For years, I’ve wanted to interview a solar energy expert.
Why? Because as land investors, when looking at a prospective deal, we need to be aware of every option available to monetize the property.
In some cases, it's as simple as re-selling the land at a markup, but in some cases, vacant land can be held as a buy-and-hold investment that generates a stream of passive income for years to come.
Today, we will talk about one way of generating passive income from vacant land by leasing to a solar developer.
Dakota Malone reached out to me recently to pitch this idea for a podcast episode, and I thought it was a great idea.
Today, I will talk with Dakota about how this industry works, how to determine when this strategy makes sense for a vacant parcel of land, and, as usual, we will pick up a lot of other informative insights along the way.
Links and Resources
- Community Solar Authority
- FREE DOWNLOAD: Landowner's Guide to Solar Leasing
- Dakota Malone's LinkedIn Profile
- 7 Ways to Make $1,000 per Month from Vacant Land
- What Is a Triple Net Lease?
- Canal Solar Power Project
- Community Solar Platform
In this episode, you will:
- Learn how to monetize your vacant land via leasing it to solar farms.
- Discover the kinds and qualifications of land that can be leased to a solar farm.
- Explore the benefits of dual-use solar projects for additional income streams.
- Uncover its lucrative potential not only for commercial developers and partners but for residential usage as well.
Editor's note: This transcript has been lightly edited for clarity.
Seth: Hey, folks, how's it going? This is Seth Williams, and you're listening to the REtipster podcast, episode 173.
For years, I've wanted to find someone out there who specializes in solar energy, because as land investors, when we're looking at a prospective deal, depending on the property, this can be a pretty brilliant way to monetize a parcel of land. And this was actually one of the infamous monetization strategies I talked about in one of the most viewed videos on our YouTube channel called “Seven Ways to Make $1,000 per Month From Land.”
And ever since that video came out, I've been working to find experts in each of these different fields to explain in more detail how you actually make money from things like wind turbines or cell phone towers or RV storage parks, that kind of thing.
And I've been waiting patiently for a solar energy expert to reveal themselves to me. And they finally did. And this guy is Dakota Malone. And Dakota reached out to me recently to pitch this idea to come on the podcast. And I was like, yes, please, let's do it. That's perfect.
And today I'm going to grill Dakota on how this industry works and how to determine when this strategy makes sense for a vacant parcel of land. And as usual, we're going to pick up a lot of other tidbits along the way.
So, Dakota, welcome to the show. How are you doing?
Dakota: I'm doing amazing. Thank you so much for having me, Seth. I know that it's always a risk when you have strangers reaching out to you, but I appreciate you taking the swing on me.
Seth: Absolutely. So aside from the little I just said to introduce you, who is Dakota Malone? What is your background and experience in the solar energy sector?
Dakota: Sure. Yeah. I'd love to give you a brief background.
So again, my name is Dakota. I was born and raised in central New York area, upstate New York, currently living in the Midwest, down in St. Louis. And I've been in the energy space. For over a decade at this point.
So I just recently turned 30. It's crazy that I've been doing it for this long already, but essentially I went to community college, got my two-year degree, handed it to my parents, and asked them to leave me alone because I wanted to figure out entrepreneurship for myself. And sustainability has always been a core value of mine.
I've had five heart surgeries, and so my childhood was very atypical compared to the regular person. And really what I did, Seth, was map over those same ideas that I used in human sustainability to take care of myself and really mapped it over into entrepreneurship, and then I went even more meta into building a sustainability company.
And so Community Solar Authority has been around for over the last half decade. We're a stakeholder in the national community/solar partnership, and really we serve as full service consultants to some of the most significant solar developers in the country, essentially helping them in the collective mission of deploying as many renewable assets as possible. And this is at a nationwide level.
So some states have better incentives than others, as I'm sure you can imagine. But essentially, we work with landowners and also large rooftop owners who are seeking to generate value-add from their real estate in order to monetize it further using these solar assets.
Seth: So we can't just gloss over this five heart surgery thing. What happened there?
Dakota: So I was born with a lot of congenital heart issues. I had a narrow aortic valve. The doctors gave me an emergency surgery as soon as I was born. So they went in through my wrist—I had what's called an ablation—and they essentially broke my aortic valve and it was then leaking blood. So I had two emergency surgeries as soon as I was born, three more in high school. A week before I graduated high school, I had my fifth and final surgery, which was open heart surgery and absolutely life-changing, if you can imagine.
But actually, in unexpected ways, it really flooded my life with compassion. And I'll share briefly.
I was in the pediatric unit because I was still 17 at the time. And I was kitty-corner to a young kid who had a similar surgery. I'll try to skip the goriness, but the only way you can leave the hospital after open heart surgery is you basically need to drain your chest of the excess blood. And so you have to walk.
And it's very hard to walk with broken ribs and everything else. And I saw a seven-year-old kid walking up and down the hallway all alone by himself. And it just flooded my life with compassion and really changed the dial of my life and what I wanted to pursue and what I thought was important.
And so, again, over the last decade. I've also moved 40-plus times, essentially living out of my suitcase just with the intent of being an explorer and trying to soak in as much of life as possible.
So it definitely changed my life and like I said, planted the seed for what sustainability was actually going to do for me. And really, my intention is just to help larger entities and organizations think about the same way I thought about through my own life.
Seth: That's interesting. I can totally see how that would change your perspective on life. And, yeah, it's awesome.
Sounds like you're all good now. Or is everything like, stabilized at this point? Healthy as ever?
Dakota: Yes, thankfully.
Seth: Cool. Well, so what drew you to specialize in solar energy, aside from your prior life experience and the inspiration with your heart issues and all that? Did you take any other professional career path before you landed up here, or did you just jump right into this?
Dakota: No. So, like I said, I've been in the energy space for a decade now, community solar and renewables for about half of that. But my first five years, I was actually in the direct sales space in the electric and gas industry. So really helping energy supply companies think through their direct sales channels, building teams and really just working through those kind of strategies.
It was back in 2018 when I really saw the writing on the wall with renewables. Basically, the trajectory and job security of the U.S., and really from a global intention to deploy as many renewables as possible. If you look at the year-over-year growth of solar and expected growth rates, ot was too incredible to pass up for me. And I said, you know what? If I already have this experience working with large consumers of electricity, municipalities, investors, business owners, really, how can I take this into a higher opportunity vehicle, provide a greater impact and really help think through how to do this in a simple way?
And so that's really the tagline that we approach is simple sustainability. The world of commercial solar can be incredibly complicated, and when it comes to working with any of the facets that we do, because, again, we work as full cycle consultants. So even helping the landowner understand what this is going to look like over a 20-year period, to actually working with corporations or national retailers, think about their deployment strategy for ESG commitments, the whole thing can be very confusing.
And our intention is just to streamline that in a very concise way so that people can make the easy decision to be able to access and benefit from the word renewables.
Seth: A lot of our audience is land investors or land flippers, people who normally buy land and sell it relatively quickly just to make a profit between the delta, between their buy and the sale price, and buying a property to use it for solar, whether they keep it and lease it out to a solar energy company, or maybe the next guy wants to do that.
Who is your typical client? Like, it's a landowner who owns how much land and where is that land exactly? And what does the profile need to look like for you to even get involved and be like, yeah, you should consider this versus, no, this doesn't make sense for you, don't do it.
