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27 June 2024

Exploring Renewable Energy Asset Opportunities

Renewable energy has become a crucial component of the United States energy mix, offering a sustainable solution to meet our growing energy demand. Renewables also provide alternative revenue streams that many clients find attractive for diversification. As the renewable energy sector expands, our mineral and surface management teams at SS&C Innovest are encountering more potential revenue opportunities for our clients who own real estate, farmland, and timberland.

Common renewable energy sources include solar, wind, hydropower, biomass, and geothermal. This blog focuses on solar and wind energy, while future posts will cover hydropower, biomass energy, and geothermal energy.

Solar Energy

The most common renewable energy source our teams encounter is, without question, solar energy. Solar energy is fascinating and attractive for several reasons, notably because it does not produce harmful emissions or pollutants. Unlike fossil fuels, solar power can be harnessed indefinitely. In theory, once a utility-scale solar installation is constructed, it can continue to harvest solar energy for centuries. For surface owners, this could mean the potential for long-term royalty revenue. As more solar development occurs, the likelihood of encountering opportunities for solar leases should increase.

We see expansive solar growth in states with significant oil and gas activity, such as Ohio, Colorado, and Texas. For example, solar growth in Texas is expected to triple over the next five years. At SS&C Innovest, our mineral and surface asset managers are prepared to guide you through negotiating solar-related contracts, mineral sales, and surface waivers.

Solar Royalty Owners

For solar energy projects, landowners (surface rights holders) typically receive royalty revenue according to the terms of a negotiated lease agreement. Surface owners will be approached with lease offers, including bonus and royalty payments and primary/secondary terms ripe for negotiation. Operators and their subcontractors will also need easements, surface use agreements, and rights of way. Importantly, surface owners must negotiate the removal of panels when the lease terminates. The Unique Assets team can work with operators and contractors to ensure the best possible terms in all contracts.

Wind Energy

Wind energy currently generates nearly double the total electricity compared to solar sources in the United States, accounting for more than 12% of total electricity nationwide. The projected growth of wind energy capacity is expected to reach 20% of total electricity by 2030. This aggressive growth within the wind energy sector presents another potential opportunity for our clients holding surface assets.

Wind Royalty Owners

Wind turbines capture kinetic energy from the wind and convert it into electrical energy. Landowners who lease their land for wind turbines receive royalty payments based on the energy generated. These wind lease agreements typically have terms of 20-50 years, providing many years of royalties for participating landowners.

As we navigate the evolving landscape of energy production, renewable resources are emerging as key players for a more sustainable energy mix. For the surface-owning clients we represent, these resources present an attractive opportunity to add new potential revenue streams to their portfolios. Our land and mineral management teams proactively anticipate increased opportunities for our clients within the renewable space and are prepared to handle the challenges this new asset class presents.

SS&C Innovest provides customized outsourcing solutions and Managed Services. Scores of organizations and individuals across the country, from individuals, family offices, and community banks to national organizations, empower SS&C Innovest to manage these services on behalf of their clients or directly. To learn more about how SS&C Innovest can support your needs, call (800) 727-0605 or email