By Steve Drew, Vice President, Market Strategy

When we turn on the lights every morning, complex layers of policy and technology make this simple process possible. Our ability to power our communities depends on the operations of energy markets across the country – they ensure that the supply of energy meets forecasted demand in the most economic and reliable manner.

Policy sets the rules for North American energy markets, electricity production, transmission, distribution, and energy storage. Markets and policies are continually evolving, especially as energy storage usage rapidly expands and crucial market factors influence renewable energy project development.

Energy Markets and Utility-Scale Renewable Projects

An energy market deals with the trade and generation of energy. Markets can also set the standards that ensure the delivery of reliable energy. Energy markets and those that work within them are responsible for coordinating, producing, and releasing energy every day.

Economics plays an important role in energy markets—the markets are expected and incentivized to keep prices down. In recent years, renewable energy sources—solar, wind,  and more—have become the lowest-cost energy generators, falling below the costs of producing conventional energy such as fossil fuels. This economic benefit has driven more energy markets to adopt and invest in renewables.

The US electric grid is made up of smaller lines (distribution) that lead from a substation to homes and businesses plus large transmission lines that deliver energy over long distances. Utility-scale projects are on the transmission system and make up the largest energy projects on a grid. Renewable projects, even on a utility scale, produce energy only when the sun shines or the wind blows. As more of these projects launch operations nationally, utility-scale energy storage will grow significantly to supplement both solar and wind.

Energy Storage Opportunities Grow: Markets and Reliability

Today’s utility-scale storage is mostly made up of large lithium ion batteries – essentially a bigger version of the batteries you use at home. The value of utility-scale storage falls into two broad categories: market participation (buying low / selling high) and reliability (keep the lights on). Batteries can do both, and the combined value of doing both is called ‘stackable value.’

Market participation: In today’s market, utility-scale storage will charge when energy is at a low cost and when energy demand is low. This energy is then released when it is at the highest demand and/or, when energy prices are also high, benefiting independent companies that own the storage batteries.

Organized energy markets also provide battery owners with incentives to draw energy off of the system at times when grid stability is needed. These markets also establish other services such as paying for a battery owner to hold energy in reserve in case it is needed in an emergency. These services are typically done in more sophisticated markets where they are able to measure processes, create policy to help pay for these services, and provide rewards to offset the use of the battery for other purposes.

Reliability: In addition to market participation, the energy industry recognizes that utility-scale batteries can help defer the need to build additional transmission. When cities or industries grow in a region, transmission planners can predict when a transmission line might become overloaded.

Typically, a new transmission line would be planned to address this reliability concern. However, transmission can be challenging, costly, and time-consuming to route through urban environments. Batteries have a smaller footprint and can be a very cost-effective way to offset transmission. In these scenarios, a utility-scale battery could save ratepayers millions by releasing energy when peak load may exceed the transmission line’s capacity.

Navigating the Patchwork of Energy Markets and Regulations

Energy storage is essential to the renewable energy industry’s advancement strategy—a solution to combat the volatility of renewable energy generation and expand investment opportunities. The rules and regulations of specific energy markets influence the method, region, and speed at which storage solutions are deployed nationally.

Energy markets are highly controlled due to the inherent liability of electricity generation and the importance of having the lights always on. The layers of oversight include Federal, regional, and states. Each layer of governance monitors and legislates energy transmission and production through different goals, rules, and regulations.

Historic policy for using battery storage in market participation is often not compatible with historic policy for reliability benefits, creating a major obstacle to advancement. When it comes to market participation policy, history has mostly focused on independent power producers who operate generation assets in a competitive marketplace.

Reliability assets, on the other hand, are more commonly owned and controlled by utilities. These are the transmission lines and related equipment that deliver energy to customers in a safe and reliable manner every day.

The challenge is that reliability policy is most often firewalled from market participation activity.

Under these circumstances, a battery owner must choose how the battery will be used and how they will be paid for services. They must choose between reliability and market participation. This splits the value of utility-scale storage and prevents a battery owner from realizing the full stackable value of the battery. The cost of the battery is held constant in either case.

This split in value is holding back utility-scale battery storage progress. To combat this, major industry stakeholders are pushing for new utility-scale storage battery policies. For customers, this would mean lower bills. For markets, it would mean more stable systems.