Dakota: Sure, that's a fantastic question, Seth, and I think that one of the things I'd like to do is either put it in your potential newsletter or just in the show notes. I think I had sent you our landowner's guide to solar leasing, which really spells out how to easily qualify your land and make sure it's a good fit. But I'll give you the brief rundown here.
So when it comes to solar assets, our typical landowner, or potentially, I'll also use municipalities, because they always have the extra incentive to do something similar, which. Is, hey, I've got vacant land; hey, I've got a waste fill or whatever it is, how can we monetize this? But our typical landowner could be a farmer or just an investor.
Like you said, one of my managing partners is also a land flipper. And so he was coming into this with a lot of additional knowledge as to what people were interested in and how they were doing it, from the owner financing perspective of basically buying and then reselling that land, but typically on the community solar side.
So there's two types of solar assets that we invest in and help other people do the same. There's a community solar asset, which is typically 10 to 30 acres, and that's going to build anywhere from a one- to five-megawatt facility. That's solar verbiage they don't need to know. But essentially, it's how many panels are going on that land and how much power is going to be produced every single year. And so based on that 10 to 30 acres, we'll essentially look at that available space.
And obviously, there are other qualifications. It needs to be close to what's called a substation. It needs to have certain power lines called phase three power lines. And I think it's also worth mentioning, Seth, that when we work with landowners, we do all of this turnkey. So what we like to do is, have people get a good idea of like, “I've got maybe 40 to 50 acres,” we'll take the 30 of those, and we'll transform it into solar. We'll go through and do the entire checklist to qualify it to make sure it's legitimate.
And then we'll actually run what’s called an internal RFP, and we'll just go to every single one of our solar developers that we work with, which, again, are amongst the largest in the nation, backed by many banks who have this collective interest. And we'll basically come back and shop around and bring back the best deal. And we don't charge a single dollar for our service. We get paid as consultants based on how much renewables we deploy.
And so, again, we're very streamlined in the fact that we get landowners the highest price of a lease and we're not affected by and don't charge for our service. So it's a very complementary thing.
So 10 to 30 acres is what it looks like on the community solar side. But then there's also what's called Utility Scale.
And so this could be 50- to literally 500-acre parcels that we look at. And the difference, Seth, is that community solar is available in about 30 states right now, based on pilot legislation, to fully completed legislation, but with Utility Scale, almost every single utility across the country needs to have some sort of blend of clean energy in their group of what they power. And so a lot of it's powered on brown sites or, excuse me, “dirty” energy. But then these utilities will also own 100 acres of solar farms, and that's used to blend their portfolio into clean energy. And so we do both.
Community solar is the smaller scale, but then there's obviously people who have tracts of land. So, for example, we're looking at over 800 acres in Virginia right now, and the legislation for Community solar isn't necessarily available. But again, in states where you wouldn't think about the opportunity to monetize your land, in states like Kentucky or a lot of the Bible Belt or southeast United States, all of those make for fantastic locations for these Utility Scale projects.
Seth: So it sounds like if my property is less than ten acres, I shouldn't even be thinking this way, right? Is ten acres kind of like the minimum to even go down this road?
Dakota: Yeah. When it comes from a leasing perspective, for what we do, at least, exactly. There are times where… I'll give you a very niche example.
We had a guy who was a consultant for us. He worked for us, and he had about seven acres of land that could build, like, a small PV system. So nothing for a solar lease. But he also happened to live across the street from a college, a university.
And so there are the times where you could build an asset on your property. It would be less than, again, a megawatt of power, which you could potentially sell to an end user, a university, a municipality, et cetera. And so it's not that it's ruled out completely, but for the sake of what we do, just to put parameters aound it, we work in that 10- to 30-acre space.
And I think that that's probably the most wise. There are probably better ways to monetize your land if you're under that.
Seth: Okay, that's helpful. And also, just thinking about other boxes that would need to be checked for this to be a viable option at all. You know, I'm not a pro, I don't know what to think of, but I'm thinking of how much sunlight is available at that place year round and how close it is to the power grid, that kind of thing. What does that need to look like?
Does this only work in Arizona? Or in places I think of, where I'm at in Michigan, where the sky is gray half the year? Or maybe everything is covered with snow, like, does this kind of thing not make sense in those parts of the world?
Dakota: Yeah. So contrary to popular belief, that's a great point, Seth. Many people think that the production factor of solar isn't as useful in states like New York, where I'm from, or Michigan, where you're at, compared to Arizona. Which does have a partial truth to it.
But the reality is that New York state, for example, is one of the leading community solar states. One for their policies and the way they do politics. But Michigan also has this legislation that's coming through the pipeline.
So a quick idea to think about as far as a checklist in order to qualify land, again, it's got to have easy access. And so, meaning it can't be in the middle of, you know. We just reviewed some area for the BSA, the Boy Scouts of America—I'm an Eagle Scout—so I reached out to them and they sent us a couple camps that were completely wooded.
So, we have no interest in deforesting land compared to putting it on a site that has the best and highest use case for renewables, like a waste fill or a quarry or something to that nature. So it's got to have easy access. Typically, like I said, it's going to be this 10- to 30-acre threshold. And then again, on the other side is like 50 to 500 acres. Typically, we're looking for state and local incentives to where, again, we can essentially bring back the best lease price.
Just as a broad range, we see anywhere from $875 to $1200 as a going per acre, per year lease rate for land. But I've seen as high as $5,000 an acre in the states where you have state and local incentives that can really juice up the price.
And again, part of our mission is to bring a fair practice all the way down so that these solar developers aren't necessarily not ripping off the landowners, but we're in the interest of making sure the landowner gets the best deal. I've seen farmers literally be able to retire because oftentimes they're old and they don't have the ability but they have to keep working, essentially.
And so, just as a total side note, we have a collective interest in that the land typically needs to be flat, bare, and not in a floodplain. So if anything's labeled in a marshland for zoning, we typically stay away from stuff like that.
It's got to be close to a substation, and that substation needs to have, essentially, “room,” what we call capacity lines to build solar energy. So oftentimes these substations have not been upgraded by utilities, and the utilities try to pass that responsibility on to solar developers.
Because we work with some of the most significant in the country, actually, globally as well. These guys can invest up to, we've seen $2 million to $5 million in substation upgrades. And so oftentimes we'll have landowners where they're like, hey, we tried to do solar in the past and we were told it wasn't possible. We're able to come in and make it possible because we can afford these substation upgrades.
It's got to be close to power lines, which, again, are the big, they're called phase three power lines. And so they basically have three levels to them. And that's basically what allows these solar farms to interconnect into the power grid.
It's obviously got to receive adequate sunlight. Which is like the least of factors, because, again, you still receive solar production on cloudy days, you still receive solar production on panels that have snow on them. Obviously not as much, and that's why O&M gets taken care of by the solar developer, meaning a landowner isn't going to be out there scraping snow off the panels if they choose to lease out their land. And I had mentioned that it's got to be close to a substation.
So I know I just spit a lot of information. Again, this is going to be in our landowner's guide, but that's essentially the checklist that we go through and confirm before we start shopping it around, trying to bring back a solar lease.
Seth: Yeah, absolutely. And I'm going to have a link, free download. You don't have to opt in anything. It'll be in the show notes, retipster.com/173 if you want to download that. And it's very well done. So I definitely recommend checking that out.
