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A Fundamental Land-Use Change in the Midwest

Writer's picture: David GeigerDavid Geiger

By: David Geiger

Edited by: Dave Price



Whether it's wind, solar, or biofuel, farmers have been harvesting power on their land for decades. As technology improves efficiency, landowners see more potential in it.


"I've moved to be much more bullish on solar here over the past year than I have been previously," says Dave Muth with People's Company Capital Markets. 


He points to wind energy. It has good gains and profitability for landowners in today's climate. Winds brings nearly a billion dollars in additional revenue for landowners in states using turbines. However, compared to wind, Muth says. "The solar story is different, because it's a fundamental land-use change."


RELATED: President-elect Donald Trump has been a frequently critic of wind energy and has spread unproven claims that wind turbines cause cancer. The Associated Press reported that Trump has tasked U.S. Representative Jeff Van Drew, a Republican from New Jersey, to write a draft for an executive order that could temporarily halt offshore wind project.


As the next generation of solar panels reaches 30% efficiency, well above the standard 15-20%, moving profitable and productive Midwest farmland to solar farms may be a good financial decision for some.


"Something to think about as we look at large and high-quality farm ground is taking less productive corners and put them to community solar." says Kayla Rowan, Director of Energy Management at Peoples Company.


RELATED: Some communities are pushing back against the use of solar panels.

Yakima County, Washington, placed a moratorium on new solar projects two years ago. County commissioners are deciding on whether to continue that moratorium. Read that story from the Yakima Herald-Republic.  


Board of Supervisors in Cerro Gordo County, Iowa, approved a ban on large scale wind, solar, and battery storage projects in rural parts of the county. Individual residents may still be able to begin energy projects in their homes. KCHA Radio in Charles City, Iowa, has this story. 


With utility-scale solar and community-scale solar power options available, Rowan says there are more states aggressively pushing toward solar production and more landowners showing interest. 

She recommends having an experienced professional look at what often are complex contracts. But there are several points a landowner can initially watch out for, especially considering they will lose access to that ground:


  • Get a good developer, and check for its liability and insurance.

  • Make sure to get compensation for lost access to acreage.

  • Think decades ahead about risks like tile needs or law changes.

  • Watch for tax implications.

  • Make sure there is a solid decommission plan. Solar leases are often funded through bonds so make sure it gets paid and has enough available for the end of the lease.


There are challenges in the Midwest, however, looking at the substantial difference between cash rent and these leases, according to Brad Haight with Farm First Energy.


He has worked on more than a thousand solar leases for landowners and developers. He says from a financial standpoint, "When it comes to the CSG's, the duration, all bets are off because the margins on those projects…the returns are higher value."


For individual landowners, some returns seem like annuities, a good option. But for institutional landowners Haight says, "This stinks. It doesn't pencil, and it doesn't pencil because the net present value of the solar revenue stream is right about equal to the value of the land." 


RELATED: Solar energy faces some uncertainty on whether Republicans who now hold the majorities in Congress will work to eliminate or less solar tax credits. President-elect Donald Trump has also threatened tariffs on imports from China, which could make solar panels more expensive in the United States. Read that story from National Public Radio here.  


Individual landowners may want to think carefully about the revenue stream compared to the value of the land. Haight says to watch the rates, "Trying to make sure the value of the solar lease is always at all times three times the value of that land. That's attractive. That's going to be attractive to the institutional values."


At some point that might mean pricing yourself out of the market, so Haight says it is not always going to work out. But this gives the potential for a landowner to make 5% after tax.


Muth adds that there is still much to speculate, and land value could appreciate at much different rates over the term of a 40-year lease. Using Illinois as an example, he says their math shows a landowner needs to get to a $2,000 per acre lease for a 75% market appreciation to rate them at the same present cash flow risk.


Note: Dave Muth, Kayla Rowan, and Brad Haight made their comments during a session at the 2025 Land Investment Expo in Des Moines, Iowa, on January 14th.

American Farmland Owner Hayfields mountains

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