Crucial Market Considerations

Investors and developers must carefully assess each energy market before deciding which marketplace to enter. Within the renewable energy space, a number of factors must align before interested parties move forward in a marketplace:

  • Financials: How are solar and energy storage developers being paid?
  • Rules and transparency: Will renewable technologies work well within the market? What are the interconnection procedures and costs? How is renewable energy measured?
  • Policies: What are the policies, specific to growing and supporting renewable energy projects?
  • Transmission: Does the energy market have a robust transmission grid?

The Redeux Energy team is deeply experienced and knowledgeable on energy market dynamics, and takes a unique, effective analytical approach to market selection that takes all relevant factors into account. This provides more confidence in long-term project success.

Market Shifts and Acceleration Ahead

In the coming years, opportunities for renewable energy and energy storage projects will grow under the 2022 Inflation Reduction Act, standalone energy storage assets are now eligible for the investment tax credit (ITC) and the ITC was increased to 30% under a ten-year fixed term for both standalone storage and solar-plus-storage facilities.  

More regulations are likely to be developed soon to specifically address energy storage assets. These shifts will bring complex challenges and vast opportunities. Working with the right people, with high levels of expertise, maximizes the likelihood of success in energy markets.

What Does All of This Mean to You?

For landowners, the increased usage of utility-scale battery storage means more opportunities to participate in the energy industry. More chances to benefit financially as the industry grows. Ratepayers will benefit from a stronger, more reliable electric grid with lower costs compared to today’s alternatives. Investors and Redeux partners will have yet another opportunity to participate in a growing utility-scale storage market.

Interested in learning more? Contact Redeux Energy today to connect with energy market experts.

Utility-scale solar developers offer a unique perspective on issues impacting the renewable energy industry; conceptualizing potential project opportunities from inception.

Rob Masinter, COO of Redeux Energy, sat down with Suncast Media this fall to discuss key issues affecting the industry, including: the Inflation Reduction Act, energy storage, and supply chain disruptions.

Above: Rob Masinter, COO of Redeux, speaks with Suncast Media

Q&A: Top Industry Trends

Suncast Media: What does the inflation reduction act (IRA) mean for utility-scale solar and storage developers?

Rob Masinter: The IRA will provide a huge boost for the clean energy industry. It will drive up the volume of deployment enormously – for solar alone we’re looking at 30+ gigawatts of annual deployment expectations for the second half of the decade per year. It’s incredible.

Suncast: With the IRA, the tax credits are changing. Investment Tax Credits (ITC) are now available to eligible energy storage projects, and you no longer have to pair energy generation with storage to go after those tax credits. How does this change the game?

Masinter: The playbook just changed, and it will allow developers to be more strategic and flexible with how they’re designing solar and storage projects. They no longer have to pair a solar project with storage just to capture a financial incentive on the storage. Instead, they can leverage the ITC to build a standalone storage project where storage alone makes the most sense, and where it will best support the grid. Where hybrid solar-plus-storage projects are the right answer, they will be deployed.  This will allow us to put more storage on the grid, to integrate renewables, and ultimately improve power quality and reliability.

For solar right now, Production Tax Credits (PTC) are also a game changer. Industry players can now make tactical decisions about whether to utilize PTC for solar in one market, and ITC in another.

Suncast: How are you (Redeux Energy) thinking about the development right now and did the IRA change the way that you approach your market?

Masinter: The IRA is like pouring gasoline on a fire; and it will drive a lot more deployment that much faster. We’ll see more capital coming into the market, and a lot of opportunity for developers and owners.

Redeux is a project developer. Developers have to consider answers to questions including where are your core competencies, where are you really good, what’s your differential advantage? Our differential advantage lies in our ability to prospect attractive energy markets, secure land, systematically develop our project pipeline, and structure win-win partnerships with asset owners.  We are fortunate to have secured very strong capital backing to operate at a multi-GW scale.

In our current economic environment, and with the IRA boost, high-quality pipeline is increasingly valuable. That is our focus.

Suncast: Can you talk more about supply chain issues affecting the industry and how things might change moving forward?

Masinter: I think the whole supply chain is going to shift from being China-centric (which has put a chokehold on project progress in recent years) to other markets, including the U.S. Fortunately, the IRA provides manufacturing tax incentives, so we’ll see a big push to develop manufacturing capacity in the U.S., which will be important to alleviating supply chain disruptions.

Within a decade, there will be a shift, and a substantial percentage of overall global manufacturing will move to the U.S. It’s a long-term shift, and those in the industry should not assume that the shift will lead to price reductions for materials integrated into solar projects, but the materials will be more readily and reliably available; that security is crucial.