But with all the stuff you just mentioned there, Dakota. So some questions were coming up as you were talking. These might be dumb questions, sure, but I'm not familiar. So just to confirm, when you say substation, what is that? Is that like where the solar farm plugs into the power grid to get dispersed everywhere else? Is that what that is?
Dakota: Yeah. So a substation is essentially, they are very small lots where the utility will build exactly that. It's basically where the interconnection happens. And so you'll see these from the power lines. You'll drive by them oftentimes in rural areas, and they'll usually be gated off and it will essentially be there. It's owned by the utility. And it is how everything gets plugged into the power grid.
So you'll know when you drive by. Them, they basically look like very large HVAC units, I guess is the easiest way to describe it. And typically like a quarter-acre lot or something like that.
Seth: Yeah, I think I can visualize what you're talking about. Kind of ugly things that just look like a bunch of electric stuff happening there.
Dakota: That's a substation.
Seth: So say I just bought a piece of property, it's 10-plus acres. All the other boxes seem to be checked. It's flat, bare land with no trees, and it's not in a floodplain, all this stuff is there like some map I can go to to look at all the substations near me to figure out, “Hey, there's a substation there. Maybe this makes sense.” And how far away does the substation need to be? Is it like a mile, 10 feet, football field?
Dakota: Great questions. So there are maps. The utilities do make it complicated to find these maps. We have a GIS land team, essentially, that goes through and they check all of this stuff. If you were trying to do it on your own, you would just need to do a Google search of my utility, whatever it is. For me, it's Ameren in St. Louis and southern Illinois. So it's like Ameren’s substation maps, and with a little bit of research, you can essentially start to look at the hosting capacity.
And again, so you typically want to be less than 10 miles from a substation, the closer the better. And typically we see these off like major highways, stuff like that.
When it comes to the hosting capacity. Again, you want to look for two things. So you want to make sure that the substation is available, you want to make sure it's close, and you want to make sure that it has capacity for solar. And so again, even if you are close to a substation, there might not be any additional capacity because there's already solar farms surrounding it, and that's a good indicator of if it's going to be viable or not. If you live in an area where you see there are solar farms, they are going to most typically be plugged into a substation close to your parcel of land.
And oftentimes there are megawatts of power available. And so again, if you've got 10 to 30 acres and it reveals that there are 1 to 5 megawatts of hosting capacity available and that substation is close, that would be considered a prime spot for a solar lease.
Seth: Is there any kind of a nationwide map that shows where all the existing solar farms are located just to kind of get a feel for, like, hey, there's a cluster of them over here, maybe there's opportunity.
Dakota: Yeah, there's not that I know of, although that would be extremely helpful. And I think one of the reasons why, Seth, is because obviously, solar and renewables has been around for a long time. Actually, the longest standing solar farm, I believe, is being used by the military. And it's been around for, I want to say, over 100 years, and it's still generating power today.
So these things can definitely last a long time. But recently, especially with the updates in legislation, we add, and I say we, as in the U.S., adds maybe five to ten additional community solar markets per year. So the surge of solar farms going up right now is actually, like, at an incredible pace.
But I would love to have some sort of person track that, because it would definitely be able to help people understand, like, hey, is this a good opportunity, or am I just kind of wasting my time here?
Seth: Yeah, it sounds like, when you mentioned, are there any state or local incentives to get the best price and that kind of thing. Correct me if I'm wrong, but it sounds like politics are involved with this, depending on who gets into office.
Dakota: Very much so.
Seth: I don't know, say if it was Trump or Biden, does that mean, okay, this is going to take off or it's going to die, or. I don't know, how big of a difference would that make?
Dakota: It's a great question. So I'll tell you that with the Inflation Reduction Act, that really set the pace for renewable energy growth, which is very much a Democratic policy. In terms of the renewable sector, many Republicans want to slash parts of that bill, which would be bad for solar growth.
But on the same stroke of the pen, community solar is considered very much bipartisan, meaning that it's a conservative approach to utilizing renewable energy. And I think a part of the reason why is because when we're building these solar farms again, you can lease this land, and so a farmer can take advantage of it. Once you build 10 to 30 acres of solar panels, those solar panels typically get divided up into what's called subscribers. So my company helps fill these solar farms with large consumers of electricity, and small businesses and residential customers are also allowed to join.
And so instead of having a singular offtaker, basically “take the power of this,” it is a way for communities, oftentimes rural communities, that otherwise couldn't install solar. Same thing with urban. Basically, everybody has the power to benefit from renewables. And that's why community solar legislation, we're watching it go nationwide.
Now, when it comes down to additional incentives, like you had mentioned. Back to the IRA, there are specific pieces of legislation within that that allow know what's called adders, where you can claim additional tax credits, essentially making the deal more lucrative for solar developers, let's say, in areas where they are considered what's called an energy community or a low-income area.
And so oftentimes, our work revolves around working with affordable housing communities or low- to moderate-income subscribers so that the developers can capture that additional value-add. And again, we like to make sure that that goes all the way down to the person actually leasing the land to make it a full circle kind of deal on that perspective.
Seth: And when you said easy access earlier, what exactly does easy access mean? Does that just mean, like, there's direct road access from the road, or, say, if I got an easement that's big enough for one truck to go through, and that goes a mile back into this property, and then you can get there. How easy does it need to be?
Dakota: Yeah. So it really depends on what developer we're talking to and who really wants to take on the project. That should be fine in most case scenarios. Seth, we say easy access, and I'll give you an example. Someone passed me some land. It was about 45 acres. He was super excited to do it. And it was in the middle of the Adirondacks, which is like upstate New York mountain ranges.
And when I say, like, middle of nowhere, you could drop someone off on Survivor, and that would be, like, their territory. And there was no phase three power lines. There was no easy access to be able to get to his parcel. It was surrounded by other parcels that really didn't have any access point. And you do need to be able to get trucks back there. You need to be able to get the panels back there.
So it's one of the lower priority as far as the checklist goes, but it is something that we check for. So in your scenario, like, hey, I've got an easement, I've got an access point, it goes a mile down the road. As long as we can fit trucks back there, typically that's going to be good enough. And again, we just mentioned it, people aren't sending us parcels of land that we're just going to automatically disqualify because it's in the middle of nowhere.
Seth: And when you said $875 to $1,200 per acre, was that per month or per year? I couldn't remember if you actually said that.
Dakota: Yeah. So that is per acre per year. And so this will typically come. The way that it works is that the first couple of years are all dedicated to some sort of study. So those can be environmental studies, interconnection studies. And this is a time when no construction takes place on the parcel. If all goes smooth, Seth, it will typically be 12 to 18 months to get through this process, and the landowner can expect to receive small milestone payments.
So while these studies are going on, they might get a few thousand dollars a year, maybe $10,000 a year, just for the solar developer to basically tie up that land, do the studies, and as long as the studies look good, they'll move forward and develop.
Now, oftentimes, people can go through these studies and they end up not working out, which is a downside. And that's part of the reason why we built this guide and we built this process because we like to do all of the qualifying work on the front end. So, we like to check the substation, we like to check the phase three power lines. We like to do all of that work upfront so that, one, we're decreasing the likelihood that this project is going to be dropped later and really increasing the rate of success.
And so the first couple of years are all dedicated to these interconnection studies. They'll receive small milestone payments.
