Is the Appropriate Color of Solar – Green or Yellow? Week 6

Conclusion: The current “solar farm” system can be summarized: Taxpayers pay higher taxes to subsidize “solar farms” so that as consumers they can pay higher rates for electricity receiving low quality electricity (called “dirty” within the industry). In short, this becomes another market place distorted by government and special interests. Our contacts within the solar energy industry expect solar farms of today to be seen as the equivalent of dinosaurs in the future. We have been told there are numerous new technologies that will replace solar panels. Ultimately every house and building will be a solar energy collector. But the current status of technology in the solar industry is to use solar panels, build solar farms, and depend on heavy government subsidies. The transition that will occur means many participants will get hurt, some very seriously. If you decide you want to participate, our recommendation is that you sell your land, not lease it. Then you can do a tax deferred exchange into another investment property. 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...

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Is the Appropriate Color of Solar – Green or Yellow? Week 5

Question Number 4: What is the approval process prior to settlement or commencement of the construction? Because the solar industry is subsidized by us taxpayers, there is a long approval process and intense competition for the subsidies. Not every “potential” solar farm will become a solar farm. To evaluate a proposal on your land, you need to understand the requisite process and make sure your rights are protected during that process. Please remember, the longer the approval process the more things can change that will adversely affect your transaction. In evaluating the approval process, inquire about the track record of the party with whom you are working. That will help you understand the probability of success. 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...

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Is the Appropriate Color of Solar – Green or Yellow? Week 4

Question Number 3: Over our 45 years of selling land, we have seen a significant variety of “trends”. The hottest, greatest, newest, best-ever items often a decade or so later turn out to be horrible, disastrous, and money pits. So we are cautious. Some of the literature that we have read about solar farms expresses concern about the hazardous waste that could result from the solar panel structures, the heat, and the chemical reactions that occur. Therefore, one of your four critical questions ought to be what assurances and documentation the solar farm developer can provide to you that prove that your property at the end of the lease will not be a hazardous waste dump. Hazardous waste dumps and land adjacent to them have little value and are significant liabilities. Perhaps you should read up on the “Superfund Law” passed in 1978 that makes the land owner financially responsible for clean-up of hazardous waste on their land. If the government has to do the clean-up, the government can charge the land owner triple the costs of the clean-up. 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...

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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...

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Is the Appropriate Color of Solar – Green or Yellow? Week 2

Question Number 1: What is the financial strength of the company that wants to develop a solar farm on your land? This is critical information if you are entertaining leasing your land to a solar farm company. It is just as important if you are anticipating selling your land to the company. In both cases, they are operating in a subsidized market and those subsidies could be withdrawn abruptly leaving anyone involved that has not gotten all the way through the process in jeopardy. If you are considering leasing your land to a solar company, please keep in mind that the economic landscape is full of big companies that went bankrupt. “Enron” should make your knees quiver. So, before you go very far with a company that has approached you about developing a solar farm on your land, ask for a copy of their balance sheet and their income statement. Verify their financial ability to perform on their promises in all circumstances. 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...

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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....

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