A finger on the pulse of the solar industry

With utility-scale solar and storage projects across the country, Redeux is will exceed 2 GW of pipeline capacity by the end of 2022, a 400% increase from year-end 2021.

Redeux’s development pipeline consists of large, hybrid solar and storage projects in eight states within the MISO, ERCOT, SERC and WECC energy markets.

Redeux’s velocity of growth in pipeline capacity and market coverage will continue to accelerate. The company will keep its finger on the pulse of evolving issues within this dynamic industry and share its perspectives.

Are you interested in learning more? Get in touch today.

By Christina Derlath, Director of Finance

Christina Derlath has extensive experience in project finance and tax in the renewable energy industry.

Financing a utility-scale renewable project can be an arduous and intricate process. Utility-scale renewable projects involve many moving pieces and incur their share of financial risks, but they also present sponsors with unique opportunities to generate revenue while creating clean, renewable energy. Project finance moves crucial renewable energy projects forward while protecting a sponsor’s assets. Through project finance, sponsors and investors can capitalize on the vast financial opportunities such projects provide while minimizing risks.

One of the things that makes renewables a sound investment is the fact that solar energy and wind power comes from natural processes that are constantly replenished. The sun will continue to shine, and the wind will continue to blow, providing us with a resource that is virtually inexhaustible. As our country continues to strive towards its clean energy goals, the renewable  industry continues to grow, while renewable infrastructure becomes more affordable.

With the passage of the Inflation Reduction Act (IRA), there will be more opportunities for those looking to develop long-term renewable energy assets. The IRA’s extensive tax credits provide much greater market certainty for sponsors of renewable projects and will influence project finance for the foreseeable future.

Breaking Down Project Finance

Energy projects could not come to fruition without project finance. During the project financing process, lenders assess a project’s risks and future cash flow, loaning money to develop the project. To protect the sponsor’s other assets, sponsors set up an independent company with an independent balance sheet for each project. This way, if something goes wrong, the sponsors other assets are not at risk and lenders have little to no recourse to the sponsor.

In a project finance structure, three players come together to make up the capital stack:

  • The cash investor –The sponsor, the cash investor on the project, builds the project, arranges debt, and raises tax equity.
  • The tax equity investor – This investor monetizes all the tax benefits, including tax depreciation and credits.
  • Debt – The lender loans money to the sponsor to support specific projects typically at the level above the tax equity partnership (i.e., back-leverage).

Depending on their risk appetite, project sponsors may choose to invest in a renewable project at different phases of the project lifecycle. Each key stage of utility-scale renewable projects come with unique risks and returns:

  • Development – Consisting of land acquisition, interconnection, permitting, and offtake, the development phase offers the highest risks and highest rewards for sponsors. Few projects actually survive the development phase. However, sponsors that invest in a project during the development phase realize high returns if the project succeeds.
  • Construction – Consisting of building and installing the project infrastructure, the construction phase offers sponsors an opportunity to charge a construction premium for building the project.
  • Operations – Consisting of running and maintaining the renewable energy project, the operations phase is lower risk. The operational period is 35 to 40 years and is attractive to investors seeking long-term steady cash flows.  

How the Inflation Reduction Act Changes Project Financing

For the solar industry, the passage of the IRA provides a range of new opportunities in the form of tax incentives and federal tax credits. These incentives are crucial to utility-scale renewable projects because they allow for the financing of projects that may otherwise be too costly or speculative for any one investor to carry on their balance sheet.

The aspects of the IRA that will lead to more renewable energy deployment include:

  • Expansions of existing tax credits – Solar projects are now eligible for Production Tax Credits (PTC), which were historically reserved for wind projects. Before the IRA, solar projects were limited to Investment Tax Credits (ITC), which were one-time credits claimed in the year the project was placed-in-service. In contrast, solar PTC is claimed every year over a 10-year credit period.
  • Extensions of existing tax credits – The IRA restores the full rate of PTCs and ITCs for at least the next ten years, until 2032 assuming the prevailing wage and apprenticeship requirement is met.
  • New tax credits – Standalone energy storage projects are now eligible for ITCs, creating new investment opportunities in energy storage.
  • Tax credit adders – This change allows sponsors to get more of their investment back while also helping to create jobs, reduce our reliance on imports, and incentivize the transformation of brownfield spaces.
  • New ways to monetize tax credits – Tax credits can now be sold to unrelated parties starting in 2023, increasing tax credit flexibility. Additionally, for the limited groups of investors that are eligible for the new direct pay proposals, developers can treat tax credits generated by a renewable energy project as equivalent to a payment of tax on the developer’s filed tax return.

