Land & Renewables Connection
Solar Leases Are Long-Term Commitments for Landowners
As companies propose solar leases in areas of western and northern Pennsylvania that have experienced decades of oil and gas development, property owners may hear the familiar statement that a solar lease is just for a few years. Many property owners found out the hard way that oil and gas leases are long-term commitments. Solar leases are also long-term commitments. While solar leases may be presented with short option periods, the “fine print” of these documents often allows them to remain for much longer, potentially for decades.
There is no uniform structure amongst all solar leases, but in general, they have a few durational periods. The first period or term may be for up to several years. During that period, the solar energy developer will perform due diligence on the property and evaluate the location in greater detail for its potential as a solar energy generation facility. Depending on the structure of the proposed solar lease, this may be identified as its own stand-alone diligence period, or it may be part of a longer operational period, but where no rent, or reduced rent, is proposed to be paid. The initial diligence or development period often allows the solar developer the option to extend that period for additional years.
If the solar company is interested in moving forward with solar energy development on the land, it will begin to construct the infrastructure necessary for that purpose. That can include roads, the solar panels, power lines and associated structures. That may be presented in solar lease documents as its own construction period, or be considered part of the operational period of the solar lease. The operational period of the solar lease, when solar energy generation is ongoing on the property, can last for several decades. A common term is a 20 year period, with options to renew for additional terms, which may equal another 20 year period.
There is no one-size-fits-all solar lease. Some proposals are structured as a lease, containing different periods. Other proposals are structured as an option period, followed by a lease term. Regardless of the structure, it is important for landowners to treat proposed solar leases as long-term commitments that could remain operational for decades. And, solar lease documents are generally not structured to allow for wholesale renegotiation or to vest the landowner with the option to terminate the lease relationship. Instead, solar leases are structured to vest the solar developer the sole option to determine if it wants to continue the lease in effect.
Because solar energy leases can potentially last for decades, property owners considering proposals for solar energy development on their land should carefully evaluate their long-term plans for use and development of the property. Solar development on property can generate revenue for landowners, but it should be considered against other potential revenue-generating activities from the land. Besides solar energy companies’ websites, there are a host of other resources for Pennsylvania property owners to gain more information about solar energy development and leasing, including from the Department of Environmental Protection and the Pennsylvania Public Utility Commission. There are also resources with a particular focus on agriculture.
While solar energy development can provide financial benefits, property owners should critically evaluate these long-term agreements. Solar leases are complex documents that are initially drafted by sophisticated companies. Beyond their duration, solar leases have a wide array of other important provisions, including payment, identification of the area to be developed, and reclamation of the land. Additionally, with solar energy leases being proposed in areas of oil and gas development, property owners should consider the interplay between leasing property for oil and gas development and solar energy development, including the potential for conflict and liability.
Houston Harbaugh’s Renewable Energy, Zoning and Land Use attorneys counsel and assist landowners who have been presented with offers to lease their property for solar energy development. If you have been presented with a solar lease for your property, contact Attorney Brendan A. O’Donnell at 412-288-2226 or odonnellba@hh-law.com.
About Us
These are cutting edge legal issues. The law of the future. Renewable energy, zoning and land use issues will shape the future of growth in the region. Houston Harbaugh’s Renewable Energy, Zoning and Land Use practice focuses on assisting clients maximize and protect the value of their properties, whether related to renewable energy, commercial or residential development opportunities.
As renewable energy becomes more reliable, efficient, inexpensive and technologies associated with carbon capture and storage advance, Pennsylvania, West Virginia and Ohio are in position to benefit from these two parallel energy development opportunities. The region’s geographic location and existing infrastructure presents unique opportunities for property owners to participate in solar, wind, geothermal, other renewable energy developments, as well as for carbon capture, carbon sequestration and carbon storage projects. Additionally, legacy oil, gas and coal infrastructure may be repurposed and reused in connection with new energy developments.
With any development, whether renewable energy, commercial or residential, there are a host of zoning and land use issues that directly impact the most basic parts of daily life of both individuals and communities. Determining where and how land can be developed impacts property ownership, property value, quality of life and the economic development and wellbeing of communities. Zoning and land use issues are, on one hand, matters of local concern but, on the other hand, potentially subject to county or state regulations.
The Renewable Energy, Zoning and Land Use practice draws on Houston Harbaugh attorneys’ experience in energy, oil and gas and real property matters to advance clients’ interests in both transactional and litigation matters. Houston Harbaugh’s Renewable Energy, Zoning and Land Use attorneys assist clients with matters including:
- Solar energy leases;
- Wind energy leases;
- Pore space ownership for carbon capture / carbon sequestration / carbon storage, geothermal and waste disposal;
- Ownership of legacy oil, gas and coal infrastructure for repurposing/renewable energy usage;
- Compliance with existing solar, wind and renewable energy leases;
- Surface and subsurface accommodation between competing land uses;
- Variance, Special Exception and Conditional Uses applications/hearings;
- Land use appeals;
- Eminent domain
Brendan A. O'Donnell
An attorney in Houston Harbaugh’s Oil and Gas Practice, Brendan O’Donnell has represented oil and gas owners across Pennsylvania in a wide array of oil and gas matters for over a decade. This experience has involved not only the Marcellus shale and the Utica shale, but more traditional oil and gas development as well.
Brendan maintains a diverse practice, representing clients in all matters involving oil and gas spanning the transactional and litigation realms. On the transactional front, Brendan routinely assists landowners with negotiating oil and gas leases, pipeline rights of way and surface use agreements and subsurface easements related to horizontal drilling as part of Marcellus and Utica shale development. Brendan also frequently reviews royalty statements and oil and gas ownership issues as well as preparing deeds and title curative documents. Brendan also maintains an active litigation practice, representing clients in state and federal courts, as well as private arbitration matters. This litigation often involves title disputes, pooling and unitization challenges, lease termination questions and royalty/ post-production cost claims.
Assisting clients across the spectrum from contract negotiations through litigation and appeals gives Brendan valuable first-hand knowledge about how oil and gas agreements are prepared, how disputes arise and how courts resolve these issues. Brendan stays up-to-date on developments in oil and gas law and writes frequently on the these topics. Additionally, as alternative energy generation like wind and solar are increasingly being developed in oil and gas producing regions, Brendan assists clients with navigating the interplay between these complex energy developments and evaluating solar agreements.
Brendan complements his oil and gas practice by representing property owners, including oil and gas owners, in zoning and land use matters. Brendan has represented clients before municipal bodies and in appeals to court. Brendan is also active in the firm’s Energy and Environmental Law Practice.
Regardless of the type of representation, Brendan prides himself in providing clients with realistic, pragmatic advice. Hiring an attorney is an investment and Brendan focuses on how he can provide value to clients.
Outside of the office, Brendan serves on the Town of McCandless Planning Commission and lives with his family in McCandless. Brendan has visited every one of Allegheny County’s 130 municipalities.
