, permitted uses and additional developer rights
A well-drafted solar lease should contain a purpose clause so that everyone involved knows the reason for the lease and what is supposed to happen. Everyone already understands that the purpose of the contract overall is to build and operate a solar array. However, the purpose clause should be more detailed than that. It should lay out what activities are allowed and not allowed and any time limits on those activities.
For example, the purpose clause may say that the leased land is to be used “for solar energy purposes.” That’s not very specific and could leave a whole lot of room for things you might not expect. Could the solar energy company store unused solar panels on the property for years? Could it use the property as a staging area for a solar array they’re building nearby? You need to know what they consider “solar energy purposes.”
As you can see, the more broadly “solar energy purposes” is read, the better for the energy company. Most landowners would prefer a stricter reading of the phrase that limits what the energy company can do and for how long. There needs to be a clear definition in the lease itself.
Solar leases often lay out permitted uses specifically. For example, energy companies need more than just the land where the solar array will be situated. They will need ingress and egress from that part of your property, and that could mean crossing other parts of your property that aren’t part of the project.
Moreover, they may need to construct roads, string up power lines, and build transmission facilities as part of the project. Make certain you understand exactly what the company will be doing to every part of your property that could be involved in the project.
If the company plans to construct roads or cross part of your property that they aren’t leasing – and this is commonly the case – they will need an easement. You should make certain this easement expires at the same time the solar lease expires. You should also find out whether they plan to make this easement exclusive or non-exclusive.
Ultimately, you’ll want to limit the range of activities allowed under the lease to the construction and operation of the solar farm, along with any other things that are absolutely necessary to accomplishing that goal. You’ll want to limit the time period allowed for these activities, too. The less disruption you experience, the better.
Get the lease you need, not the one the solar company drafted
Depending on your situation, you may have the option to renegotiate part or all of the solar lease you are offered. You should take the opportunity to have your own attorney review the proposal and, if necessary, make changes that are more favorable to you.