This boost in renewable energy deployment will also create jobs and positively contribute to climate change. Over the next decade, the IRA is expected to create 200,000 jobs and offset an additional 747 million metric tons (MMT) of carbon emissions. Studies estimate that the IRA could help the United States achieve roughly two-thirds of President Biden’s 2030 carbon reduction goals.

As IRA benefits begin to impact the market, new players will enter the market. Project financing structures will shift and expand due to increased flexibility, which accommodates the economic preferences of different investor types. As an organization that evaluates project economics from the perspective of sponsors and owners, Redeux pays close attention to these trends.

Throughout market shifts and industry growth, project finance within the renewable energy sector will become even more nuanced and complex. It is important for all project sponsors and tax equity investors to work closely with experts and consultants who have a deep understanding of the process and can get renewable deals done.

With the changes mobilized by the IRA, the solar industry’s market value is projected to continue its impressive growth, driving an additional 222 gigawatts (GW) of solar over the next decade compared to a non-IRA scenario. That makes right now a better time than ever before to learn more about Redeux’s approach to development and project finance.

Are you interested in learning more about utility-scale solar project finance? Get in touch today.

By Rob Masinter, Chief Operating Officer, Redeux Energy

Renewable energy deployment accounts for 95% of the forecasted increase in global power capacity through 2026. Solar will comprise nearly half of that capacity.

The momentum behind renewable energy will only continue to grow. It’s important for business leaders, energy industry stakeholders, and the general public alike to understand the benefits of a sustainable future.   

Below, Rob Masinter, Chief Operating Officer of Redeux Energy, peels back the curtain on trends in renewable energy, tackling top questions and offering veteran industry insight.

Why is renewable energy important?

When renewable energy generation is integrated at scale with the nation’s electric grid, energy costs will decline. The costs of producing renewable energy are well-documented to be lower than the costs to produce conventional energy. Climate change is accelerating, and it is imperative to reduce emissions from burning fossil fuels – which can readily be accomplished in the electric grid via renewable energy deployment. Further, renewable energy is produced from abundant solar and wind resources in the U.S., contributing to national energy security and independence.

That said, increased renewable energy deployment on its own is not a sufficient solution to ensure a clean and reliable electric grid. Due to the intermittency of clean energy generation from wind and solar, the challenges of widely deploying battery energy storage, and constraints to building out adequate high-voltage transmission, a reliable grid into the 2030s still requires base load supply and ancillary stabilization services from thermal energy generation, particularly gas. Nuclear power plants are also a critical component of the long-term mix for clean baseload electricity supply.

How have you seen the renewable energy landscape evolve over the last decade?

With growing awareness and strategic intent to address the causes of climate change, the public and private sectors have accelerated the procurement of renewable energy at both distributed (local) and utility (regional) scale. To keep pace with the growth in demand, project designs have become more standardized, supply chains have matured, manufacturing capacity has grown, and improved construction techniques have enabled massive efficiencies. 

Driven by the scale and volume of renewable energy generation deployment, costs per megawatt of clean energy production have declined dramatically, by over 90% in the last decade. The industry achieved a huge milestone several years ago: the levelized cost of energy produced from renewables has declined below the levelized cost of energy to produce electricity from gas and coal.

Of the available renewable energy sources, why have you (and Redeux) chosen to focus on solar and energy storage development?

If you look at projections for the growth of capacity in the renewable energy market over the next decade, the growth of solar deployment will outpace the growth of wind. Battery energy storage deployments, paired with a solar farm or as standalone systems, will enjoy massive growth as an enabler for 1) renewable energy integration and 2) cost-effective alternatives to gas-fired peaker plants and transmission infrastructure expansion. 

A decade ago, wind power was the predominant source of utility-scale clean energy. Onshore wind farms expanded quickly and turbine sizes grew steadily from the late 2000s through 2016. Since about that time, rates of renewable energy capacity addition swung in favor of solar, due in part to favorable cost economics for solar.

The wind industry also encountered stumbling blocks due to increasing landowner and community concerns about the height and presence of wind turbines – which can be well over 100 meters tall – and related regulatory challenges. That all said, wind is typically a higher-capacity factor resource than solar and it is experiencing a new renaissance in the form of massive offshore project development as well as on-shore repowering.

