The Law of Solar: A Guide to Business and Legal Issues

The Law of Solar: A Guide to Business and Legal Issues

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Solar Project Property Rights: Securing Your Place in the Sun

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Developing and operating a successful solar energy project requires more than having the latest solar technologies. Low-maintenance, high-return projects start with securing long-term project site rights under leases or easements that ensure control of the land for all necessary uses, undisturbed access, exposure to solar rays, and flexibility for project modifications based on rapidly emerging technologies or market changes. The form and substance of solar leases and easements vary based on the type of system (photovoltaic (“PV”), concentrated photovoltaic (“CPV”), or concentrated solar power (“CSP”), for example), the type of installation (rooftop or ground-mount), the business model and practices of the developer, applicable law, and the type of landowner or host (not-for-profit, commercial, residential, or utility-scale). In light of these and other variables, this chapter focuses on a few common but key issues: establishing the scope of rights and property under a site lease, easement, or government right-of-way; addressing critical title problems; and addressing water rights, statutory solar easement requirements, and other real property matters.

I. Distinguishing Land Rights and Identifying Project Needs. Among the first steps in developing a solar project is securing rights to the land needed to construct, operate, and maintain the project. Typically, site rights are established through a lease or easement agreement. In order to maintain the deductibility of land cost for federal income tax purposes, it has usually, historically been best that the project entity not acquire fee title to the land. For large, utility-scale CSP and other large projects, however, purchasing fee title may have economic and water rights advantages or avoid limitations on the duration of leases or easements. Project counsel should be mindful of the relative advantages and disadvantages of leases and easements in various states. These issues can range from differences in tax treatment to nonrecognition of easements for possessory uses or limitations on the types of easements available in a particular state. For rooftop PV systems and small-scale ground-mounted systems, an easement agreement can offer a secure right to use areas of property or buildings that are also occupied and used by others. Large-scale PV, CPV, and CSP projects may be better served by leases that secure exclusive occupancy for the project, though easements may be sometimes used as well, with similar terms and effect. Project developers should examine their project needs in terms of unobstructed spatial requirements; exclusivity; the distribution, transmission, or use of the power generated by the project; energy storage; and resource demand (such as water, surplus power supply, and thermal energy storage). An exception to the general concerns regarding rights to land is when the project is structured as an equipment lease, generally in connection with an installation on a host entity’s building(s). In this case the project owner/lessor may not have a recordable interest in the project site but will instead have access rights described in the equipment lease. This structure differs from the site lease or easement approach in several ways, which should be discussed with counsel.

A. The Solar Project Property Agreement.

1. The Purpose and Scope of the Interest. Lease agreements provide the broadest occupancy and use rights for a project site and are the most common site-control vehicle for CSP and CPV projects and ground-mounted PV systems. A solar lease agreement should provide the developer with unrestricted access to and from the property and the exclusive right to use the leased property for solar energy development. Developers generally do not share the leased property with other occupants or even the landowner because, unlike wind energy projects that allow for compatible simultaneous uses of the land, solar projects are land-intensive, dense facilities, and typically require that the developer have exclusive use of the property. While some sheep grazing may be possible and can be useful in managing vegetation among certain solar arrays that are four feet off the ground or higher, developers are generally well served to lease on an exclusive basis property that is wholly unoccupied. On the other hand, leases may be less suitable for certain rooftop PV systems or shared spaces (e.g., garages and parking lots), because the developer/project entity is not the only occupant of the space, or in states where use of a lease has other adverse effects. In rooftop and shared space situations, a lease that gives the developer control of the site, and the coextensive responsibility for the site, may exceed the needs and comfort level of many developers.

Easements can be ideal agreements for rooftop and smaller-scale PV projects when the project developer and the project share a larger space with the landowner or third parties. An easement is a real property interest whereby the landowner grants to the developer a right to use the property for a specific purpose. The form of easement typically cannot be unilaterally revoked without cause by the landowner and can be pledged by the developer as security for financing. A typical rooftop shared space easement secures to the developer a right to enter and use the property and is defined by a scope of use, exclusivity (or nonexclusivity), a term, and certain responsibilities and rights of each party to the easement. A mere license or revocable permission to conduct an activity on the property is not generally considered a real property right and is unsuitable for establishing most project site rights.

