Common offer to lease farmland for solar panels: $1,000 an acre

More than half of large U.S. farmers say they have been offered at least $1,000 an acre during discussions about planting solar panels instead of crops on their land, said a Purdue University poll released on Tuesday. Bids have climbed rapidly since 2021, when the most common offer was less than $750 an acre.

“Interest in leasing farmland for solar energy development continues to be strong,” said Purdue’s monthly Ag Economy Barometer. One in 10 of the large-scale farmers questioned by Purdue reported having actively engaged in discussions over a solar lease in the past six months, roughly the same rate as a year ago.

“Payment rates offered varied widely, but it was notable that over half of respondents were offered a lease rate of $1,000 an acre or more,” wrote agricultural economists Jim Mintert and Michael Langemeier, who oversee the Ag Barometer.

Some 56 percent of landowners said they had been offered more than $1,000 an acre in recent discussions. Purdue did not say how many had signed leases.

In June 2021, when Purdue first asked farmers about solar lease rates, only 27% said they had been offered annual leases of more than $1,000 an acre. By contrast, 32% of farmers said they had been offered less than $500 an acre, and 22% said they had been offered from $500 to $750 an acre. So the majority of farmers, 54%, had been offered less than $750 an acre. Fewer than one-third of farmers said they had signed a lease at the end of discussions.

Productive farmland in the Midwest can produce corn and soybeans worth $1,000 an acre, but expenses including seed, fertilizer, pesticides, and equipment can dramatically reduce net revenue.

The conversion of farmland to wind or solar power has raised hackles in rural America in recent years, and there have been efforts to block the developments.

“Your land is waiting to pay you back,” says Dominion Energy, an electricity provider in the mid-Atlantic region, in offering to buy or lease land for solar power. The utility said “initial critical requirements” were at least 10 acres of relatively flat land that has few or no wetlands and is located near the company’s distribution lines. Solar projects may operate for 35 to 50 years, it said. Other companies dealing in solar generation list similar requirements, including direct access to public roads.

Twice as many farmers are interested in solar leases than are interested in being paid to capture carbon on their land, said Purdue. Carbon contracts offer much lower payment rates, perhaps $20 an acre or so, and may require farmers to alter their practices.

A record 33 gigawatts of solar capacity was installed last year, raising the nationwide total to 162.8 gigawatts, said the Solar Energy Industries Association, a trade group.

For the Ag Barometer, Purdue interviews operators with production worth at least $500,000 a year. According to USDA data, 7.4% of U.S. farms have annual sales of $500,000 or more. The survey has a margin of error of plus or minus 5%. The latest survey was conducted from Feb. 12 to 16.

The Ag Economy Barometer is available here.