And then typically there are two phases. One's called NTP, which is notice to proceed. And that means everything checks out and you're ready to move forward with the construction of the project. The developer will then go and build the solar asset. And once it turns on, also known as COD, commercial operations day, that landowner will start to receive those yearly lease payments in the form of a single payment per year across the next 20 to 25 years. There are typically options in there. So, like 10-year options, 5-year buyouts, et cetera. But we've never seen a landowner stop wanting to monetize their land. So for us, that's never happened.
That's the expected per lease rate. Like I said, the $875 to $1,200 is pretty standard across the board. And again, I'm speaking at a nationwide level, so this could be a lot higher in certain markets and a little bit lower in other markets.
Seth: Does that annual lease payment step up each year to keep up with inflation, or is it just like, no, it’s $875 a year, that's what it is for the next 25 years?
Dakota: Sure. Oftentimes there are escalators. They're small, typically 1% to 2% escalator payments for that landowner, which isn't much. But we do consider that when it comes to inflation and everything else, and typically, almost every single time, the solar developer is responsible for any increase in taxes. So there's really no worries from the inflationary standpoint, other than you want to monetize and make as much money to live otherwise. But as far as, land increases, insurance, the developer takes on that responsibility.
Seth: Yeah, that was actually going to be my next question. Does the property taxes go way up, since it's now an improved property? But is it set up like a triple net lease where the solar farm pays for everything involved, or how does that work?
Dakota: Yeah, exactly. And so I've had people ask if they could cut the grass and get a higher lease payment, which I think is a great idea, like thinking ahead. Of how to get the most out of it.
But really, the answer is yes. So the developer takes care of everything front to back. And so, again, this is very much just them leasing out the property. It's completely hands-off passive income. So any operations or maintenance, any snow removal, any grass that needs to be clipped, or panels that need to be washed, everything's completely turnkey for the landowner.
Seth: Is the developer essentially the same as the long-term owner? Or does the developer build it, then they sell it to some other entity, and then they are the tenant that pays for that lease?
Dakota: It depends on the strategy of the developer. So we work with both. We work with asset owners, which can oftentimes be banks, or the companies that the banks own, essentially. And so we're partnered with the longest standing, most bankable asset manager in the community solar space. They're called Community Solar Platform. They manage assets across the entire country.
And so what we'd like to do, Seth, in the spirit of being full service, is that if we're working with a landowner and we're identifying that they're going to be a good fit. The last thing that we want to do is work with an organization that might potentially go under. Selling the project is really no big deal; that's actually very common in the community solar space. Many times, people will build the projects, and then once they get to interconnection—that interconnection typically costs at least half a million plus dollars, oftentimes in the millions of dollars, and those construction companies and EPCs simply can't afford it—and so they'll sell to much larger asset managers and other developers, essentially, that own portfolios of these projects. Which is typically a good thing, because, again, you want to make sure that that asset is being managed by someone who knows what they're doing, someone who has the tenure and experience to do that long-term, because these assets are going up for decades at a time.
And also, just as a total side note, there's always peace of mind with decommissioning bonds thrown into this. So that the landowner knows that should this project come to the end of its life cycle and they're not going to renew their lease, that that solar farm is going to be taken down and it's going to be appropriately brought back to its original state as a parcel of land.
Another point worth mentioning is a lot of times people have questions about whether or not these solar panels affect soil quality. I think it's called Jack’s Solar Farm, I believe they're over in Colorado. They do a fantastic job of doing these types of studies with what's called agrovoltaics, which is essentially dual-use solar farms. They'll have the solar on top, and they'll grow things like berries and herbs along the bottom.
And so when it comes to decommissioning and returning a land back to its original state, there have been no studies to suggest that the solar panels or the solar farms affect any of the soil quality or otherwise ruin that value of the land. And in fact, it's, no pun intended, one of the cleanest ways to monetize that land. And then obviously bring it back to its original life, if that's what a landowner chooses to do at the end of its cycle.
Seth: Does it ever make sense for a landowner to just try to build their own solar farm and then sell that power to the local utility company? Or is that never how it works? Or is that just not a smart way to go about this?
Dakota: A lot of co-development work, Seth, and oftentimes it's not with landowners, but it can be with municipalities, larger organizations. Commercial real estate companies love us because you'll see in the news a lot of times, like the big boys of commercial real estate, CBRE, these guys are adding renewables as a way to create value-add because they have the portfolios of properties and they know that they can claim tax equity and tax incentives if they build it themselves.
And so oftentimes we'll go into co-development relationships where it's like, hey, we have the access to develop and build. If you want to own this long-term, you can absolutely do that. If you want to turn it into an asset that's just selling power back into the grid. Again, it's not typical for landowners to do that, but it is possible
And again, part of what we do is in identifying. So if people check out our landowner's guide, they want to send us their land for review. I doesn't cost you a single dollar. We'll do it all for free. We'll get it qualified. We'll essentially be able to come back and we'll say, hey, what's your intention? Do you want to lease this land?
You could potentially sell it to us. If we're interested in buying it, we have investors that we work alongside who will buy up these properties, and then we'll go do exactly that. We'll go develop it, turn it into our own asset, and then either sell it back into the grid or sell it to a developer. But the opportunities there, there are multiple ways to kind of monetize the land. And it comes down to what a landowner wants to do.
Seth: I've got a self-storage facility where we have a little over 27,000 storage buildings with flat roofs and thought about putting solar panels on the roof. I've never really looked into it. I don't know if it's smart or not. But in that kind of situation, I guess my assumption was I would own the solar panels and sell power back to the energy company, however that works.
But is it a smarter idea to work with you and say, hey, can you find some developer out there who wants to put these panels on the roofs of our buildings? Or does that not make sense for some?
Dakora: You know, I just saw public storage came out. They're working with a company called Solar. Landscape out of Jersey, who is doing a fantastic job of media coverage for the solar world.
It is very wise for storage companies to be able to use that as value-add. There, again are multiple opportunities. The easiest one is simply to just lease your roof and let the solar developer take care of it. Again, not everybody necessarily wants the… because if you were to sell the power back yourself, you'd typically be responsible for the O&M, which isn't the worst thing in the world. But you don't want to have to clean 27,000 square foot of solar panels as an additional job.
Typically, if I had to guess, based on what you do, so oftentimes working with storage facilities, which we're in the very beginning relationships with several of them, it's a fantastic play. Again, for the same exact reason, it's value-add to your real estate and it's passive income and you don't necessarily have to take care of any part of it.
So again, based on the state and where that's at, we'll determine which legislation makes it fruitful and really what it looks like. for example, a state like Rhode island, we're working on a mall over there right now, one of the biggest in the state, and the roof didn't really work out. So we're doing carports, which is very much different than a roof.
But my point is that Rhode Island, for example, has some of the highest utility rates in the country. And so when it comes to the lease rate, it's not that powerful of a lease. But we're utilizing carports here as kind of a multi-tool so that it's protecting cars, it's giving the coverage, it's taking care of the snow plowing for the parking lots, because the O&M's taken care of.
And so again, part of the creative process on our end is like, hey, if you bring us an opportunity, we're going to come back and we'll give you all of our consulting advice for free.
