Economics FAQ

Before a solar or wind project can be constructed, the developer must secure the land.  Large-scale solar and wind projects often lease land from rural landowners and farmers.  Before signing a lease, landowners may be able to negotiate for provisions that provide them protection or address concerns.  After the lease is signed it is unlikely that the project solar developer or operator will be willing or able to agree to new conditions.

Land leasing for energy projects can provide guaranteed income, but there are important items to consider when negotiating with a project developer.  Questions include who is the developer and what is their track record, agreement length, what are payments during the permitting, construction, and operational phases, and many others.  Make sure all agreements are documented in the lease, as verbal assurances are not enforceable.  The lease should state that all responsibilities and rights will transfer to a new site operator and landowner.  

UW-Madison Extension offers a guide for landowners considering leasing their land for solar projects, Learn about Solar Land Leasing Contracts, along with a companion worksheet to help document important information when meeting with developers.  These documents are not substitutes for hiring legal counsel. 

Solar lease rental payments are typically much higher than income from agricultural use, so landowners who sign a lease usually benefit financially.  Solar leases typically last 25-35 years, and sometimes include escalating lease payments for inflation.  Most leases include a non-disclosure clause, so exact rates are not public.  However, based on conversations Extension specialists have had with landowners, annual rents in Wisconsin range from about $500 to over $1,500 per acre, depending on factors such as proximity to substations and transmission lines.  In contrast, the average rental rate for agricultural use in Wisconsin was $158/acre in 2024 and $183/acre in 2025.  Typically developers offer lower rental rates for the period when the project is in the planning and permitting stage, and the higher payments do not start until construction begins or until the project is operational.  Rental rates for farmland next to solar projects may also rise as a result of the reduced supply of land available. 

The potential economic impacts of leasing land for energy development go beyond the annual payments, and include possible challenges to farm operations during the construction phase, impacts to transition planning for the farm, and constraints to future property improvements.  Landowners should carefully consider all provisions of these long-term contracts and work with an attorney before signing to ensure their interests are protected.

A 2025 scholarly study found that agricultural land values close to solar fields increased by an average of 19.4% compared to land values further away.  The same study found that residential properties located next to large-scale solar projects may have a temporary decline in property value.  On average residential property values within a half mile of large-scale solar developments in the U.S. declined by 7.2% for up to eight years after construction of the solar facility.  These declines were greatest in the northeastern US and highly variable in the Midwest, with some properties near solar sites increasing in value while others decreased.  

Non-participating property owners who are immediately adjacent to a solar field may be able to negotiate Good Neighbor Agreements that provide a landowner payment, or that obligate the solar site manager to provide visual screening, noise abatement, or other adjustments to mitigate negative effects on the adjacent property.

How does solar development affect farmers financially?

Farmers may experience both financial benefits and costs when farmland is developed for solar energy.

• For landowners who farm: Rent from solar developers typically far exceeds income from farming and provides stable, predictable payments year after year. This consistent revenue can help farms weather market downturns or management transitions. At the same time, the solar project may require adjustments to the overall farming operation that add some cost, especially during project construction.  In the rare cases that the project does not generate utility aid, the property may be reclassified as commercial for tax purposes.  Landowners should work with operators to confirm the utility aid status of any projects they’re considering hosting.  

• For adjacent landowners: Property values may rise, though agricultural property taxes remain based on use value, not market value.

• For tenant farmers: Those renting land to grow crops or spread manure may lose access and face higher rental or purchase costs for nearby farmland.

• Dual use opportunities: Some farmers can graze sheep or pursue other agricultural activities within solar projects, offering affordable land access.

For large-scale energy projects in Wisconsin, local governments receive utility aid instead of property taxes.  The Wisconsin Department of Revenue distributes payment to each county and municipality that hosts tax-exempt utility property, based on the amount of energy generating capacity within each jurisdiction.  For all renewable energy projects larger than 50 MW, as well as any projects larger than 1 MW owned by a public utility, the total payments are $5,000 per megawatt per year, divided between local hosting governments. Since one megawatt of solar takes up w, and many projects are 100 MW or larger, one project could be hundreds of acres and span multiple jurisdictions.  Payments start the year after the project is operational, and continue for the life of the facility. 

The funds are not earmarked, and can be used in a variety of ways, including road repairs, fire services, preventing tax increases, and other local improvements.  For more information see Local Property Tax Impacts of Large-Scale Wind and Solar Projects.

Dealing with any large-scale development takes time and financial resources.  Here is a list of some of the common items local governments might consider when planning for proposed projects:

Staff time and administrative resources

• For permitting processes (especially for projects under 100 MW that require local approval)
• Managing community engagement and addressing resident concerns throughout planning and construction

Infrastructure impacts

• Repairing or upgrading roads damaged by heavy construction traffic
• Possible wear on bridges or culverts requiring reinforcement or replacement

Legal and negotiation expenses

• Fees for attorneys and professional negotiators for developer agreements
• Drafting and reviewing contracts, easements, and compliance documents

Specialized professional services

• Engineering, environmental, and/or financial consultants to evaluate project impacts and agreements
• Additional planning or zoning expertise for complex siting issues

Fiscal impacts on schools 

• Loss of school district revenue from property taxes is usually addressed by the state school aid formula 
• Utility aid carveouts could be used to compensate for any remaining shortfall

Other indirect or unforeseen costs

• Emergency services readiness (such as fire or EMS) for new infrastructure

The county may negotiate a Joint Development Agreement with provisions such as:

Prioritizing local contractors for construction, vegetation management, and maintenance, financial assurances for decommissioning, funding to offset costs related to the renewable energy project, such as road repair, emergency services training, and other costs listed above, and a commitment to maintain utility aid payments if the state law changes.

Joint Development Agreements (JDAs) are contracts that local governments negotiate with solar developers.  These contracts may allow the community and solar developer to address community concerns that cannot be regulated through ordinances, either because the project is 100 MW in size or greater, or because the concerns go beyond the health, safety, and environmental provisions allowed by Wisconsin statute.  These agreements can have different names, including Local Operating Agreement (LOAs) or Memorandum of Understanding (MOUs), but there is no legal distinction between these terms. If a project spans multiple jurisdictions it may be helpful for counties, towns, and villages to coordinate on contract negotiations, both to increase negotiating power and to save on costs for professional services.