Easements, while sometimes mirroring the terms and conditions of a full-blown project lease and used for stand-alone, utility-scale solar projects, also can be well suited for rooftop or shared-space installations because they ensure the developer’s use of a portion of a larger piece of property or building, while limiting the developer’s responsibility for areas outside of its use. Whether one uses a lease or an easement as the site-control agreement for a utility-scale project, the table of contents and terms and conditions of the agreement will be very similar. The basic site-control issues for a solar project are the same regardless of the technical form of the site-control agreement.

2. The Scope of Property Subject to a Solar Project Property Agreement. A solar developer will want to ensure that it contracts for sufficient land to access, develop, and operate its project; to protect its project facilities from dust, dirt, debris, vandalism, shading, and other outside forces; and to provide flexibility in selecting the precise location for the system and any ancillary facilities. However, unlike wind projects and some ocean and tidal projects, solar projects are land-intensive, dense developments. A typical wind project uses, on average, one acre to produce one megawatt of energy. A wind developer might lease a 50-acre parcel and use 10 percent of it. In a typical wind project, the landowner may continue to use the remaining portion of the larger leased premises for agriculture or other uses that do not interfere with the project operations while profiting from the wind power produced on the leased land. On the other hand, solar projects can require up to five acres for every megawatt produced, and the solar facilities usually occupy (or the landowner is generally denied entry to) virtually the entire project site. Depending on the amount of additional land the landowner has and the size and location of the solar project on its land, there may not be any remaining, usable land for the landowner’s own use. Consequently, the landowner may have more concern for the location and configuration of a project that uses less than all of the landowner’s contiguous lands to preserve access to and use of remaining areas that may still be put to productive use by the landowner.

3. Potential Resolutions to the Scope of Land Requirements. In utility-scale solar projects, there are few alternatives to leasing or otherwise acquiring secure control of large amounts of land and retaining exclusive control over those lands for the life of the project. As mentioned above, unlike wind development projects in which the landowner retains the right to use the property not occupied by wind facilities for farming or other noninterfering uses, solar projects often entirely preclude any coexisting agricultural or other active use of the developed project area by the landowner. The landowner is likely to lose all productive use of lands leased to a solar developer. Thus the payment for the use of the project site will not be ameliorated by any offsetting additional income or benefit the landowner might otherwise obtain from joint use of the site. As a result, lands with low agricultural or mineral value are better situated for lower land rents and to potentially allow a developer a better marginal return, though in high-demand or uniquely situated properties with high-value solar characteristics, the value may be set by the solar development value of the site as its highest and best use. The savvy developer will research the value of the land and its potential uses, and be prepared to negotiate an agreement that provides an attractive income stream to the landowner in light of local market conditions while maintaining profit margin for the prospective project.

Regardless of any alternative-use value of a particular property, reaching agreement on the amount of land subject to the agreement, the payments and other terms and conditions of the agreement will involve a number of factors. Most common payment terms are tied to the number of acres of land under contract, the type(s) of improvements intended for the particular site, the amount of energy produced by the project, and what other interests or properties of the landowner may be disturbed or used in the project for access, transmission, operation and maintenance, or other facilities. In addition, a site-control agreement may give the landowner comfort that the developer will minimize the project’s impact on the land and make available any unused space for other uses by the landowner. For example, an agreement may provide:

