How Do Landowners Benefit from Solar vs. Farming?
The profitability of farming is difficult to predict. Despite the hard work of our nation’s farmers, factors outside of our control—demand, droughts, storms, seeds, soil, state politics, national politics, world changes—cause major fluctuations in the cost of production and price of crops. Consider what’s happening right now. In the wake of Russia’s invasion of Ukraine, both have increased, creating a market for farmers with increasingly tough margins. Entering a solar lease not only helps the community take control of its energy and keep it affordable but allows property owners to maintain high and economic returns.
Increasing Economic Value for Landowners
Farming remains essential to the well-being of Indiana and the nation as a whole, but co-locating farming and solar on the same lands have extraordinary economic benefits.
In March 2022, an economic report comparing the revenues of farms in Indiana that are engaged in a solar lease and those that chose not to participate was conducted. The comparison included the following results:
Solar leases created between 2x to 3x the economic value for the landowner than any of the observed non-engaged farms.
The additional income earned from solar leases is 2.4x to 2.8x the income of non-participating farms.
Solar rent exceeds farm cash rent of more than 2.2x to 3.2x over a 35-year period and is far more stable. The average solar rent is $1,214 per acre whereas the average farm cash rent in west central Indiana is only $562, meaning each acre listed under a solar lease derives 2.2x the profit it would under a farm cash lease. In north central Indiana, the difference between rents is even higher with the average solar rent exceeding farm cash rent by 3.2x.
These key findings are of particular importance when compared to historical and future predicted farm operation profitability. Between 2017 and 2021, the Purdue Crop and Cost Return Guide found that farm revenue and other related economic metrics were unstable. Comparing these Indiana farm profitability metrics to that of solar leased farmland, it was discovered that property owners would have been $233 per acre better off leasing land than farming it on average.
Even with solar leases, farming will remain a crucial part of Indiana’s economy and strength, but solar leases provide an opportunity for landowners to increase income and economic value, gain energy independence, and allow their soil to be rejuvenated for farming later on.
Hoosier Solar’s Commitment
Here at Hoosier, we are committed to helping Indiana landowners realize the full economic potential of their property. Our leases offer guaranteed competitive annual compensation for thirty years and the promise that when we leave, the land is better than before. At the conclusion of the decommissioning process, the project site will be flat, have better drainage, rejuvenated soils, and improved roads should the landowner desire to not remove roads installed that its pre-solar use condition.
Interested in learning more about solar leasing land for solar projects? Email us today.