How Do Landowners Benefit from Solar vs. Farming?

Increasing Economic Value for Landowners

Farming remains essential to the well-being of Indiana and the nation as a whole, but co-locating farming and solar on the same lands have extraordinary economic benefits.

In March 2022, an economic report comparing the revenues of farms in Indiana that are engaged in a solar lease and those that chose not to participate was conducted. The comparison included the following results:

1. Solar leases created between 2x to 3x the economic value for the landowner than any of the observed non-engaged farms.
2. The additional income earned from solar leases is 2.4x to 2.8x the income of non-participating farms.
3. Solar rent exceeds farm cash rent of more than 2.2x to 3.2x over a 35-year period and is far more stable. The average solar rent is $1,214 per acre whereas the average farm cash rent in west central Indiana is only $562, meaning each acre listed under a solar lease derives 2.2x the profit it would under a farm cash lease. In north central Indiana, the difference between rents is even higher with the average solar rent exceeding farm cash rent by 3.2x.

These key findings are of particular importance when compared to historical and future predicted farm operation profitability. Between 2017 and 2021, the Purdue Crop and Cost Return Guide found that farm revenue and other related economic metrics were unstable. Comparing these Indiana farm profitability metrics to that of solar leased farmland, it was discovered that property owners would have been $233 per acre better off leasing land than farming it on average.

Even with solar leases, farming will remain a crucial part of Indiana’s economy and strength, but solar leases provide an opportunity for landowners to increase income and economic value, gain energy independence, and allow their soil to be rejuvenated for farming later on.