Is the Appropriate Color of Solar – Green or Yellow? Wk 3

Question Number 2:

Who bears the cost of demolishing and removing the solar panels and related structures 30 years from now when they are out of date and no longer working?

It is our understanding from talking with experts in the field that solar panels lose a little bit of efficiency every year. Therefore, at the end of 30 years they are highly inefficient and basically rubbish. But the cost of demolishing and hauling them away to a dump could be quite substantial. It might make the lease payments received by the landowner look insignificant.

What has been represented to me as the cost per acre to build a solar farm is astronomical. In our conversations with one representative of a solar farm development company that was only interested in leasing land, we asked at the end of the 30-year lease who paid to remove all the solar panels and improvements that would now be worn out. The company representative answered that that would be the cost of the land owner.

So be careful if you are talking about leasing your land to a solar farm developer. Understand who is paying for the demolition cost at the end of the lease, and the magnitude of the cost if you are responsible as a land owner. Be especially careful evaluating the future financial ability of that company to perform their obligations.

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.