  • A minimum annual rent payment based on the amount of acreage under contract. In an agricultural area, this rent may be based on the land’s agricultural value or other highest and best use value, whichever is greater.
  • A power sale revenue-based payment to be made if and to the extent a negotiated percentage of the payments received by the developer from energy produced and sold by the project in a particular year exceeds the minimum annual rent payment for that year.
  • An agreement by the developer to consult with the landowner during the project’s scoping stage regarding the location of the project and its related facilities. Sometimes, certain sensitive areas of a larger parcel are made off-limits for certain types of development in the agreement itself or carved out of the land subject to contract in the first place. Consulting with landowners can give more comfort that their concerns will at least be heard and considered in the siting process. Notwithstanding the consultation provision, the agreement will typically make clear that the developer is the final arbiter on where, whether, and when to locate project facilities within the project footprint. Again, for solar projects, the facilities generally occupy (and preclude other use of) the entire project site.
  • An agreement by the developer to release lands that are not necessary for the project from the site-control agreement once the project’s final scope, configuration, and location are determined. Often, such a release would not release the protective provisions relating to noninterference with the influx of solar radiation to the remaining project site and would also reserve access, utility service, and transmission or collection easements or rights serving the project site if the remaining project site did not directly abut the existing, public access and utility/interconnection/transmission routes and facilities serving the project.
  • An agreement to allow exploitation of mineral, oil and gas, etc., resources of the subject property so long as such did not involve any entry onto or disturbance of the surface of the project site or of the developer’s access, facilities, or operations. For instance, the agreement could allow directional drilling for oil or gas from a remote location so long as such activity did not involve explosive or concussive methods or other methods that could affect the surface use or cause or contribute to subsidence, involve any entry or activity above 500 feet below the surface, or otherwise affect the use or operation of the site or project facilities.

4. Easements: Project-Wide and Ancillary Rights. An exclusive easement will give a developer the sole right to use a portion of the landowner’s larger property, much the same as a lease would. Easements are often used where the landowner’s property may have other users, such as when a project is located on a roof or over a parking garage. In order to protect the developer’s investment, as with any adequate site-control agreement, the easement must ensure that the landowner and third parties will not interfere with the developer’s use. Key components of a solar project easement include, among others:

A Specific Term. Easements can be perpetual in nature (for so long as the allowed use continues), whereas leases generally are established for a set period of time (though many states recognize perpetual leases where the intent to create a perpetual leasehold is clearly set out). Developers using an easement for a solar project, unless there is a reason to make the easement longer or perpetual (subject to developer’s termination rights), typically include a term of 20 to 30 years, with extension rights, as they would under a lease.

A Right to Install Fixtures and System Equipment. As with a solar project lease, a solar project easement should include explicit rights to install, inspect, repair, replace, operate, improve, alter, expand, relocate, and remove all project equipment and related fixtures, which are to remain at all times the property of the developer.

A Clearly Delineated Scope. Rooftop projects and projects sharing common boundaries with unrelated facilities (for example, box stores, parking lots, and garages) may require only portions of the building or facilities for the actual project, but the developer and its installer will need access to and from the project area and the construction equipment areas, as well as utility and transmission rights. These rights should be clearly delineated in the easement agreement to protect the developer’s investment and put others on notice that, even if the host facility is closed or a stairwell is off-limits to the public, the developer still has the right to access and use those areas.

As part of the scoping of a project in a shared-use situation (such as a rooftop project), developers will want to give careful consideration to the myriad uses and needs they may have throughout the entire life cycle of the project, including the periods of resource assessment, construction, operation and maintenance, and ultimate removal or decommissioning. Construction, ongoing access, and the right to move, repair, and replace equipment for the life of a project are just a few of the considerations to take into account when crafting an easement.

Every project agreement should also include access, transmission, and other rights, on- and off-site, that are needed for the development and operation of the project. Developers should work with landowners to create mutual noninterference provisions and establish access and use rights that protect the developer’s project while accounting for other ongoing uses or needs of the property.

Finally, because of the more open access or close proximity of use often available to third parties, rooftop and parking structure installations have certain considerations not applicable to more isolated and secured system installations. Project site agreements should account for damage to systems from vandalism or from the landowner’s invitees or others; responsibility for roof or parking lot maintenance, including any costs associated with resultant system shutdowns; and ongoing access to sunlight. See Section III.B below.

B. Alternative Land Rights: Fee Interests; Federal and State Lands. Utility-scale CSP and PV systems are uniquely suited for large swaths of flat land. With current technology, the slope of most project sites should not exceed 1 percent, though some CPV systems can be installed on rougher terrain. Relatively flat, wide-open spaces in areas with plentiful sunshine call to mind the Southwest, the plains states, and inland rural areas of California. Ownership of these lands runs the entire range of private landowners; federal, state, or local governments; or Native American tribes.