Redeux sees an enormous market in utility-scale solar and battery energy storage deployment over the next decade (ranging from estimates of 25-50 GW annually). Solar energy development will have the largest share of new capacity additions in the United States over the next two decades. We’ve built an expert team with the core competence to develop best-in-class utility-scale solar and storage projects and are focused on target markets for asset ownership and energy offtake.

What is utility-scale solar?

Utility-scale solar projects connect to transmission voltage power lines typically above 115 kilovolts. In contrast, distributed energy commercial-scale projects connect to distribution voltage lines by which utilities deliver electricity to buildings, factories, and residential neighborhoods.

Utility-scale solar projects have the capacity to generate 20 megawatts of energy at a minimum. Redeux’s average project size is 100 megawatts of energy delivered to the grid, though we develop opportunities that may be larger or smaller than that. This size range enables us to develop projects capable of delivering the lowest levelized cost of energy.

What are the biggest challenges of advancing utility-scale solar project development right now?

These solid-state solar power plants are large, requiring 700 to 900 acres of land equivalent to a footprint of one to one and a half square miles.  Land availability is one of the most significant challenges given the relatively large footprint.

Currently, half a million acres within the United States are being used for solar projects. A recent decarbonization study conducted by Princeton University calculated that wind and solar could provide 98% of electric power by 2050, requiring the equivalent of 17 million acres for solar deployment. More realistically, I foresee a need for 5 to 8 million acres of land for solar deployment through 2050. That’s 10-15x growth from today – and equal to the land mass of Maryland.

Most land that would be considered ideal for solar development (e.g., flat, dry, next to high-voltage transmission substations) has already been leased or acquired for current and planned projects. Community opposition to utility-scale solar development is on the rise. Utility-scale solar energy developers will have to get creative to design best-in-class projects on much-less-than-ideal land. For example, there is opportunity for brownfield redevelopment, which also benefits the local economy. 

Another enormous challenge for utility-scale solar right now is the availability of materials that are critical inputs to the manufactured components of these projects. Due to import tariffs and regulations as well as Covid-related supply chain issues, polysilicon (a key material in solar modules) and lithium (a key ingredient in energy storage batteries) have experienced soaring price increases.

The increasing pace of deployment coupled with a very tight labor market is also increasing the cost of construction, let alone the availability of general contractors to do the work. Redeux is establishing partnerships with Independent Power Producers who have well-established procurement and construction competencies to navigate these challenges.

What do you think it will take to achieve large-scale adoption of renewable energy?

It’s already in progress, it will just take more time and more land, but the demand and momentum are there. Some of the biggest private sector players are facing pressure to integrate ESG (environmental, social, governance) factors into their business plans. This pressure is propelling tech giants such as Google, Amazon and Microsoft, alongside large banks and infrastructure funds to require clean energy for their operations and investments.

Within the utilities industry, driven both by recognition of climate change and by economics (lower operating costs and regulated returns on new capital investment), momentum is increasing to retire underperforming thermal energy plants and invest in renewable energy sources.

Generally, most constituents are bullish on renewable energy project development — they see the financial and climate benefits, and they recognize the economic development opportunity. The largest hurdles now include siting the infrastructure, and – very importantly – expansion of transmission to deliver the energy from relatively remote locations to urban load (demand) centers.

Can you debunk any common misconceptions about solar energy projects?

Yes, I’d like to highlight three:

  • The energy transition does not mean the end of “thermal” energy. For at least the next decade, we need a mix of carbon-based and renewable energy sources to enable a reliable electrical grid. We will need nuclear power for the foreseeable future.
  • Utility-scale solar arrays can be thoughtfully integrated into rural and suburban areas. They make very little noise, are low to the ground (only 8-10 feet tall) and are isolated behind a security fence.
  • Solar farms can co-exist alongside other land uses including farming, ranching, timber growth, oil and gas extraction, and mining – providing an additional source of income to landowners.

What are your predictions on where renewable energy is headed?

When it comes to renewable energy, the momentum, demand, and necessity will only continue to increase with time. We will begin to see more federal policies and regulations supporting renewable energy expansion and accelerated adoption. The recently passed Inflation Reduction Act will be a big part of this. The availability of tax incentives and credits, including for standalone battery energy storage, is crucial to speed the deployment of critical infrastructure build-out.

To deliver clean energy to cities and population centers, FERC (the Federal Energy Regulatory Commission) will need to implement policies that promote the deployment of more transmission infrastructure capacity across the country.

What is Redeux aiming to do differently within the renewable energy space and why is it valuable?

