Solar interest shines on Illinois farmland

2017-04-19T17:00:00Z Solar interest shines on Illinois farmlandBy Phyllis Coulter, Illinois Farmer Today Illinois Farmer Today

BLOOMINGTON, Ill. — It’s almost as if someone shouted “free beer,” and solar companies came running to see if it’s true, said Dale Aupperle, president of Heartland Ag Group.

He’s talking about the rush of solar companies to Illinois this year to inquire about leasing land for solar farms — some with offers that raise eyebrows.

In the last 60 days, multiple solar companies have approached Aupperle seeking farmland in central and northern Illinois to lease and offering at least twice, what regular farm rents are. “Lease your land to us. We will pay up to $1,250 per acre per year for a 20 to 40 year lease,” states one flier.

In eastern Illinois, Melvin Coulter was presented with a lease offer of $800 per acre annually, or close to four times the normal cost of leasing farmland in the Paxton area, he said.

“It’s not a bad deal, but there are some things you should think over,” Aupperle said. “High earning opportunities have some extra risks.”

The “solar revolution” in the Land of Lincoln was sparked in part with the signing of the Illinois Clean Energy Jobs Bill in December that goes into effect June 1, said Craig Thompson, farm manager for Soy Capital, based in Bloomington.

The new legislation offers incentives for clean energy sources.

Things are still in the early stages, mostly fact finding, but the interest shown by solar companies is having a ripple effect.

Illinois Farm Bureau and county organizations are holding public information meetings. Counties are passing changes to zoning bylaws to accommodate solar development. And solar companies are talking to utility companies as part of the next phase of potential development.

Analyzing contracts

In addition to favorable legislation, the improvement of solar technology and the reduced cost of installation is leading to the new solar boom, said Jason Carr, the community relations director for Cypress Creek Renewables, one of the companies showing interest in Illinois.

The company, with main offices in California and North Carolina, started “a small outreach” to Illinois farmland owners last year to see if there is land near existing towers suitable for development.

Carr said the main steps are to secure land from landowners and to negotiate with utility companies for a purchase agreement. Construction could begin in some areas this year, but the majority would be in 2018 and 2019.

Depending on the company, some are seeking as small as 20 acres and others want access to 1,000 acres.

Aupperle said some contracts have three phases of land occupation: The first may be one to four years of due diligence to get the project designed. During this time the payment to landowners is lower. The second stage, often a 20-year contract, offers considerably more than traditional rates. After that there is the opportunity for extensions.

Thompson started getting letters from solar companies about leasing farmland in November.

“Sometimes landowners want me to follow up,” he said.

Thompson has been contacted by four companies so far: one based in London, England, with a U.S. presence in Ohio, one from Arizona and two from Colorado.

“There may be a dozen by the end of the year,” he said.

He is not aware of any farmers who have signed agreements yet. It is still early in the process.

“We advise our clients to wait and see,” he said. “You are in a position of leverage and let the bidding war begin.”

He notes that when windfarms first came to the area, the initial ones didn’t pay as much as those coming later.

He advises farmers to do due diligence with the contracts and see if they are favorable for the landowner.

“Be prepared to walk away,” he said.

Legislation, negotiation

Some counties see opportunities for their farmers and communities. Earlier this month, Mercer County changed zoning laws to allow solar companies to set up shop.

“It passed unanimously,” said board member Joe Vann of New Boston.

The board initiated its actions when it received inquiry letters from solar companies. Vann looked into the matter and even visited a solar farm in Ohio.

The county could benefit with increased assessment for taxes. And landowners could benefit from higher lease rates and long-term contracts, he said.

“There is limited development here. We are on the wrong side of the Mississippi,” Vann said. Some land not suitable for farming would meet criteria for solar.

Some farmers are looking to the state and county farm bureaus for more information about the solar projects.

Garrett Thalgott, an attorney with Illinois Farm Bureau, has been to about 10 information meetings on the topic.

“Our role is to give landowners an overview of the lease and encourage them to talk to their own attorneys,” he said. “We don’t want any members getting blindsided.”

He tells farmers not to get caught up in the dollars, but to look into all the consequences of such an agreement.

“It could be 10 years down the road, and if you don’t like it then you’re stuck,” he said.

Initially, interest was in the northern-most third of the state, but it has moved to central Illinois with county meetings in McLean and Champaign in April. Earlier meetings included farmers from Grundy, Livingston, LaSalle, McHenry, Kankakee and Kane counties.

Farmers attending the information meetings most often ask about decommissioning — they want to know what will happen to the land when the 20- to 40-year lease is up, Thalgott said.

Others want to know what the terms could mean to their farming operations.

Some contracts have provisions that the farmer won’t interfere or obstruct the sun from reaching the solar panels, leaving farmers to wonder if dust or aerial application of chemicals could be considered interfering with the sunlight.

Another thing to consider is the use of land. For wind farms, often only 1 percent of the property bought is used for the tower and access to the energy. For solar farms, 100 percent of the land surface is used, Aupperle said.

“The value of farmland is what it is earning,” Aupperle said.

A potential new buyer may not like having a portion that cannot be farmed, another might like the steady income.

Copyright 2017 Illinois Farmer Today. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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