State and federal lands are under the jurisdiction of the departments of state lands and the Bureau of Land Management (“BLM”), respectively. County, city, and other state-subdivisions are governed by the applicable state statutes and local ordinances. Each state and local jurisdiction has a unique scheme for leasing or licensing the use of its public lands, as does the federal government. Many of these departments are well acquainted with granting grazing or mineral rights but can be less familiar with the installation of large-scale solar projects. Developers should explore the various forms of land-control rights available from the applicable government authority for the land at issue.

BLM regulations specify procedures for obtaining site rights, called right-of-way (“ROW”) grants on BLM lands. The regulations allow resource assessment, construction, and project operations. They provide for project-specific rent (based on appraisal, with a phase-in period during project development) and terms of the grants (generally not to exceed 30 years, with an option to renew). For utility-scale solar projects, the BLM has created a separate Solar Energy Program. See http://blmsolar.anl.gov/. The purpose of the program is to support the responsible development of utility-scale solar energy projects on BLM-administered lands in the six southwestern states. Under the Solar Energy Program, the BLM has classified about 79 million acres of BLM lands that are excluded from solar energy development and also identified about 285,000 acres of BLM lands as priority areas, or Solar Energy Zones, that are suitable for utility-scale solar projects. So far, the BLM has approved 19 Solar Energy Zones across California, Nevada, Arizona, Colorado, Utah, and New Mexico and may identify new zones in the future. New applications for utility-scale solar projects are processed in accordance with the BLM’s Record of Decision for the Solar Programmatic Environmental Impact Statement. Multiple applications for the same land can trigger a competitive process. The process includes BLM consideration and approval of a detailed Plan of Development for each project and full environmental review in compliance with the National Environmental Policy Act. BLM’s final Record of Decision on solar ROW grants may be found at http://blmsolar.anl.gov/documents/docs/peis/Solar_PEIS_ROD.pdf.

The various available means for securing site rights on public lands should be examined, and any potential drawbacks evaluated based on time, lack of exclusivity, and costs to ensure that the project’s long-term value is maintained and that the investment is protected from vandalism, potentially disruptive uses (shading), or other interference during the life of the project. Because governmental authority is often limited by, and agreements with those authorities are often subject to limitations imposed by, statute, ordinance, regulation, charter, or constitution, one must be familiar with the implementing statutory and other laws applicable to the particular arrangement. Statutes, constitutional provisions, and other applicable laws often specifically override any contrary provisions of a written contract, so reliance solely on the text of a site-control agreement for these lands may be deceptive.

Leasing or obtaining ROWs on Native American tribal land is an attractive possibility in areas where the tribes own or control large areas of land suitable for solar development. Developers should be aware that leases and ROWs on Native American tribal land require approval by the Bureau of Indian Affairs (“BIA”). Any agreement that encumbers tribal land for a term of seven years or more triggers BIA review. Projects sited on Native American tribal land are also subject to federal environmental and other statutory review requirements. For example, projects on Native American tribal land, as with federal lands, will almost always require an environmental assessment under the National Environmental Policy Act. Thus, as part of the initial siting evaluation of a project, developers should assess sacred sites (including burial grounds, native plant harvesting areas, and ceremonial locations). Developers should consult with the tribe itself regarding unique or archaeological resources on the proposed site. Each tribe is in the best position to evaluate and determine which sites have cultural relevance to that tribe and to weigh the potential issues associated with leasing such lands for solar projects. Also, whether or not a project is to be located on tribal lands, project sites including or near potential or known cultural resource sites will also typically require consultation with the applicable tribe(s) as part of the permitting process.

When exploring potential projects on Native American tribal land, as with federal lands, developers should account for the time that likely will be involved for federal agency review and approval, plus any associated environmental and cultural resource studies. These may add significant cost and time to a project’s development period and construction. As with the various state and local governments, tribes also have their own laws and rules that vary from tribe to tribe. Attorneys, local staff, and tribal contacts who are knowledgeable in tribal land leasing requirements and the intricacies of permitting and siting projects on particular tribal land are invaluable resources for navigating the statutory requirements and any review or permitting specific to the land at issue.