We see ourselves as part of a solution, not the only solution, and we’re evaluating opportunities to work with other businesses and other energy partners. This mentality translates to how we work with landowners, early-stage developers, and asset owners – we look for collaborative solutions that are truly mutually beneficial. We aim to be their trusted partner throughout the project development process.

Redeux is currently operating in a mix of organized and bilateral energy markets. They will continue to expand their geographic coverage beyond an initial eight states and are actively seeking partnerships with landowners, early-stage developers, and operating asset owners.

Are you interested in learning more? Get in touch today.

By Ryan Kelly, Senior Manager, Land Acquisition

The farming and solar energy industries may appear to be at odds with each other regarding land use – both need large land positions in order to succeed. That said, solar developers and farmers have been working together for decades, forming mutually advantageous partnerships. Recent studies have found that co-locating solar energy generation facilities with active agriculture (sometimes referred to as “agrivoltaics”) can provide a wide range of benefits for crop production and pollinator habitat as well as environmentally responsible local economic development.

Many farmers are not aware of the full scope of benefits, and may not even know that leasing their land for solar projects is an option. A partnership with a solar development company could be exactly what today’s farmers need to address mounting financial challenges.

A Shifting Agricultural Landscape

In recent years, farmers across the United States have struggled with water sourcing. Drought conditions have made it difficult to properly maintain crop output without significant cost.

Throughout 2021 and 2022, farmers are feeling the squeeze of inflation. Their operating margins are shrinking as they must pay far more for weed-killing chemicals, crop seeds, fertilizer, equipment repairs and seasonal labor. Cost inputs have become harder to control, and swings in commodity prices have left farmers on uncertain financial footing.

This environment has incentivized farmers to seek additional, more reliable sources of revenue, including partnerships with solar power companies.

Benefits for Farmers and Their Community

The key benefits farmers can gain from a solar partnership include:

  • Reliable revenue stream. Revenue from leasing farmland for utility-scale solar project development can provide a stable source of annual income measured in hundreds of thousands, or even millions of dollars, depending on acreage. The solar project pays for taxes associated with the energy facilities on the leased land.
  • Long-term partnership. Partnerships with solar projects can last over 40 years. Decades of guaranteed revenue will help farmers hedge against commodity cycles and navigate industry consolidation challenges.
  • Outside-the-box land use. A non-traditional farmland use option can be especially appealing to those who newly inherited or acquired the land.
  • Building a legacy. The partnership provides an opportunity to build wealth and create a long-term legacy for generations to come.
  • More water production. Solar arrays not only reduce water use, they can allow groundwater to recharge, leading to increased natural water production over time.
  • Community support. Solar projects increase the tax base within the community, create jobs, and can even benefit schools.
  • Clean, low-cost energy. Solar projects offer an environmentally sustainable use of land resources, reduced energy costs for local homes and businesses, and reduced greenhouse emissions (compared to traditional energy generation).

Farmers and Solar Developers: A Long and Meaningful Partnership

Solar developers have a long history with the farming community. Since the 1980s, solar companies have been working with farmers of all sizes–from large high-volume agricultural producers to mid-size farms to small family-owned operations. Due to technological advancements in the solar industry, the size and scale of solar projects on farmland have greatly increased in the past five years.

Utility-scale solar companies have been leasing land from farmers for clean energy facilities that typically require 500 to 2,000 acres. Farmland underneath or near electric transmission lines is particularly appealing to solar developers because the land often requires little to no dirt work to prepare for installation.

Addressing Common Questions and Concerns

Farmers, understandably, have questions about the potential impact of solar projects on their land. Solar developers work closely with landowners to ensure all concerns are addressed before installation begins.

  • Impact to farm output. If crop production is impacted during the development of a solar project, the solar developer will ensure that the lost yield is compensated. During the operating period of the project, the farmer will receive more revenue through the solar partnership than the foregone crop production.
  • Reduction in prime cropland. Solar developers are thoughtful about the land they install on and are sensitive to crop needs. They are seeking underutilized, marginalized farmland that can be optimized through solar partnerships. Solar developers do not go after fertile land that could be used for high-yield crops
  • Reputation of entities. Some farmers are worried about working with reputable entities and need assurance that if something were to happen, the farmers would get their land back and the land would be restored to its original use. Prominent and experienced companies such as Redeux Energy can be trusted to maintain and restore all leased land at the conclusion of the project.
  • Coexistence with oil & gas activities. Farmers should be able to maximize revenue by leasing their mineral rights to oil & gas companies and their surface rights to solar developers. The two energy producers can easily coexist on shared farmland.
  • Concerns about proximity to homes, viewshed. During the development process, all concerns about the proximity and viewshed of the panels are addressed. Developers collaborate with landowners and community members to ensure agreement and comfort.

