What Should Landowners Know About Solar Farm Development in Nebraska?
As of April 2024, Nebraska is positioning itself as a notable player in the solar farm sector, reflecting a national trend toward renewable energy adoption. With over 200 days of active sunlight, Nebraska has seen significant strides in its solar capacity, notably with the completion of several large-scale projects that contribute to its growing portfolio. Nebraska’s solar energy capacity stands at 30MW in recent years, with further expansion expected as additional projects are underway.
The state benefits from policies such as net metering, which allows residential and commercial solar system owners to receive credit for the excess electricity they generate, and reduced loan rates for solar projects due to incentives such as PACE Financing and the Nebraska Dollar and Energy Savings loans.
Moreover, the involvement of major public utilities, including the Nebraska Public Power District, which has committed to increasing its renewable energy sources, underscores a broader shift toward sustainable energy solutions. With a supportive regulatory environment and initiatives like community solar projects that allow multiple individuals to benefit from a larger solar array, Nebraska is embracing an energy future that promotes sustainability and economic growth.
The number of solar farms in Nebraska will increase exponentially over the next decade. This is a direct result of the implementation of various incentives promoting renewable energy generation across the state. Many solar developers are actively planning new projects across the state. This presents a great opportunity for landowners to earn a steady stream of income from their land through solar lease payments, also known as solar payments.
Landowners in Nebraska are receiving offers from developers to lease their land for solar farms. They often wonder how much their land is worth for a solar farm and if they are receiving a good offer. Leasing land for solar farms helps landowners provide their future generations with long-term financial stability. Several factors go into solar farm valuations that landowners and realtors should consider.
LandGate is a marketplace that provides data intelligence to landowners while also providing them the opportunity to connect with Nebraska solar developers. Traditionally, developers would knock on landowners' doors or cold-call them. This old-fashioned way is not easy for landowners. It can be perceived as unwanted solicitation at a time when the landowner is not ready and doesn’t have enough information to feel comfortable talking about a solar farm on their land.
LandGate provides useful data to landowners or to their agents to inform them for free about the value of their land for solar farm leasing. Equipped with more information, landowners can make good and fast decisions about pursuing a solar lease.
What is the Process for Leasing Land for a Solar Farm in Nebraska?
Step 1: Solar Lease Negotiation Period in Nebraska
The solar lease negotiation process is the first step landowners take when interested in having a solar farm on their property. Land professionals can assist landowners during this period to make sure they are receiving the best deal possible but also understand the period between signing the lease and having an active solar farm on their land.
During the negotiations, landowners can negotiate solar lease payments, the length of the lease for the solar farm, and the percentage of the escalator is to combat inflation.
Step 2: Solar Lease Option Agreement in Nebraska
The next step is for the landowner to get a solar farm option agreement. At that point, the solar developer has done a preliminary study, also called a feasibility study, to know if the site is potentially suitable for solar farm development.
Why Can’t I Get a Solar Lease Agreement Directly?
The process of a solar farm project in Nebraska begins with optioning the land, which is called “site control” by developers. The reason solar developers cannot go straight to a solar lease is that they have to evaluate the land thoroughly.
Typically the initial screening study is good enough that this first due diligence process is all that is needed. Another larger uncertainty for solar developers is to know if the solar project will be accepted by the utility on the electrical infrastructure (or electrical network). We refer to this phase as “utility’s application” in the graph above and developers refer to this phase as “queue submission”. This means that the solar project enters the interconnection queue of that region waiting for regulatory approval.
These queues are known as Independent Systems Operator (ISO) or Regional Transmission Organization (RTO).
During this period, the analysis of possible engineering and land factors is conducted to determine the feasibility of the project to be constructed and connected to the grid. This is the reason why the solar developer starts with an option, as not all solar projects are approved by the ISO/RTO.
How Likely Will My Nebraska Solar Option Become a Solar Lease?
At the moment, about 20% of solar options become a solar lease and are built into a solar farm. Currently, the electrical infrastructure network is a big bottleneck. There are more applications of solar projects to get on transmission lines than available capacity.
However, governments are aware of this situation and are working to ease it, in order to foster more solar development. This means that it will likely get resolved in the next few years. The problem of available capacity applies only to utility-scale solar farm projects, which are typically greater than 5 MW capacity.
Where Can a Landowner Get More Information About the Solar Lease / Option Period in Nebraska?
LandGate assists landowners with determining the value of their land for a solar farm. We do this by taking into account the proximity of substations, transmission lines, and state incentives - each of which plays a role in site control.
Am I Getting Paid During the Solar Option Period?
Yes. Solar payments start during the option period but are usually smaller compared to the solar payments during the lease or construction phase of the solar farm.
Step 3: Solar Lease Agreement in Nebraska
Once the availability of grid capacity is confirmed, the solar project is moved to a “planned” phase. During this time, the developers will exercise the solar farm option agreement to become a solar farm lease agreement. Typically larger solar rent payments start at this time.
Step 4: Solar Farm Construction in Nebraska
Solar payments are phased as the project progresses. It starts with small solar lease payments during the option phase. Then it increases during the solar lease phase, it increases again during the construction phase of the solar farm, and the largest solar payment occurs when the solar farm is active and generating electricity.
How Long Does It Take to Build a Solar Farm in Nebraska?