II. Overcoming Title Roadblocks. Securing an interest in property for a solar project requires more than just a signed solar project property agreement. If a rooftop or utility-scale project site is encumbered by existing leases, easements, mineral rights, or other interests, the project developer takes its interest in the land or site subject to those existing rights. Unless discovered and dealt with early on, third-party rights that prohibit or potentially interfere with or limit the project can result in significant delays, liabilities, losses, and costs to the developer. Accordingly, the developer should obtain and carefully analyze a search and examination of the title to the project site along with a complete, detailed survey of the site and proposed location of project facilities, and purchase a policy of title insurance to help protect its investment in the project. These principles apply equally to a new acquisition (including acquisition of the equity interests in an existing project entity, where there are additional, special title insurance concerns) or the financing of an existing or to-be-constructed solar energy facility.

A. Title Review. It is fundamental that for a complete review of title, one must obtain all documents in the public record and off-record agreements relating to the proposed project lands to (1) determine the person(s) or entity(ies) vested with title, (2) determine whether the title is subject to liens or mortgages that create unacceptable risks to the solar project, and (3) discover all encumbrances, such as easements for utilities, road rights-of-way, mineral and timber rights, or other interests held by people or entities other than the landowner that might prevent, limit, or interfere with construction or operation of the project as planned. Beyond review of available documentation, a developer would be deemed to have notice of (and will take subject to) the rights of parties in possession of the subject property or whose rights could be ascertained from a visual inspection of the subject property. Such indicators of potential third-party rights could be a road or utility line crossing the subject property without a corresponding recorded easement (hence one aspect of the value of a complete survey), the actual physical presence of third parties on the land, or signage, vehicles, or the like on the land that indicates a third-party presence or interest. It is critical to obtain the title information as soon as possible and review it thoroughly to make certain that all interests of record and off-record are discovered, disclosed, and analyzed carefully. Insurable title to the lease and/or easement is a key factor in successfully financing, selling, or syndicating a project as well as a prudent precursor to any project development or purchase of a project or a project site control position.

B. Determining Whether to Undertake Curative Measures. Once all of the information contained in the preliminary title reports or commitments for title insurance, the survey(s), and all off-record agreements relating to the site have been reviewed, it is necessary to cull those title issues that must be corrected or cured from those that will not impair the vitality of the project and may be permitted to remain. If a leasehold or easement interest is obtained from someone claiming to own the land, when, in fact, the fee simple title of record is vested in another (or otherwise known to be vested in another, even if not of record), the title company will require correction of the title and/or the affected site control agreement before a policy can be issued. Some things are as easy as a mere name change, which can be dealt with by a recitation that the person was “formerly known as” or “who took title as” or the like. Others may require further documentation, such as the death of an owner of record before probate and disposition of the project property interest of record to the heirs or devisees. If the owner had held a survivorship estate with other co-owners, resolution may be as simple as recording a death certificate. Most often, mortgages must be addressed in some manner that will permit the lender’s interest to coexist with the project, while ensuring that the project is not subject to foreclosure by the prior mortgagee. Easements or rights-of-way can also be problematic—some must be adjusted or a side agreement entered with the easement holder to allow access to or construction and/or operation of the proposed project or related facilities or uses, whereas others may not create any risk to the project and need not be addressed. All such interests should be carefully reviewed and any potential problems dealt with before proceeding with any development on a project.

C. Curing Title Defects. After identifying potential title issues that need to be addressed, one must analyze the range of curatives to address the issue, determine the most efficient and effective means to that end, and negotiate appropriate documentation to resolve the matter. For existing mortgages, developers should work with their attorneys and the title company to evaluate whether a subordination agreement is required, which can be difficult or impossible to obtain from institutional and other lenders, or if a nondisturbance agreement will suffice. For existing easements, the developer should evaluate whether a consent and crossing agreement is necessary, or if the easement holder will modify its easement to allow the solar project or related facilities to cross or overlap the easement area or limit the area of a blanket easement to avoid overlapping any project facilities or access.