In the assumption—I don't even want to say in the assumption—but just in the spirit of providing as much value upfront as possible, and we'll give you options, we'll say, hey, here's what we think, here's what we can do. You tell us what you want. And, typically, based on the consulting that we give and the access that we have—which is the bigger piece to it, because we have the access to pull these projects off at scale—typically people are like, okay, awesome, let's do it. And so I hope that provides a little bit of insight to that question.
Seth: No, for sure. I guess it just helps confirm I'm not crazy for thinking that, but I guess maybe one drawback—
Dakota: You're very wise.
Seth: Thank you. I like hearing that.
If we were to agree to some kind of 20-plus year lease like this, and they go on the roofs of our buildings, I would assume we're kind of stuck for 20 years or however long the lease is. Like, if I want to knock those buildings down and build something else there, I can't really do that because that lease is there. Is that accurate?
Dakota: I'll give you an example. So, same group over in Rhode Island. They had a beautiful 60,000 square foot strip mall, and we were going to do solar. And the lease rate, I don't even remember what it was. It was decent, but we didn't factor in. Well, it's not that we didn't factor it in. It's that they had an opportunity to monetize it in a greater way.
So they ended up selling the strip mall because it had ocean view over on Rhode Island, and they sold it to a real estate developer for many millions of dollars, which ended up being a much more valuable play than just leasing out the roof for less than $100,000 a year for the next 20 years, which, again, is great money. But they were able to just sell the building instead in the spirit of that developer wanted to build vertically, and they were going to build condos on top of it with the ocean view.
And so my point is that if you plan on developing, and again, we'll give people this advice up front to help them think through it, which is like, “Hey, if you plan on knocking down your storage facility in ten years to do something else with it, maybe not the best fit.” Same idea when people are considering.
I was talking to a manufacturer the other day in upstate New York. They're like, hey, we plan on exiting our business in five years. So you have a ten-year agreement in front of us. And I'm like, well, yeah, maybe you're not the best fit for actually joining one of these solar farms if you plan on exiting.
So, again, stuff to think through. And that's a really good point, Seth. Is if you have better ideas for your property long term, one of the things you are in this scenario is committed. And so it's always important to consider that.
Seth: Yeah, along those same lines, I've seen a couple of really creative ways that people have utilized solar panels in a way that kind of kills two birds with one stone.
For example, there's this canal solar power project in India that I saw on Reddit this past year where they've got this big, long canal and just having an open, exposed area that water runs through, where water is scarce and it's going to evaporate. It's like, hey, why don't we cover that with these solar panels. So we're not only saving and conserving the water and has less evaporation and heat on it, but also we're creating tons of surface area of solar panels, that kind of thing.
Or, like, if you wanted to create a covered parking lot, normally you could just put up a metal roof over that. But what if you just put up solar panels to act as your roof? And these things seem like brilliant ideas. Have you seen any other creative ways to use solar panels that sort of accomplishes two objectives?
Dakota: Totally, yeah. What comes up first is my carport example, again, because, again, not only can you connect EV charging to that and kind of have it power itself, but again, you're shielding cars. And so any auto dealers that might be listening to this, we love working with auto dealerships, because they're being forced to deploy EV as that comes online more, but again, as a way to protect your assets underneath that roof and have the O&M taken care of.
Carport solutions are fantastic. Typically, they are the most expensive kind of product to make pencil, which is why the lease rates aren't always that great. But again, it's in the spirit of this dual-use, highest-use case of this.
I've also seen the canals. I have a contact who actually reached out to me not too long ago. He's at a large real estate organization, and he, you know, I've got this canal, and we want to put solar over the top of it, not necessarily for making sure the water doesn't evaporate. But I have seen stuff like…
You know, we actually just did another deal a few months ago, executed a lease agreement on another mall in upstate New York. But this guy came back to us. And said, hey, I've got three other parcels I want you to look at. Two are parking lots and one's a lake. So we're going to do a couple of carport solutions, and we're going to do, actually will be our very first, if we can get it to execution, our very first floating lake solar project. Which I think is very cool.
There are so many use cases for dual-use solutions. This is unrelated to what we do.
But I saw basically a roll-up solar. It was almost like, I guess, a roll of tape that they're using in the military for medics. And it's a way to do pop up wound care for combat soldiers that get hurt in the field. They basically roll out 100-plus yards of solar panels, very much like a fire hose, like a fireman rolls out their hose. They roll it out and it instantly starts producing power wherever they're at. So they can set up basically a medevac shop right wherever they're at, which I think is really cool.
And so I think a lot of these solutions that are coming out, we're just going to see more and more creative ways to kind of plug into the power of solar. But then also thinking about how can we get multiple uses out of this. I only think that's going to become more popular.
Seth: Yeah, I do wonder, kind of going back to the government policy stuff. So let's say I'm living in a time where the government policy is very supportive of solar farms and one is built, but then all of a sudden government policy changes the next year, and all of a sudden they're less supported or even discouraged.
Does that ever come back to bite a solar developer like, oh, man, you're going to start losing money now, you never should have built this thing? Or does it simply slow things down? Like it's going to continue expanding, but it just kind of slows down depending on if somebody's in office who doesn't support it?
Dakota: The latter. I've never seen a case which isn't to say that it's not true, I've just never seen a case where it hasn't been a good idea. It definitely makes projects not as lucrative, which no solar developer or financier wants to hear.
But I would say it more or less just slows it down more so than it does completely takes the opportunity away. There have been states like North Carolina which take away their net metering policies, which can be disadvantageous for people who were looking to take advantage of solar.
But again, especially because Utility Scale will always have a blend of renewables in their portfolio. In the case where they're doing these 50-plus acres of Utility Scale solar, that will always be a part of the strategy, regardless of what the legislation is. I don't think I've seen an example of where that has happened yet. Community solar has been around for 15-plus years at this point. Again, the management partner that I spoke. On, community solar platform, these guys helped pioneer the program into existence, and so they've been at it for a long time.
I can always circle back and ask and get you that answer. But I don't think I've seen a case where that's necessarily been true.
Seth: So this is maybe not totally relevant to you because it seems like you deal with larger parcels of land and commercial applications and that kind of thing. But sometimes I think about putting solar panels on the roof of my house or even getting, like, I don't know, any kind of a smaller scale solar thing just to generate energy, whether it's for, like, a residential generator or something like that.
But I hear that solar panels are getting better and cheaper every year. Does it make sense to just keep waiting five more years until the product is better before investing all the money into that kind of thing? Or is it better to buy it now? Any thoughts on that?
Dakota: Yeah, again, definitely not my expertise. I actually own a converted school bus. That has solar panels on top, and I get to be powered by the sun. And last summer I was road tripping with my bus, and I always found it so cool how I always had a full charge minus when I turned the AC on because it was so hot, I turned it very quickly.
But the power of kind of liberating yourself with clean energy from that sense is really powerful. I would say it's based on what your intentions are and your end results are. Again, when you install solar on your home, you're never really freed from the “grid,” as people say, versus if you were homesteading, producing your own power. I think that's a totally different scenario.
Again, when it comes to residential solar, I don't really have the expertise to speak for it. I mean, it doesn't hurt to look at what residential installer could bring you. Oftentimes they completely replace your electric bill, and obviously, you now have a bill to the solar developer, which cuts your electricity costs.
