New York is Leading the Nation

2
0

 

New York is Leading the Nation

Lawrence Nelson and Cemal Basaran are friends.

Each owns more than 100 acres in Orleans County and each has been approached by a developer who wants to put thousands of solar panels on their land, cashing in on lucrative state and federal subsidies that encourage the development of renewable energy.

Nelson said yes, seeing it as a way to bring in steady income.

Basaran said no, not wanting the restrictions on using the rest of his land that would come with signing a deal.

Nelson and Basaran are far from alone. Solar developers have been contacting farmers across the state in an aggressive bid to line up unshaded acreage that can be turned into solar farms.

The land rush is similar to the leasing flurry that swept across the Southern Tier in the early 2000s as natural gas drillers scrambled to sign leases with landowners in anticipation that the state would approve regulations that allowed the development of highly productive gas wells using the controversial hydraulic fracturing process. That land rush petered out when the state banned fracking.

The state is aggressively pushing for more electricity to be generated from solar and other renewable sources. The Cuomo administration has set a mandate for the state to get half of its electricity from renewable sources by 2030, with the state offering its own incentives in addition to federal subsidies to encourage the installation of solar panels across the state.

“They are blanketing the state with propositions, trying to be the first,” said Tim Bigham, a field representative for the New York State Farm Bureau. “It started in the eastern half of the state and it’s progressed across. They’re still rolling it out in this part of the state.”

Aggressive pitch

The solar land rush now underway is less controversial and less free-wheeling than the natural gas leasing frenzy, but it still offers landowners a steady stream of income if their land is turned into a solar farm. A typical contract offers landowners annual lease payments in the range of $1,500 per acre over a 20-year period – terms that could generate hundreds of thousands of dollars in income for farmers whose land is turned into a solar farm.

That’s what convinced Nelson, 80, to sign a contract. Turning a portion of the more than 110 acres that he owns off Route 31A in Albion into a solar farm could provide himself and his family with a steady source of revenue.

One of the most aggressive companies seeking out farmers is Cypress Creek Renewables, a California-based energy developer that was founded two years ago and now has operations in 16 states, including New York.

The company typically looks for sites with about 20 acres of relatively flat land that is located within a mile of a electric substation or power transmission line, said Jeff McKay, a Cypress Creek spokesman. A typical installation would be able to generate about 3 megawatts of electricity, although output from solar arrays usually is far lower than their stated capacity because they can only produce power when the sun is shining.

Once the company identifies potential sites, it typically contacts the landowners by mail.

“They’re very aggressive. They have a very colorful, sexy brochure,” Basaran said. “They left one in my door. They sent me one in the mail. They called and left me a message.”

‘Send me a contract’

Dr. Kevin O’Gorman, an Eden physician and farmer, signed a lease this summer after Cypress Creek contacted him about leasing 20 acres of land off Route 62. The land, once used as a Christmas tree farm, is separate from O’Gorman’s main property and is largely secluded from view.

“The land is not that good. It’s really dry,” O’Gorman said. “I said, ‘Send me a contract.’ ”

Once he got it, O’Gorman had his lawyer review it. O’Gorman also asked his neighbor if he would have any objections to solar panels going up on the property. The neighbor didn’t.

So O’Gorman signed.

But that doesn’t guarantee that solar panels will go up on the property, McKay said.

The contract, which is typical of the offers landowners receive from Cypress Creek, gives the renewable energy developer six months to study the land more closely. If Cypress Creek decides to walk away, O’Gorman gets just $250.

The real payoff for O’Gorman, however, only would come if Cypress Creek decides to install solar panels on his property. At $1,500 an acre, with an escalator clause that boosts the payments by 2 percent annually – and assuming Cypress Creek decides to lease all 20 acres – the contract could generate as much as $670,000 for O’Gorman over 20 years. If Cypress Creek decides to lease a smaller portion of the 20-acre site, the payments would be less.

O’Gorman, 72, said the payments could give him and his sons the financial flexibility to make further investments in their farm.

Nelson also saw Cypress Creek’s offer as a way to potentially generate steady revenue from his property. “I wasn’t doing anything with the land, anyway,” he said.

Concerns about contract

Basaran, a University at Buffalo professor, also was intrigued by Cypress Creek’s offer. But after reviewing the contract more closely, he began to have doubts.

For starters, Cypress Creek might opt to lease just a portion of his 116 acres, but signing a deal would prevent him from putting solar panels anywhere else on his property that is within a one-mile radius of Cypress Creek’s panels. He was bothered by restrictions on burning wood and other activities that could reduce the amount of sunlight that hits the panels. And he was concerned about provisions that could allow Cypress Creek to extend the 20-year lease for another 20 years.

“There’s big upside,” said Dennis Vacco, a former state attorney general who now is working with the Farm Bureau to help landowners understand the potential risks and rewards of signing deals to allow solar panels to be put on their land. “But it’s not $1,500 an acre until they proceed with the project.”

Vacco, whose father received an offer from Cypress Creek to put solar panels on part of his Brant farm, said landowners should proceed cautiously before signing a lease, including determining whether a solar farm would change the zoning of the land from an agricultural designation, potentially triggering a tax penalty for putting farmland into commercial use. Also, once the lease expires, how much work and money would be required to restore the property to a usable state after the panels are taken out?

With so many landowners being contacted, individual property owners often have little leverage to improve the lease terms beyond specific issues tied to that parcel of property, Vacco said.

“They’re out there blanketing as many property owners as possible,” Vacco said. “When my father called, they said, if you’re not interested, we’re going to move on to the next property owner.”

Leave us a comment