Growing Opportunity

The farming and solar industries can help each other grow. If developed strategically, solar panels can boost farm and crop productivity:

  • Agrivoltaics save water and energy while improving animal welfare
  • Planting pollinator-friendly plants under the panels, including native grasses and wildflowers, can improve crop production
  • On hot summer days, solar panels provide shade that lower temperatures and could benefit crops

As solar technology advances, farmers and solar developers will find even more ways to work together and build mutually beneficial partnerships.

Are you interested in learning more? Get in touch today.

By Ryan Kelly, Senior Manager, Land and Local Affairs

Ranchers across the country are experiencing an evolution, a shift in how people consume meat. Profits are becoming slimmer as consolidation in the meatpacking market is forcing ranchers to accept lower prices for their product. According to the New York Times, “The four largest meatpackers have used a wave of mergers to increase their share of the market from 36% to 85%” since the 1980s.” The cost of livestock feed has increased and drought conditions are trimming margins even further. 

The energy industry is undergoing a transition at the same time. Renewable energy generation offers consumers an alternative to the current options available from their electric utility, often reducing energy costs overall. However, solar developers face a challenge in that they do not have enough land to install clean energy infrastructure. 

If they work together, the ranching and solar energy industries can help address their greatest challenges, forming a partnership that benefits ranchers and their communities for generations to come.

Pastureland and Solar, A Perfect Match

Ranchers and meat production companies own approximately 654 million acres of pasture/rangeland in the United States. New solar generation projects will require an additional 17 million acres of land to achieve the nation’s clean energy production goals by 2050. The possibility of partnering with ranchers on a broad scale is attractive to solar developers as rangeland is more easily convertible for solar use than other land uses such as timber.

The wide, open spaces are perfect for solar projects and have high energy generation potential where solar resources are strongest. Less time and money are required by the developers to prepare the land for solar arrays. Additionally, this land is often adjacent to transmission lines and high electricity load centers where energy generation is most valuable. Ranchers could be sitting on a remarkable opportunity and not know it. 

As little as 500 acres can become a home to a utility-scale solar array that offsets emissions and increases energy independence in the area. Perhaps more importantly from a rancher’s perspective, that solar development is now a source of significant reliable revenue. 

A New Income Stream for Ranchers

In an increasingly volatile marketplace, with unreliable income and an unpredictable future, ranchers urgently need to diversify revenue sources. By leasing their land to solar developers, ranchers will gain stable long-term income that helps them hedge against commodity cycles. In addition, the local community will benefit through job creation and boosted tax revenues. 

Though utility-scale solar developers typically seek at least 500 acres to build a successful solar array, not all of those acres need to come from a single landowner. Neighbors interested in reaping the financial benefits can band together to lease a number of contiguous land parcels, in excess of 500 acres where possible.  

Breaking Down the Revenue Potential

To truly make a difference in ranchers’ lives—and to meaningfully alleviate economic pressures—the additional revenue from the solar partnership must be sizable. The good news is that it is. Specific income varies by acreage, but a minimum of $100,000 annual lease revenue is easily attainable. That is the starting point. Depending on the market, the average annual lease income within the first 10 years of the partnership could be $700 per acre for 1,000 acres, making the average annual income between $650,000 and $750,000 per year. As time passes and land values increase, a rancher could potentially earn over $2 million per year from leasing their rangeland. 

Additionally, the solar project will pay for taxes associated with the energy facilities on the leased land. Their goal is to make the process as easy and valuable to landowners as possible. 

Meeting Ranchers’ Needs, Addressing their Concerns 

Solar developers are not just energy experts, they are land experts. Before any project begins, they carefully assess the pastureland and have extensive conversations with the landowner and with community members. Redeux Energy works to understand ranchers’ needs and ensure they are met throughout the partnership. 

A primary concern is the current use—will solar development hinder ranch activities? The answer is no. The solar project and the ranch’s grazing and operations can co-exist without being in competition with one another. Additionally, the solar infrastructure is low to the ground and, as a solid-state power plant, makes nearly no noise.

Naturally, some ranchers also worry about the future life of the land, and what will happen when the lease is up. Solar developers will faithfully reclaim and restore the land to the way it was before they arrived.