But to your point, Seth, solar technology is improving greatly. And again, this is full cycle, meaning that a lot of people complain about the fact that solar recycling, for example, isn't nearly where it should be. But over the next ten to 20 years, that problem is going to be, most likely, solved in a very powerful way. And so it takes the adoption of this technology in order to improve the technology.
But to your point, yeah, the solar panels that were around 5 or 10 years ago, compared to what's available now, are very different. And again, we're even seeing technology like the solar shingles come out, which are a very expensive solution, to my understanding.
But I think to your point, if you did wait over the next couple of years, because you could afford to, then I think, it really comes down to a person's options and what they think is best for their family. And I'm sorry, I can't give a better answer to that.
Seth: That's totally fine. Totally fine. So I often hear solar spoken about alongside wind energy, just because they're both green energy sources and that kind of thing. And a few years ago, I interviewed a consultant similar to you, about wind energy and wind turbines and how that all works. And he was telling me, in the many things we talked about, one of the biggest drawbacks of solar power is that it requires a lot more land than wind energy does, where just you stick that turbine there, and it's a smaller little footprint.
So this is your chance to strike back at those wind energy guys. What are the drawbacks of wind turbines where solar panels excel?
Dakota: Awesome question. It's actually funny, because I work with a lot of wind consultants as well. They'll actually come work with us as partners. When their wind projects don't work out, they'll turn around and say, hey, maybe you should do solar instead.
Seth: So they're not sworn enemies with you or anything?
Dakota: Not for me, at least. No. I find a lot of those wind guys know because they're working with a very similar, know, farmers, people with land. See a lot of off site wind projects going on and, like, the oceans and stuff. Again, over in states like Rhode Island, I saw they had a really big bill that just pased.
I guess I can only speak to. The fact that, again, I'm from upstate New York, so I grew up on a small town in between two cornfields right off Lake Ontario. But we've got a camp up towards the Adirondacks and what's called theTug Hill plateau.
I remember seeing the transition from this just bare land. It's got to be hundreds of acres. I don't know the exact amount, but it is massive. I remember when the first wind turbine went up. And now when you drive through there—I was just there over the summer—it looks like it goes on as far as the eye can see, wind turbines and solar.
But again, there are projects that are hundreds of acres of solar farms. Again, I'm in favor, going back to the technology question, I'm in favor of dual use. If we can incorporate more agrovoltaics to accomplish farming on top of power generation. I think that's really wise, and I support that and embrace that, contrary to what most people view as what a solar guy would be.
Again, my spirit of sustainability comes actually from my own life. It comes from the pillar of human sustainability. Oftentimes when you get in the clean energy space, it does get clouded by politics. And so I'm someone who's very balanced. Like, I believe nuclear is just as. Important of a conversation as solar. And so I think oftentimes that comes as refreshing because people sometimes approach us and they expect us to have a very linear way of thinking.
And really, I'm in favor of one understanding the complete details. I'm sure wind is complicated. There's not much I know beyond what I had kind of just mentioned, but I think that there's a use for both of those projects. I could probably argue and disagree with the consultant that came on, as far as whatever else he had to say about solar, because, again, there are often times where helping a farmer retire is going to be of equal use as to putting a smaller amount of wind turbines if his intention was to be able to stop working. So that's my initial thought.
Seth: So I think I know the answer to this, but I'm just going to ask it straight up, just so I make sure I know the answer. So if I own land and I decide to lease it out to some developer or energy company to build a solar farm, are there any costs involved for me, or is it just purely profitable?
Dakota: So in the case of a roof, for example, people might need to reroof, and that's obviously very expensive.
In the case of land, there are typically no fees associated. And if there is like a survey or something, we'll make sure the developer pays for it. So if they come back, and again, just as a total side note, if there are listeners that may already have a proposal from a solar developer and you want a second opinion, happy to review your agreement and tell you if it’s good or if they're trying to pull something. And happy to get second and third opinions and other proposals.
But typically there are no fees associated with doing this stuff. There may be the developer asks for a survey, maybe putting documents together, or other legal fees for reviewing agreements. But that aside, no.
Seth: And I kind of talked about this earlier when you mentioned bare land. So does that mean, like, to build a solar farm, you can't chop any trees down? Like, if I've got a 30-acre property that's just, like, packed with trees and we gotta mow it down to put solar panels there, that's a deal breaker? Or does it have to be truly, completely nothing on there? Like, if I got chopped down one tree, is that a deal breaker? Help me understand that.
Dakota: How many trees? No, that's a good question. Again, we're in favor of doing things for the best and highest use case. You can absolutely chop down 30 acres, profit from the timber, and then turn it into a solar asset.
Seth: Okay, got you.
Dakota: Typically that will need to be done before a solar developer takes interest in it. But again, if it's a smaller acreage where we're looking at 10 to 30 acres and a couple of acres are wooded, we may be able to find a solar developer that would go ahead and take care of that or work it into the process so that maybe the lease rate is slightly lower because they're paying for the trees to come down.
So, not to say it's not possible, by any means, it's just if we had two parcels of land, they both looked good, but one was bare and one needed to be deforested in any way, we would take priority over the one that's already bare. And that's just from, again, a streamlined perspective.
Seth: Okay, so if I've got like 20 acres or something, and I really want this thing to get leased out to a solar developer, is there anything I can do to make it look more attractive to them if it's not already done, or is it one of those things where it is what it is? You can't put lipstick on a pig.
Dakota: I mean, again, it really comes down to, like I said about the zoning. So as long as the zoning looks clean, you could potentially grade it. So it's like the slope of the land. But again, I don't think it's necessary to do. It really comes down to, does it fit in these parameters that we talked about earlier? So, from the substations, the hosting capacities, those are the biggest factors when it comes to this stuff. It's not necessarily if the land is going to look pretty with the solar panels on it. So, no. My answer is no.
Seth: I mean, are there any other preliminary assessments or preparations a landowner should make before approaching a solar company or before talking to you, or just pick up the phone and call you and you'll figure it out for them?
Dakota: Luckily, we have our GIS team that can work pretty quickly to determine if land is eligible or not. At this point, we're pretty much wide open across the country because of the legislation and intentions of development for the developers we work with.
And so, again, they have endless appetites to be able to deploy as many renewables as possible. And so it's a little bit extra work for us on the front end because we're qualifying thousands and thousands and thousands of acres of land per year. But for us, it's worthwhile, at least at this point, because with the given parameters that we have, if people are sending us the ten to 30 acres or 50 acres plus, from there, the work to do, the substation checks, et cetera, it typically takes us 20 to 30 minutes to qualify a parcel.
And so again, even if we get thousands of parcels a year, we're already invested in that interest of making that happen. So that's kind of where we sit with that. And I'm sure that will change over the next few years. But right now, we're pretty much wide open across the market for this stuff.
Seth: Do you have like a list of which states or counties or anything make the most sense for solar development? Like, if you're in XYZ state, don't even think about it. Or if you're in this state, pick up the phone, a call right now.
Dakota: So for the latter, I would know if you're in states and you have land in places like California, New York, Illinois, Maryland, these are all very hot markets. There are other territories, for example, there are energy grids across the country, one of them being called PJM, which is one of the primary in the country, they are kind of slowing down on their legislation and kind of getting locked up in policy. So, for example, we were looking a a portfolio in Ohio, and that's, again not to say that it's not favorable, but right now it's like a slower state compared to other opportunities that I had mentioned.
