There's been a recent uptick in farmers/landowners asking about these contracts: • Solar panel farms • Carbon contracts • Wind energy farms • Data center leases While the $ might be attractive, the devil is in the details. Each type of contract has unique issues, but here's some general risks to consider when approached: → Long term commitments These contracts often span decades, potentially limiting future land use, succession planning, or adaptation to new technologies. → Assignment of rights Many contracts allow unlimited assignment which means future companies aren't the ones you made the deal with. → Environmental compliance The installation may lead to environmental concerns bumping up against federal or state regulations. → Impact on property value & marketability This could negatively affect future sales or even the ability to get loans against the land. → Removal & restoration Who is responsible and able to remove installations and restore the land at contract's end? → Maintenance Is the company obligated to keep the structures in good repair and how can you hold them to it? → Interference with ag operations Equipment & structures may hinder farming activities and reduce usable land area. → Tax implications Changes in land use can affect property taxes and eligibility for ag tax benefits. → Liability for accidents or damages Added infrastructure and workers increases the risk of the landowner potentially being implicated if people or property are harmed. → Energy production restrictions Contracts may restrict the landowner's ability to develop or benefit from their own renewable energy projects. → Data ownership & privacy Who owns and can access data generated on the land? → Stacking/multiple use restrictions Some contracts prohibit engaging in other revenue generating activities on the same land. → Bankruptcy of company What is the remedy if the company goes bankrupt? Or the third or fourth assigned company (see above risk) → Impact on neighbors Large projects can strain relationships with neighbors due to landscape change, noise, and increased traffic. This isn't an exhaustive list. But, they're some issues of concern when wading through the 20+ page boilerplate agreements the companies are providing. So, before signing on the dotted line... please have your attorney review the contract and advocate for you.
@clintwfischer I’ve found in our part of the world very little of what you mention is of concern when a pile of cash is shoved across the table.
@clintwfischer Be aware of developers. They don’t actually have any money. They are trying to put the project together and flip it. They have no incentive to make sure the project is viable. I looked at a developer solar “contract” that turned out to be just a series of options
@clintwfischer Great post. These considerations are also valid for Native American tribes that are looking to invest in data center and renewables. @ncaied @TheYurokTribe @nativenews_net @NNNnativenews
@clintwfischer Have had the Carbon Contract people at the last couple of bison conferences we have had... they talk a good game until it's time to sign. It's a great way to lose your land in the long run.
@clintwfischer Any of those bells are almost impossible to unring. Sometimes the cost of money is more than you want to pay.
Removal, Restoration, and bankruptcy of the (foreign-owned) company go hand in hand. The wind farm in my area has already had 3 owners in 4 years. The current foreign owner assumed the lease agreements which rely on a "letter of credit" to pay for decommissioning. By law, after 6 months of no electric production, the turbines must be removed and the land restored. Including at least 5 feet of the concrete below the ground. The estimated decommissioning cost is 800k less scrap value. How good is a revocable "letter of credit" to a foreign-owned bankrupt company? Unless you have an escrow account in cash for decommissioning in the landowner's name expect to pay more for the removal of the turbines than the income you made during the wind farm's lifespan.
Removal, Restoration, and bankruptcy of the (foreign-owned) company go hand in hand. The wind farm in my area has already had 3 owners in 4 years. The current foreign owner assumed the lease agreements which rely on a "letter of credit" to pay for decommissioning. By law, after 6 months of no electric production, the turbines must be removed and the land restored. Including at least 5 feet of the concrete below the ground. The estimated decommissioning cost is 800k less scrap value. How good is a revocable "letter of credit" to a foreign-owned bankrupt company? Unless you have an escrow account in cash for decommissioning in the landowner's name expect to pay more for the removal of the turbines than the income you made during the wind farm's lifespan.