What Landowners Should Know Before Signing Renewable Energy Agreements

by Attorney & Counselor, Nathan Yates

The renewable energy boom that continues to sweep across Texas and the nation presents both exciting opportunities and significant challenges for landowners. As the demand for energy continues, wind, solar, and battery storage projects, and now data centers, are increasingly seeking vast tracts of land. While these developments can offer substantial financial benefits, navigating the complex landscape of these long-term land use contracts requires a deep understanding of the implications for a landowner’s most valuable asset: their property. 

Why Renewable Energy Agreements are Appealing

For many landowners, the prospect of long-term lease payments or above market offers to purchase for their property to host these energy projects is highly attractive, often promising income streams far exceeding traditional agricultural rents. For instance, recent surveys have shown that while the nationwide average cash rental rate for non-irrigated cropland is around $146 per acre, some solar leases are offering annual rates of over $1,000 per acre*. This stark difference underscores the financial allure. However, these seemingly lucrative offers are wrapped in intricate legal agreements that can span 30, 40, or over 50 years, fundamentally altering the landowner’s rights and responsibilities. 

The Long-term Impacts You Must Consider

The long-term nature of these agreements means that decisions made today will impact generations. Key considerations for landowners include the scope of the land granted to the developer, potential restrictions on current and future land use (such as farming, hunting, or future development), the developer’s access rights, and critical decommissioning clauses that dictate who is responsible for removing equipment and restoring the land at the end of the project’s life. Concerns over “nonmonetary impacts,” including the conversion of agricultural land to industrial use, have been significant, arising in an estimated 82% of delayed or halted utility-scale renewable energy projects between 2008 and 2021*. This highlights the profound land use implications that extend beyond just financial terms. 

Negotiating Renewable Energy Contracts from a Position of Strength

Moreover, while initial offers might seem generous, landowners must be wary of future renegotiations. Experience shows that in scenarios like wind farm extensions, a staggering 85% of landowners are reportedly offered less favorable terms* when renegotiating existing leases, indicating a power imbalance that can erode long-term profitability. Developers are sophisticated entities with specialized legal teams, well-versed in drafting contracts that favor their interests. Landowners, often dealing with such agreements for the first time, are at a distinct disadvantage without professional guidance. 

This underscores the critical importance of securing expert legal representation. An attorney experienced in renewable energy and real estate law can provide the essential guidance needed to scrutinize every clause, negotiate fair and equitable terms, and safeguard a landowner’s interests. This includes ensuring proper compensation structures (whether fixed, royalty-based, or a hybrid), defining clear land use parameters, establishing robust environmental protections, and guaranteeing adequate financial assurance for decommissioning. Without such representation, landowners risk unknowingly conceding valuable rights, accepting inadequate compensation, or inheriting liabilities that could prove costly for decades. Ultimately, independent legal counsel empowers landowners to make informed decisions, ensuring their valuable property assets are maximized and that they truly benefit from Texas’s renewable energy future. 

Ready to Talk?

If you’ve been approached about a renewable energy lease—or are simply curious about your options, contact us today for a consultation. We’ll help you assess the offer, identify risks, and explore alternatives that work for you.

Contact Braun & Gresham today to schedule a consultation with an experienced Texas renewable energy lease attorney and take the next step with confidence.

Sources: 

*Solar lease rates ($1,000 to $1,500 per acre compared to $146 per acre average cash rental rate) – Peoples Company, AgWeb, ProAg, US Dept of Agriculture  

*82% of delayed or halted utility-scale renewable energy projects (2008-2021) due to “nonmonetary impacts”: cited by the American Farm Bureau Federation (AFBF). 

• Solar Energy Expansion and its Impacts on Rural Communities | Market Intel by the American Farm Bureau Federation attributes this figure to “an analysis from the Massachusetts Institute of Technology.” The MIT research, Sources of opposition to renewable energy projects in the United States – DSpace@MIT, identifies community opposition and non-monetary impacts as significant factors in project delays and cancellations. 

*85% of landowners are reportedly offered less favorable terms when renegotiating wind farm extensions from Lumify Energy. “Wind Farm Extensions: The Ultimate Guide.”