Is the Appropriate Color of Solar – Green or Yellow? Week 1

Introduction:

A significant force currently impacting the land market in Virginia is the emphasis on “solar farms”. I find “solar farm” to be an interesting nomenclature for an industrial use of farmland.

The solar farm industry exists because it is heavily subsidized by us taxpayers. Like any market that is being driven by government subsidies, this market is totally distorted and a lot of characters are participating in it. The reluctance of many American electricity generating companies to be involved in solar is a reflection of the fact that in Virginia we have a significant number of cloudy days.

Every electrical power company has to generate electricity so their customers can flick a switch at any time and enjoy the benefit of electricity whether the sun is shining or the sky is overcast. Therefore, solar electricity is more expensive not only to produce but also because of the cost of the redundancy of generating electricity conventionally.

The country that has invested the most in solar energy is Germany. Every article I have read about the impact of solar energy on Germany’s economy references the significantly higher cost Germans pay for electricity than consumers in other countries with less emphasis on solar.

Landowners approached by companies or individuals representing companies who want to do “solar farms” on their property need to be cautious. We have identified four critical questions that you should ask in the event you are approached to have your property used as a “solar farm”. Those questions will be the next four blogs.

It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is land.