Again, if you know that your town where you locate your parcel, if there's no other solar farms around, and there's what's called a moratorium, where they just don't want any solar farms built—because, again, it does go down to a local level. Oftentimes we'll need to go into board meetings and you'll have the one guy stand up and scream in how solar is going to ruin everything, which is fine, and I respect all opinions—but if that's going on, obviously it's probably not a good idea.
But really, that aside, Seth, again, we're open to look at whatever you've got. If we get 1,000 parcels of land as a result of this podcast, that's fine, we'll go through it. And again, it may take 20 to 30 minutes to qualify a full parcel. Like all the way through, but if we get a bunch of stuff that doesn't qualify based on like, it's in this particular state and it's got this particular legislation, or it's less than… Basically, if it doesn't fit, we'll kick out all of that stuff and it may only take 30 seconds for us to look at and be like, oh, this is no good. In which case we would just send a very quick note back and say, hey, thanks for submitting, but this parcel doesn't look good for us.
Seth: Do you guys have like a form on your website or something where it's like, yeah, fill in your, I don't know, parcel number and coordinates and name and all this stuff and just an automated way of saying that? Or human eyes have to look at it every single time in order to make that determination?
Dakota: We have an opt-in form. We don't have any automations as like, oh, hey, this is going to be a good fit. Which actually isn't a bad idea. I might have to think on that, Seth. It may have just given me a good idea. It won't be accurate per se, but it's like, hey, we think this is going to be a good fit.
Our website is being redone. By the time this podcast comes out, I'm sure it will be out. So it's communitysolarauthority.com. We'll have a sector for land. People can essentially put in their land criteria and basically what they've got a hold of. I will make a note that we don't typically like to work with people who are like, oh, I want to buy this land, would this qualify? The process to get through that is just a little bit too strenuous, so I will say if you fall into that category, we can certainly help you think through it. But as a general note, we like to do deals with people who already own the parcel.
Again, part of our simple sustainability tagline is all about streamlining it, because we are service consultants for these developers and our mission is to just streamline it. And so I will make that note.
But you can go to communitysollarauthority.com and plug your information in, and they'll be able to kind of submit their parcels and we'll be able to reach back out and let them know.
Seth: Yeah, got you. So it sounds like based on that, it's not a good idea to speculatively buy a piece of land with the assumption that you'll be able to use it for solar. It's more of like, that would be a Plan B, like, have something else in mind first, but don't buy it assuming it's going to work out for this, because you can't really determine that before they own it, right?
Dakota: Exactly. Yeah. And again, it's really just in the spirit of we built our entire company based on partnerships, Seth. And so as part of our mission, we always like to start small and with pilot deals, because again, we have investors that work with us that do go and pursue land. They buy it up. They work closely with our internal team. We say, hey, this is a really good parcel. We know we're going to be able to monetize it, buy it up.
But when it comes to our first transaction together, we don't want that to be our first transaction together. We want it to be people who already have the land. They're like, hey, I've been sitting on this 50 acres, or I've been sitting on these parcels or a portfolio. We work with, like a trust, for example. They've got thousands of acres in a trust in a singular state. They passed it over to us. They said, here's 300 parcels. Which ones work?
We love doing that because it just. Increases our hit ratio, essentially. And so that's really who we like to work with. But again, if people just have a single piece of land, again, we'll happily take a look, as long as it fits into that criteria.
Seth: Are there any risks associated with doing this? Like, if I lease on my land to a solar developer and they do it, from what I'm gathering, it sounds like the main risk is just that I will probably be locked into this agreement for however many years unless I can somehow terminate the lease agreement early, which I wouldn't normally expect I could do.
But other than that long-term commitment, is there anything that would it devalue the land in any way, or can you think of any reason why you wouldn't want to do this?
Dakota: Again, if you plan on, and even if you did sell your land, that's okay. People buy solar assets all the time, and they also buy the rights to have these parcels leased.
So if anything, you could obviously take that monetization schedule that you have and say, “Hey, this parcel of land is 30 acres. It's currently leased at $50,000 a year on 50 acres. You buy this land, and you are coming into $50,000 of guaranteed income.” So really, there's a lot of advantages on that side.
But to answer your question, typically no, there's no way it devalues the land. There are really no opportunities, at least with the solar developers that we work with. I can't speak to this across the board. There's really no opportunities to lose here, which is the entire point of working together.
This is a massive opportunity in history with the intentions of deploying as many renewable assets. This is just really a piece of time right now where there's a window open for people to take advantage of the legislation in place and really benefit from the collective deployment of renewables. Again, a lot of people are. It's going to the banks of the world that own all of this property. We work with the corporations and the giant real estate companies, but we also love the hero stories of, again, the farmer that was able to retire, the family that was able to have the peace of mind for the rest of their lives, that they were going to be able to live without fear of inflation. And so we push for those stories as much as we do for the large clients that are looking for the tax equity and to make the breaks.
And so, yeah, I just think that it's a really valuable opportunity for those that obviously fit into the scope of what we're trying to do.
Seth: I think you kind of answered this question earlier, but say I or a developer put a solar farm on the property, 20 years goes by, and then that solar farm is removed. Are there any permanent modifications made to the land that's like, okay, well, before you were able to do this, but now you can't anymore because that solar farm was there and that permanently changed something about it.
Dakota: I don't think I've ever got that question before. Yeah, no, there's not. Again, the advantage here is that when it comes to ground mounts, which is what we call them, when they put them on the land, all of that is, again, in advantage of protecting the land and making sure that it could be returned to its original state.
The downside of that is that if the 20 years is up, those developers typically don't want to move that. They might go and replace the panels, but you can essentially keep that lease going. So if you're a young person and you've got this land, you can essentially just continue to lease that out every 20 years. And obviously the terms change, right? The price changes, et cetera. But you can keep going if you want to.
Otherwise, no, it'll be decommissioned, returned to its original state, and again, the developer will be responsible for recycling those panels. So that land is returned as is.
And there's nothing that I know of or could even imagine where work would be done on that land where you couldn't go and do something else with it. I'm trying to imagine a scenario where maybe they put gravel down, but that's not even a thing.
So I don't think so, no.
Seth: Is it a common thing for people to get these leases in place and then sell the lease while keeping the land? Like, for example, if I had a 50-acre property and half of that was, I don't know, a shopping center or something, and the other half was a solar farm. So I want to keep the whole property, but I want to sell off just that lease so I can get the cash.
Now, is that a common thing people do, or like a normal strategy that people take?
Dakota: I have never heard of that, I guess. Are you saying it would be a separate parcel from the strip mall, let's call it? Because if it's a separate parcel, you could obviously sell it.
Seth: I think that's one scenario, but the reason I asked this is because I interviewed a cell phone tower consultant similar to you, but he was specialized in cell phone towers, and he was mentioning that that was a not uncommon thing where cell phone tower leases are bought and sold, like just the lease, not the land underneath it. So I didn't know if that was normal for solar farms.
Dakota: I actually have never heard of that.
I've got a friend who does the cell phone leasing as well, or the tower leasing. I've never heard of a scenario where people sell their rights to the lease, so I guess I can see why because they want to keep the land. But they would be able to basically almost like an exchange to pull out the equity.
Seth: Yeah, it's kind of like selling a note or something like that.
Dakota: Yeah. Which is obviously very common in what you do with land flipping and what your audience does. I've actually never heard of that. Again, I'll have to come back and see if that's a thing. And if it is, we could throw it in the show notes.
