Dynamically rising costs and inflation have affected agriculture, which has an impact on the profitability of agricultural production at the end of 2023. Therefore, leasing lower-quality land for a renewable energy installation may be a solution that will guarantee stable income on a farm for a long time. How have the rental rates for photovoltaics changed at the beginning of 2024 and what does their value depend on?
Running an agricultural activity involves exposure to many types of risk related to changing weather and prices of agricultural products and fertilizers on the market. All these factors significantly disturb the financial liquidity of many farms. The remedy for all these variables that seriously undermine the profitability of agricultural production is to ensure stable income, which will increase resistance to financial instability affecting farms.
Leasing land for the construction of a photovoltaic farm, wind farm or energy storage facilities is a proven way to ensure long-term profit. The funds paid are adjusted for inflation and ensure diversification of income on the farm for over 20 years. Many of our clients decided to cooperate precisely because of the stable income they can invest, e.g. in the further development of their farm. Thanks to the construction of photovoltaic farms, everyone benefits – the land owner, who gains permanent income thanks to the lease agreement without any work or costs, and the local community thanks to the taxes paid by the investor. The increase in the number of renewable energy sources also translates into lower electricity prices and improved environmental conditions thanks to reduced greenhouse gas emissions – emphasizes Robert Bocian, regional manager for the acquisition of investment areas at Projekt Solartechnik.
How much for the lease of agricultural land for photovoltaics in 2024?
Annual rates offered for the lease of agricultural land for photovoltaic installations are also increasing slowly but surely at the turn of 2023-2024.
If in 2020 at least PLN 7,000 was offered per hectare. PLN per year of leasing land for photovoltaics, at the end of 2021, rates of up to PLN 12,000 were already standard. PLN/year per hectare. Interestingly, at the beginning of 2022, offers of up to PLN 15,000 began to dominate. PLN from the lease of 1 hectare per year, but such plots must meet specific requirements.
A plot meeting the conditions for a photovoltaic investment brought a profit of PLN 16-17 thousand. PLN up to PLN 20,000 PLN/ha/year in 2023. What is this amount at the beginning of 2024?
The amounts paid after the installation is launched by companies operating on the market range from PLN 15,000. PLN and 22 thousand PLN/year/ha and depend on several factors. The distance of the plot from the power grid is crucial, as it affects the valuation of a given investment and, therefore, the offer that can be submitted to the land owner. Compared to 2022, the rent has increased due to inflation, emphasizes Robert Bocian.
As you can see, rents have increased even above PLN 2,000. PLN/ha/year at the beginning of 2024 compared to the rates applicable at the beginning of 2023. Why are the rates for the lease of agricultural land so diverse at the beginning of 2024? It all depends on whether the plot meets the requirements for leasing and installing a photovoltaic installation.
Not all agricultural plots are suitable for photovoltaics
A farmer who wants to lease an agricultural plot at an attractive price for a photovoltaic farm must meet several important requirements.
We are looking for unshaded areas with an area of at least 1 ha and a width of at least 40 m and with soil class IV-VI. The plot must have access to a public road. Agricultural land should also be owned by the farmer for at least 5 years. There are more detailed requirements, please contact us to verify the feasibility of building the installation – notes an expert from Projekt Solartechnik.
First, the investor leasing the plot will check the class of the land to be leased. These must be land of class IV, V, VI or wasteland. Additionally, usually such a plot cannot be smaller than 1-2 ha (up to 100 ha), and the width of the plot must be at least 50 m. Land for photovoltaics cannot be shaded by buildings, trees, bushes or other objects. The plot area should be flat and preferably oriented to the south.
Employees of the leasing company will also check whether the land is located at a maximum distance of 3 km from a medium-voltage power line or from the main power supply point.
Please also remember that the plot cannot be located too close to protected areas, such as Natura 2000 or landscape parks. The attractiveness of a plot is also influenced by whether it is covered by the Local Spatial Development Plan (MPZT). It cannot be located in an area at risk of flooding. It is best to have access to the plot via a paved road, although not all companies require this.
What should you pay attention to before signing the contract to earn money on the lease?
A farmer deciding to conclude a land lease agreement should pay attention to several things that will help him protect himself against possible problems in the future. Moreover, they may have a decisive influence on how much a farmer will actually earn from leasing land for photovoltaics. Before we sign the contract, it is worth analyzing it carefully, even with a lawyer, because we are signing the document for many years.
When signing the contract, it is also worth paying attention to whether the land lease rates are indexed to inflation every year. All fees and taxes related to the operation of the photovoltaic farm and charged to the owner should be covered by the investor – such a provision should appear in the contract.
Moreover, the farmer’s earnings from leasing agricultural land for photovoltaics are divided into two parts. For the first years there is a so-called parking fee of PLN 300-1000/ha/year. During this time, the agricultural plot remains physically intact as design work is carried out and the investor tries to obtain a permit to build a photovoltaic installation. Let us remember that this does not always end in success.
The main rent is PLN 15,000-22,000. PLN/ha/year, usually becomes due to the land owner only from the beginning of the construction of the installation, i.e. from the moment when the farmer actually loses the opportunity to receive benefits from cultivating his own agricultural land.
Therefore, it is extremely important to specify in the contract for the lease of land for renewable energy sources the final date by which the investor should start the construction or operation of the photovoltaic farm.
This period should be precisely defined and amount to a maximum of 5 years, and in the event of its ineffective expiry, the lessor should be entitled to immediately terminate the contract or to collect rent in the amount that would be due if the power plant or photovoltaic farm were built (even if the investment is not implemented ) – summarizes Michał Gilewicz, legal advisor from the Kuyavian-Pomeranian Chamber of Agriculture.
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