A utility, a lender, another landowner, or some other person with a pre-existing lien or encumbrance on or an interest in the project property may not always be interested in helping to solve the developer’s title problem. Nevertheless it is often necessary to secure that person’s cooperation and agreement to deal with the issue in the most effective and complete way. Parties with a legal interest in a project site may hold such interest for the long term. Initiation and maintenance of good relationships with such parties may help to resolve and avoid problems throughout the life of the project.

D. Mineral Rights. Mineral rights that are not subject and junior to the developer’s site control agreement present a serious challenge to developers of utility-scale projects. Projects located or sought to be located on lands with existing mineral rights holders, such as oil and gas companies, railroads or their successors, or other persons or entities, including governmental bodies, can be at risk of forced removal or destruction of the project facilities, depending on the circumstances, the applicable law, and the terms of the mineral right.

Broadly speaking, the term “mineral rights” refers to the privilege of exploring for, extracting, exploiting, processing, selling, and earning income from the removal and sale of oil, gas, and other valuable mineral resources found under the surface of the land. Note that mineral rights are rights to the applicable substances included in the right, whether at or below the surface of the land, and do not necessarily indicate that the mineral owner also owns the surface of the land. However, the mineral rights owner generally has the superior right to use as much of the surface as is reasonably necessary to extract the minerals (“surface rights”). Absent an express limitation on such right in its granting instrument, or a release, waiver, or subordination of mineral rights by the holder, or an agreement not to interfere with the solar project operations, the presence of mineral rights can be a significant obstacle to project development, financing, syndication, or sale. It is often possible, however, to insure title around mineral rights that are shown to be ancient, untraceable, or otherwise abandoned or of a nature or in a jurisdiction or location where such rights are unlikely to be (or allowed to be) exercised to the detriment of the surface use.

On occasion, the holder of mineral rights may be willing to relinquish or limit its surface rights. One option is to enter into a long-term lease under which the mineral rights owner waives surface rights in exchange for a royalty based on project revenue, similar to landowner rent. More often is some sort of surface use waiver or agreement that allows peaceful coexistence of the solar project and the mineral operations, but on different areas.

E. ALTA Energy Endorsement Series. Energy projects, including solar and other renewable energy projects, built on leasehold or easement site control agreements have certain unique attributes requiring different coverage than what has traditionally been available through a standard American Land Title Association (“ALTA”) title insurance policy in a transaction involving acquiring fee ownership of a project site. A traditional policy of title insurance on a leasehold or easement interest typically covers the real property interest insured under the policy (the leasehold rights or easement rights in the land described in the policy), but does not insure any improvements or other facilities (such as the collection system, transmission/collection lines, transformers, switchgear, etc.) installed by the tenant/easement holder and that the tenant/easement holder will or may remove from the site during or at the end of the lease term, which are deemed tenant’s trade fixtures and characterized as personal property. Neither does a typical title policy take into account that such improvements are part of an integrated system in computing damages for an insured loss. In addition to the general rule regarding tenant trade fixtures, most solar project site control agreements specifically provide that the project facilities will at all times be and remain the sole separate property of the tenant and not part of the real property. ALTA policies do not insure title to nor provide for damages for the loss of personal property, and the majority of a leasehold or easement energy project’s infrastructure value is in facilities that are likely considered personal property. Further, the basic ALTA title policy forms do not account for claims that arise from improvements to the land constructed after the policy date, and special endorsements to the title policies are required to address these characteristics.

F. ALTA 36 Energy-Project Endorsements. To address the unique needs presented by energy project development, ALTA created a new series of endorsements for energy projects that went into effect in 2012. The ALTA Series 36 (Energy Project) Endorsements (“Series 36 Endorsements”) address certain issues that are particular to energy projects. Among other attributes, the Series 36 Endorsements: (i) expand coverage to account for loss to an integrated project where a covered claim might affect less than all of the covered property, (ii) extend coverage for losses arising from improvements constructed after the date of the title policy, (iii) consider the effect of any loss on “Severable Improvements” (which are considered part of an “Electricity Facility” but may be characterized as personal property), and (iv) include an “Additional Items of Loss” section tailored specifically for energy projects. The Series 36 Endorsements may not be available in all states; however, the title company you work with may be able to provide modified coverage under a traditional policy to account for such lack of availability. Project counsel should be well versed in the new title coverage available for energy projects and adept at working with title insurance underwriters working with renewable energy projects. Such coverage is likely a necessity for the financing, sale, syndication, and development of future projects.