Seth: Yeah, you bet.
So as a land flipper and a land investor who's just always looking for different opportunities out there, what advice would you give me if I were scouring the country trying to find markets where I can buy parcels of land? This might not be the primary strategy, but it could be like a Plan B.
It sounds like I should be looking for parcels that are 10 acres and larger, preferably in a state or market where there are incentives for this kind of thing, with easy road access, preferably close to a substation. Anything else I should put in my filtering criteria as I look around for potential properties for this kind of thing?
Dakota: Yeah, I mean, again, almost in the pirit of doing it, even easier, and this obviously creates a split, but if I were to run a strategy like that, I would do exactly that. So I would start to look around for pieces of land that might make sense, like open farms, et cetera. And I would actually probably even start with the partnership route.
And again, this is just specific because this is how I build my entire businesses off of partners. And so again, we'll partner with wind consultants who may not be able to put their wind farms up, but their client still has a need to either generate income through a lease or electricity costs. And so they will pass as clients, and we'll work in tandem.
So if I was running this plan for land, I would start to focus on farmers and other people where this land criteria kind of comes up. And I would say, hey, I want to help you monetize your land through solar leasing. And so instead of trying to take the full dive myself, like you said, and potentially find the land and then buy the land and then try to qualify it, as a starting point, to keep it simple, I would just start partnering and say, hey, I want to make a chunk of whatever your land lease is, or let's do a flat fee.
You only have to pay me if I get a solar developer to come build. So that way, again, it's very like Airbnb arbitrage style, where you are arbitraging other people's property and land, generating a solar lease. You can get a couple under your belt. And then from there, I would start to, okay, like, what does this actually look like for me to do?
But again, I'm a very big believer in starting small and derisking the opportunity. So that's how I would start. And actually, that could be crazy lucrative. And again, we have people on our team that are simply 1099 contractors, but they are basically bird-dogging land that way. They're going into partnership, finding a couple of those deals, and then after they get a few, they're starting to kind of build the opportunity larger and wider.
Seth: Now, how do you make your money exactly? Because I think you said that it doesn't cost anything for the landowner. Are you making your money from the developer in some way, or how does this become a profitable venture for you?
Dakota: Yeah. So no matter what we're doing, so from land leasing to actually installing solar for a real estate group to enrolling a national retailer in a solar farm, we just get paid as simply an extension of these solar developers, what's called their origination teams. And so, very similar to any sort of consulting work, we get paid a fee based on how many megawatts of power we either develop or enroll.
And so again, when it comes to land leasing, we could charge for our service. Probably not that much for landowners, but in the case of, like, we work with national retailers and corporations, we could charge hundreds of thousands of dollars for what we do. We choose not to, again, for the sake of competition. There's a lot of sustainability consultants that don’t execute and charge lots of money.
And so we just kind of put the process in reverse and we don't charge for our service because we know we're going to get paid based off of execution. And because we've been doing this for so long and I come from the sales world, we're really results-driven. And so again, we'll get paid based off of how much power we actually develop.
And so other opportunities in land, Seth. Sometimes developers will pay people just a finder's fee, so they'll pay them like $10,000 to $20,000, just as an example, for finding the land and bringing it to the solar developer, which, again, can be lucrative for the right person, not our collective interest.
We want to do the full lifecycle. And so we're going in making these deals with solar developers for the long term. We're finding the land. We're helping build and construct on the land. We're subscribing that solar farm once it's built, and then we're managing the asset long-term over the next 20 to 25 years with our management partner.
So a very different strategy compared to what other people are doing. But that's kind of like some insight into how we get paid. And again, there are opportunities for us to monetize elsewhere. We're just long-term players. And so that's how we think about things.
Seth: So it sounds like you get paid upfront and then also sort of long term as you help manage it?
Dakota: The opposite. We typically don't get paid on the land that we invest in for a long time. And so again, it will come in what's called milestones. The landowner will always get paid first. And if we get paid any sort of upfront money, we'll pay it to the person who brought us the deal. And so again, if we're working with consultants who brought us the land, we're like, just take all the upfront money so you get a payment. We're willing to wait because we make a lot of money for what we do elsewhere and we don't need the cash flow necessarily from a small milestone payment.
And so again, part of the reason why it's cool to work with us is because we think in decades where everybody thinks about instant gratification. And so because we have the ability to think in decades like this, we are willing to wait a long time invest right alongside the landowner to make sure that project actually goes through. And again, that just leverages the opportunity because we're invested in making it work and we don't believe in wasting our own time.
So when we choose to work with landowners and say, hey, we want to do this for the long haul, they can believe us because we're very transparent in our business strategy and how we think through things.
Seth: So as we wrap this up, I guess my closing thought is how do you see the future of land leasing for solar energy development in the next five to ten years? I don't know if there's ever going to come a day when this is saturated or like we don't need any more solar farms or anything like that, but it sounds like clearly this industry is growing, maybe growing faster in some states than others.
But do you kind of think that we're at the beginning of that growth curve, or in the middle of it or near the end of it, or how much more opportunity will there be in the future?
Dakota: Yeah, so I think the opportunity is only going to grow. Who's to say how long of a window we have? But I think we have clearance at least for the next decade. And so again, I think in decades. So I'm committed to doing this for over the next ten years.
And I think that, as I go on, I think a lot of cool things I see other people doing are like funds and syndicates for this type of stuff in the commercial real estate world, for example. And I would love to start doing that with solar farms and again, partnering with people, with audiences and networks, because from our side we're invested in building these projects, but we also want to own and buy up our own land to run these strategies, too.
So again, we practice what we know. My intention was to come on today and provide as much value on the subject as possible, but also let people know that this is the same strategy that I'm running internally at my company. I co-founded Community Solar Authority over half a decade ago at this point. And we are in the collective interest of having land leases ourselves, buying up property and owning that for solar development. And so we're going all in on this area for at least over the next ten years and hopefully that kind of paints an arc as to where we're thinking and what we're seeing out on the field.
Seth: Awesome. Dakota, thank you so much for coming on and talking to us today. I learned a ton from you. I'm sure a lot of people listening have as well.
So just to recap, if people want to find out more about you or talk to you or figure out if their land is a good fit for this. Do they go to, is it communitysolarauthority.com?
Dakota: Yes. So that is our website.
I would actually prefer if you come connect with me on LinkedIn. So that's linkedin.com/dakotamalone. And the reason why is I create content on LinkedIn daily. I've been on there for over a year at this point and it is a way for your listeners to be able to come on and actually have conversations with me. They can have, obviously direct access and also continue to learn about a lot of the projects that we do and what we've got going on.
But if you do have those 10 to 30 acres of land or 50-plus acres of land anywhere across the country, you own it and you're interested in a solar lease, you can go to communitysolarauthority.com, put your information in, and we'll reach back out to see if it's a good fit for some of the solar leasing that we're doing.
Seth: Awesome. And I will include a link to that LinkedIn profile in the show notes. Again, retipster.com/173.
And if you people out there are listening on your phone, feel free to text the word free, F-R-E-E, to the number 33777, to stay up to date on all things going on in the world of REtipster.
Thanks again, Dakota. Thanks everybody out there for listening and we will talk to you next time.
Dakota: Thank you so much, Seth.
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