Usually, it will take between 1 to 2 years to build a utility-scale solar farm. It takes less time to build a community solar farm since they are usually smaller in size.
Step 5: Active Solar Farm in Nebraska
After the construction has been completed, the solar farm is now considered ‘active.’ For landowners, this phase is called ‘production,’ as it signifies that their land is currently producing energy for the electrical grid that it is interconnected with. The production phase lasts anywhere from 25 to 50 years depending on what was negotiated on the lease.
What Can a Solar Farm Power In Nebraska?
In Nebraska, the largest solar farm is an 8.5 MW facility capable of powering significant numbers of homes. This output has the potential to cater to the energy needs of around 6,000 households as the typical electricity consumption of an average household in Nebraska stands at 12,408 kilowatt-hours per year.
What is the Impact of the IRA and Other Factors in Nebraska?
Nebraska solar incentives have encouraged solar companies to develop more projects across the state. Additionally, favorable market conditions for electricity prices are encouraging investment into the solar sector in Nebraska. Landowners and real estate agents should have an understanding of these incentives and market conditions to be prepared for potential offers for solar project deals.
Inflation Reduction Act: This bill passed in 2022 and became effective at the beginning of 2023 provides incentives to reduce renewable energy costs for organizations on a business, educational institution, and state level. More specifically, in Nebraska, solar energy is eligible for a tax credit.
Federal Solar Investment Tax Credit (ITC): Under the IRA, homeowners in Nebraska can claim a 30% tax credit on the installation costs of solar photovoltaic (PV) systems. This substantial credit, available for systems installed between 2022 and 2032, reduces to 26% in 2033 and 22% in 2034, before phasing out in 2035. The average solar system installation in Nebraska costs around $37,275, meaning the 30% credit could amount to approximately $11,183 .
Nebraska Dollar and Energy Saving Loans: This state-level incentive provides low-interest loans for purchasing solar systems, with interest rates as low as 3.5%, making solar technology more accessible and affordable for residents.
PACE Financing: Available at the local level, this program offers affordable solar loans that are repaid through property tax bills, enhancing accessibility and easing financial burdens associated with upfront costs.
Net Metering: In Nebraska, this program allows homeowners to earn credits for surplus energy generated by their solar systems. These credits can offset future utility bills, providing ongoing financial returns on the investment in solar technology.
Lincoln Electric System Capacity Payment: This local incentive offers a one-time payment for net-metered solar systems below 25 kW, paying $375 per kW for south-facing systems and $475 per kW for west-facing or tracking systems.
The increase in LMP pricing has made solar energy an attractive option for electricity generation in Nebraska. LMP is a pricing method used in electricity markets to determine the cost of electricity at specific locations (called ‘nodes’) within the electrical grid.
A PPA (Power Purchase Agreement) is a contract between a renewable energy developer (such as a solar company) and a power purchaser (such as a utility). Over the last three years, Nebraska’s PPA pricing has increased by 36% and the LMP price increased by 75.1%.
In the context of solar energy projects in Nebraska, the relationship between LMP and PPA pricing lies in how the PPA sets the pricing terms for the electricity being sold. The increasing price in the PPA provides certainty to the solar developers about the revenue they will receive for the electricity that they produce. This pricing is especially valuable given the significant 75.1% rise in LMP prices over the past three years, reflecting higher market prices for electricity at specific grid locations due to increased demand.
Although the rising LMP prices promote investment in solar infrastructure by potentially increasing revenues for solar energy producers, they also elevate electricity costs for consumers and businesses. This dynamic has slightly tempered the growth of renewable energy initiatives in Nebraska. However, the expansion of various solar incentive programs and supportive state policies ensure that the development of solar projects remains robust, maintaining a positive trajectory for the state's renewable energy landscape.
Commercial, Community, & Behind-the-Meter Nebraska Solar Farms
Typically, landowners and land professionals think of solar farms as huge plots of land covered in solar panels out in the middle of nowhere. However, this usually is not the case! In Nebraska, active solar farms are typically 71.53 acres, allowing about 2.95 MW of electricity to be produced under ideal conditions.
Commercial solar projects are the commonly largest energy projects being about 40+ acres of land. These solar farms usually feed their energy into the grid to the surrounding area. Realistically these solar farms can be any size as it depends on the capacity available within the grid.
Community solar farms in Nebraska serve energy customers directly within the same area or community. These solar farms tend to be smaller in size about acreage and megawatts. Community solar is different from residential solar as residential solar panels are found on top of rooftops. Community solar projects can be larger, it just depends on the location.
Commercial, residential, and industrial solar farms are all considered to be behind-the-meter solar farms. Behind-the-meter means that they are intended to generate power primarily for on-site consumption rather than selling it to the grid. Community solar and utility-scale solar farms generate energy that is utilized in the grid to send it to all consumers a part of that grid. This means that they are front-of-the-meter solar farms.
Discover Land’s Value For Solar Leasing in Nebraska
The solar energy industries within Nebraska are growing to achieve energy goals for clean energy development. This makes it easier for landowners and real estate agents to participate in solar development deals. Landowners in Nebraska can receive a free solar leasing estimate by identifying and claiming ownership of their parcel on our map.
Realtors can assist their clients in learning about their property’s potential for solar energy by using LandGate’s tool, LandApp. Land professionals can utilize LandGate’s data and analytics to inform their clients about their resource’s potential.