III. Other Potential Property and Land Issues.

A. Water Rights for Concentrated Solar Power Projects. Water rights can be a concern regardless of the type of solar project. Every project likely has a need for water at some point in its life span. Where a project site control agreement grants or includes water rights in the project rights and the agreement or applicable law disallows waste, the developer will have to figure out a way to keep the water right in effect without forfeiture or limitation and without using the water for purposes not allowed under the applicable water right. For instance, a water right for irrigation use on a particular area of the project site most likely cannot be used to support project activities or facilities, other than perhaps irrigation of vegetation in the prescribed area, or be applied for any purpose other than irrigation or at any other place. CSP projects have special water concerns beyond liability for waste or potential forfeiture. Water requirements for CSP projects require careful consideration and planning. When a project is located in a semidesert or desert environment, solar radiation is plentiful, but water may be scarce or severely limited. Project developers should give early and careful consideration to the water requirements for the proposed CSP project and potential sources. A few of the critical questions to ask include:

  • Is there a source of water currently in place on the property—a surface source (such as a river or canal), a municipal source, or a groundwater well?
  • If there is no surface source, is water available from an aquifer or a local source?
  • Do the available water rights allow the water to be used at the place(s), in the quantities, at the time(s), and for the purpose(s) desired by the developer?
  • Are there available alternative uses that the developer can take advantage of to ensure that the full amount of water required to be used to preserve the right can be lawfully used and applied to avoid forfeiture or other penalty?
  • If water rights must be acquired, are such rights available, both legally and physically? What is the process and timing to acquire and perfect those rights?
  • What water laws and restrictions will affect the ability to obtain water for the project?
  • If a well or surface diversion or any storage is required to bring water to or store water for the project, what water rights or permits and easements are needed, and how much time is needed to obtain those rights?
  • What are the ramifications of water use for permitting and environmental review of the project?

A clear understanding of a project’s water needs, the availability of water at a project site, and the time and cost involved in obtaining water is essential to establishing a project’s construction and operation timeline, budget, output, and, ultimately, feasibility.

B. Access to Sunlight: State and Local Government Laws. Approximately 40 states have passed laws or taken measures to promote the installation and use of solar energy systems. The states have two primary mechanisms for ensuring that solar projects can access sunlight to operate the system:

  1. Allowing neighboring property owners to voluntarily grant solar easements that, like any other property right, must be documented and recorded in accordance with local requirements; and
  2. Outlawing the imposition of prohibitions on the placement of a solar power system in a community, or outlawing the imposition of unreasonable restrictions on the placement of solar facilities such that their installation, operation, or functionality is adversely impacted.

Any grant of a property right must contain certain legal elements no matter where the property is situated. Many states require the grant of a solar easement to describe a range of items, including the dimensions (solar envelope) of the easement, the estimated amount of sunlight directed to the system, any permitted shading by vegetation and other plantings, the corresponding reduction in access to sunlight, the property benefitted and burdened by the easement, and, sometimes, the compensation to the grantor of the easement. The solar easement must also contain any state-specific requirements. A state’s focus may be affected by weather, terrain, or the character of the area. Some states and/or local governing bodies can be height- or design-sensitive (California, Colorado) or locale-sensitive (Hawaii), or may focus on visibility and placement (North Carolina), orientation (Wisconsin), zoning (Rhode Island), or setback issues (Oregon). Any terms or conditions for revising or terminating the easement should be included as well. The contracting parties may include their own remedies for breach of the easement, allowing a court to order any interference with the system to stop and awarding damages for the capital cost of the system, any additional energy charges caused by the breach, and attorneys’ fees and costs. Download The Law of Solar - 5th Edition (PDF)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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