top of page

Calculating Your Sale Value of Your Solar Lease Payments

Calculating Your Sale Value of Your Solar Lease Payments

Do you want to make the most of your solar lease payments? If so, it's important to understand the sale value of those payments and how they will be calculated. Knowing this information can help property owners and landowners get the best return on their investments while ensuring that their leases are profitable now and in the future. 

Solar leases typically vary from 20 20-year lease period to as long as 50 years. There are many pros and cons to having such a long-term lease. Inflation is something that can negatively affect solar lease payments but is typically avoided by selling your solar lease payments to a prospective buyer.

Understand Your Solar Lease Agreement Terms

It's important to understand the terms of your solar lease agreement, especially since it's a long-term commitment. Before signing on the dotted line, be sure to carefully review the terms and ask any questions you may have. 

One key element of your solar lease agreement is the solar farm lease payment, which you'll be paid for throughout the duration of the lease. This can be discussed as either a monthly lease payment or annual payments. By understanding the value your property holds for a potential solar farm, you will be able to negotiate properly for a lease payment. 

LandGate provides that information to landowners absolutely free with their property report. LandGate takes into account many variables in order to determine an estimation for the property owner’s solar energy value. Typically, it can range from $400 to $2,000 per acre, per year.

Another key element to understanding your solar lease agreement is to understand how long the process will take once the lease agreement has been signed. There are two major phases that the property enters once the solar lease is signed: option and development/production.

  • The option phase can last between 2 to 5 years depending on the size of the solar project. During this period, the developer is working on getting the project approved and ready for construction and the landowner is receiving a small lease payment portion that was discussed in the lease agreement.

  • The property owner is able to use the land however they please during this time since construction isn’t taking place.

  • The development/production phase can last between 20 to 50 years and can be extended depending on if the developer and the landowner would like to extend the lease. During this period, the project is being constructed meaning that the solar panel system is installed on the property. This means that the property owner is not able to use the property with solar installation anymore.

  • After construction, the solar farm will be deemed in production and the landowner will now start receiving the agreed-upon solar lease payment.

Understanding Your Options

When it comes to making financial decisions, understanding your options is crucial. This is especially true for those considering investments that involve cash flows over a number of years, such as installed solar panels. To make an informed decision, it's important to consider all aspects of the investment, including lease terms and the potential benefits of selling solar payments. By taking the time to fully understand your options, you can make a well-informed decision that aligns with your financial goals.

Many property owners see solar farms and a ‘home improvement’ so to speak as a property with a solar farm built on it can be a reason why a potential investor might want to buy the property. If you are a landowner considering selling your property in the future there is no need to worry about the current state of your property. Property owners can 1031 exchange their solar lease with the sale of their property.

Determining How Much You Could Receive from the Sale of Your Lease Payments

If you are considering selling your lease payments, it's important to understand how much money you could potentially receive. A critical factor in determining this is the number of years left on your solar lease agreement. If you have a long-term lease of 20 to 50 years, you may be in a good position to sell your payments. 

Inflation plays a role in determining the value of your payments. A high inflation rate could mean your payments have a lower value than what you initially agreed upon. By evaluating these factors, you can make an informed decision about whether selling your lease payments is the right choice for you.

Learn About Other Benefits of Selling a Solar Lease 

If you're considering selling a solar lease, there are many benefits to keep in mind beyond the initial financial gain. One significant advantage is avoiding the effects of inflation. As time passes, inflation can erode the value of the money you receive, making it less valuable in the long run. Selling your solar lease can also help you avoid the potential loss of income over time. 

Depending on the number of years left on your lease, it may make more sense to take the lump sum payment now instead of receiving smaller payments over a longer period. Plus, if you're working with a reputable solar company, selling your lease can provide peace of mind knowing that you'll receive a fair price for your investment. If you're looking for a smart financial move to help you avoid risk and uncertainty, selling your solar lease is worth considering.

Who are Potential Buyers of Solar Lease Payments

Solar lease payments are becoming more popular, and with that come potential buyers who are interested in investing. Investors may be individuals looking for additional streams of passive income or a specialized company seeking to diversify its portfolio. 

These buyers are attracted to the steady income stream that comes with solar leases, making it an appealing investment option. Solar companies themselves may purchase their own lease payments as an investment in their own future and continued growth. Solar lease payments provide an attractive investment opportunity for those seeking a stable and sustainable income stream.

Selling a solar lease can be a complicated process but striving to understand your agreement terms, the available options, and the potential buyers of your lease payments can make it significantly less daunting. With a little research and understanding, you can make the decision that best works for you. 

Whether that means holding onto your lease payments or selling them on the secondary market, it's important to consider all of your options and potential financial advantages. To get started on understanding the value of your solar lease payment potential sale value, use LandGate’s online calculator to see how much money you could potentially receive by selling them.


bottom of page