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North Central Indiana | Not to be the bearer of bad news if this is actually your contract, but…
Around here solar leases are starting twice that high. And 30 years from now your inflation adjusted lease will be equivalent to $1,360 in today’s money assuming 3% inflation.
I’ll take a small leap here and say we should expect higher effective tax rates 30 years from now. Thats not exactly a rosy picture. Now I realize $1000 an acre is great money but it does come at a cost. You don’t have land anymore, it’s solar panels. And it’s worth $0 in 30 years if you don’t get a renewed solar lease. Thats the scary reality of solar. Take a good 80 that would sell for 15k an acre today, and trade it for $60k-ish an acre 30 years from now. Maybe ag land values will level off for the next 30 years, but that’s unlikely just due to inflation but there’s also the same control factor that’s always been in play. If land increased in the next 30 years like it has the last 30 years($2100/ac to $15k/ac or 614%) your 80 acre field would be worth about $90k/ac. Now you’re out $30k/ac and you have to bank on someone renewing a lease on 30 year old technology or someone willing to buy rural land for $30k/ac that best case scenario has had the poles and gravel dug out but has had no management and needs a tile system patched back together. Would you buy land like that today for $5k/ac? If not then it’s probably a risky venture. I would compare it at least mildly to a golf course, although I’d prefer the golf course over a solar panel mess. A golf course, 120 ac, just sold here to be converted to farm ground for $1,300/ac. Risky business long term on solar. Another potential that is equally worrisome on solar land, what if they change the laws on bringing land into production ag use over the next 30 years and you can’t revert back even if you want to? Then what, there isn’t incentive to pay anything to get a solar lease if you have no options or worse they “sell” the lease to a different company and they file bankruptcy, leaving you with 30 year old solar panels that no one wants and land that you can’t do anything with. But the big payday does seem attractive today.
I know we want to believe they have our best interests in mind, but if a simple farmer can do this napkin math at midnight I guarantee you the solar companies have a much better idea on how much they can screw you before it becomes too obvious.
Now if you roll all the money into land payments immediately I can get on board with the idea more. You get the land accrual from above and the solar check. But if you take all the money and put it into land you don’t get the payday, all you get is the right to sell more breakeven bushels of grain. Lots to consider. And like I said in a different post, I hope the guys opting for solar leases rather than selling out have VERY good attorneys, because I know the solar companies do. If you haven’t caught on yet, we’ve had the solar circus visit our farm, and we did get some guidance that we felt couldn’t be ignored, and we don’t have any panels because of it.
Edited by JRCS Farms 9/12/2024 23:29
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Solar vs corn