Mutual Benefit for Generations

Ranchers and solar developers could be the answer to each other’s largest problems. A mutually beneficial partnership could positively impact the environment and the financial stability of smaller ranches for decades.  

Many ranchers dream of keeping their land in the family for generations and transferring wealth–solar project participation can ensure that becomes reality. 

Interested in learning more? Contact Redeux Energy today and transform how you use your land. 

By Joe Martin, Manager, Land Acquisition

Thousands of people around the country own land, and many are not aware of its untapped potential. On agricultural land alone, experts estimate that by installing renewable energy infrastructure on just 1% of existing underused farmland, solar panels could provide 20% of electricity for the U.S.—and farmland is only a portion of usable landholdings. The solar industry operates on just over 0.5M acres of installed capacity, but needs an additional 17 million acres of land to achieve an all-electric power production scenario by 2050, a scenario that would support sustainability and energy independence from coast-to-coast.

As landowners struggle amidst inflation, supply chain challenges and commodity cycles, a mutually beneficial partnership with a solar power producer could provide the reliable revenue stream landowners need to thrive for generations.

Underutilized land nationwide—agricultural, rangeland, transitional and post-industrial—is being given new life through solar development projects. Landowners working in farming, ranching, timber, mining and oil & gas have all discovered that their land can do more for them and their communities.

By leasing their land to solar power producers, landowners reap economic and environmental benefits while continuing operations alongside the solar facility. Here are the top 6 benefits of leasing your land for solar development:

1. New Revenue Streams

The number one incentive for most landowners who lease to solar project developers is income. Through the lease, landowners can significantly increase annual cash flow, allowing them to make more overall per acre than they would through farming, ranching, etc.

Unlike commodity markets or crop outputs, the lease income is reliable and predictable. Throughout the full life of the project–which can be over 40 years– landowners receive steady payments, supporting their family through multiple generations. This long-term stable source of passive income may be very beneficial for planning during challenging times.

2. A Long-Term Partnership  

When you partner with a solar power producer, you are investing in the future of your land. The solar developers care deeply about your land and take great care in maintaining the acreage. The multi-decade lease will generate income when the facility is in use while also fostering land regeneration. After the lease is up, the land is restored to pre-construction conditions, ready to benefit the next generation.

3. Support Energy Stability and Independence

Energy stability and independence are key concerns across the country, especially as fuel prices continue to rise. Leasing your land for solar project development creates a renewable energy source that can support your community’s energy needs. Solar energy generation projects create enormous value with minimal long-term environmental impact. For those with ESG goals, or those who are working with businesses or investors who do, solar development can help meet those goals through sustainable operations.

4. Boost Local Tax Revenues and Create Jobs

Large scale solar project development starts with the local community in mind. The developers understand local areas and landowner expectations and work closely with local stakeholders to bring the facility to life. Every project has tremendous potential to benefit the greater community through economic and workforce development. The construction and operations team for the project is sourced locally, bringing jobs directly to the region, some of which can be held for decades.

Additionally, solar development boosts local tax revenue, which supports community needs. Solar projects also improve the likelihood that the area will attract other technology and industrial development, allowing the region to continually prosper.

5. Unlock Hidden Potential in Your Land

You could be sitting on land that is very valuable for solar development and not even know it. Large, utility-scale solar projects can be built on as little as 500 acres of relatively flat land. Ideally, that land would be close to existing, high-voltage electrical transmission infrastructure and is  be impacted by flood plains or wetlands.

These projects can be designed to coexist alongside landowner activities, so if you’re leasing a portion of your land to the solar facility, you can continue using the land surrounding the solar arrays for grazing, crop growth, energy extraction, logging, etc. Giving unused–or underused–land a new purpose could notably increase your property value.

6. Hedge Against Commodity Cycles, Farm Input Inflation, and Property Tax Increases

External, sometimes international, forces can lead to unpredictable commodity cycles and farm input inflation, leaving farmers and ranchers with income instability. This can severely impact the livelihood of those in the agricultural industry, with few opportunities for alternative earnings. By leasing your land to a solar power producer, you can generate continuous revenue that acts as a reliable cushion protecting you from sharp market swings and unpredictable annual revenue sources.

As an added benefit, the solar project owner will cover any related increase in property taxes on the land they lease, further improving the financial situation of landowners.

Leasing your land and entering a long-term partnership with an experienced utility-scale solar project developer could transform your land and your community. Are you interested in learning more? Get in touch today.