Farm managers surveyed on renewable energy agreements

CHAMPAIGN, Ill. — Wind and solar farms, data centers and battery storage sites have been in the headlines, and farm managers were surveyed to find the extent of the growth.

The Illinois Society of Professional Farm Managers and Rural Appraisers’ Mid-Year Snapshot Survey found 48% of survey respondents on managed farmland had a farm enter into a new wind or solar agreement during the first half of 2026, and 52% had no new agreements.

Of those involved in new agreements, 26% entered both wind and solar agreements, 13% entered solar agreements only and 10% entered wind agreements only.

Juo-Han Tsay, assistant director for the TIAA Center for Farmland Research at the University of Illinois, and Luke Worrell, of Worrell Land Services, Jacksonville, the ISPFMRA general chairman of the Farmland Values Survey and Conference, presented the mid-year survey data in a webinar on Aug. 27 that also included farmland value trends and rental agreements.

“As far as we know, there is no comparable Illinois data right now related to these topics. So, this is the pictures that we have of what is happening on the ground and it’s coming from the people that are negotiating these agreements,” Tsay said.

“Keep in mind that everything here is activity since January. So, it is not showing the total happening in the whole Illinois farmland market.”

Further Details

Other survey findings are was follows:

• Annual lease rates offered for new utility-scale solar or wind contracts clustered between $1,000 and $1,999 per acre, reported by 62.5% of respondents. A further 31.2% reported $2,000 to $2,999 per acre and 6.2% reported more than $3,000 per acre. No respondent reported rates under $1,000 per acre.

• Battery energy storage entered the market. Of respondents, 33% received inquiries or entered option agreements for utility-scale battery energy storage systems during the first half of 2026: 22% for projects co-located with solar and 11% for standalone facilities.

• Seven respondents knew of a guaranteed annual base rent for a battery storage lease. Four were in the $1,500 to $4,999 per acre range, two between $5,000 and $9,999 per acre and one at $10,000 or more per acre.

• An active wind, solar or battery lease raises the price at which farmland transacts. Of respondents, 72% reported a moderate premium of 1% to 15%, and 8% reported a significant premium above 15%. The remaining 19% reported no impact. No respondent reported a discount.

• Lenders have not visibly changed their approach to encumbered ground. Of respondents, 73% were unsure whether agricultural lenders are altering underwriting standards for farmland under long-term renewable energy leases, 24% saw no noticeable change and one respondent reported stricter terms or higher scrutiny.

• Data center developers are active in Illinois farmland. Of those who managed farmland, 26% were approached by developers or brokers to sell or lease managed farmland for a data center project during the first half of 2026.

• Where data center development is occurring, developers are primarily seeking parcels of 100 to 250 acres, reported by 50% of respondents, followed by 250 to 500 acres, reported by 27% of respondents, and more than 500 acres, reported by 18% of respondents.

• Renewable development and 1031 exchanges are also shaping buyer intent. Of the buyer intentions, 17% were 1031 exchanges, and 6% were renewable energy development. Operating the farm, at 32%, and renting it out, at 31%, remained the two most common intentions that buyers intend to do with the land.

Worrell was asked if he thinks demand for farmland for wind and solar installations will increase at this same level going forward.

“I was wrong about this a couple years ago. I thought it would kind of dissipate a little. I’m not saying I thought it would just go away, but I was surprised at how the level of interest continued to rise,” he said.

“Just based on experience, until I see tangible proof that people have stopped calling me about farms that I manage or might have on the market, I think it’ll increase. To what level, I don’t know, but if I had to answer today, I would say increase.”

Rental Arrangements

The survey also included an updated snapshot of the various rental agreements between farmers and landowners in the first half of 2026. Over time, variable cash rents have increased, and share rent leases have declined.

Respondents indicated 35% are variable cash rent leases, 28% are share rent, 21% are fixed cash rent, 12% are modified share rent and 4% are custom farming arrangements.

Farm managers expect that trend toward variable cash rents to continue into 2027 — 52% expect greater use of variable cash rents and 29% expect greater use of fixed cash rents, while 45% expect less use of share rent leases.

Variable Cash Rent

For variable cash rents, the most common arrangement has a base cash rent paid regardless of prices, yields or incomes, with a bonus payment entered into the calculation based on revenue.

Respondents named 62 lease terms in total:

• 42% were a base cash rent paid regardless of prices, yields or incomes.

• 39% were a payment made when revenue exceeds a specified level.

• 6% were a revenue payment beginning at zero revenue.

• 5% were a payment based on price.

• 5% were a payment based on yield.

• 3% were costs of production entering the calculation of rent.

Farm yields are used in 96% of the cases when yields enter rent calculations. County yields are used in the other cases.

When price enters rent calculations, multiple prices at delivery points are the most common method for arriving at the price, with 57% of leases using multiple prices at a local delivery point, 36% using futures prices and 4% using one price at a delivery point.

Crop insurance and/or government payments are used to calculate rent payments in 29% of the leases.

When gross revenue is used to calculate a bonus, the average percentage is 36% for corn and 40% for soybeans.

Most respondents, at 64%, are very satisfied with the performance of variable cash leases, 29% indicated they were very satisfied and 7% indicated they were neutral.

A majority of respondents indicated that variable cash rent arrangements make negotiations easier as compared to fixed cash rent arrangements:

• 24% indicated that negotiations were much easier.

• 62% indicated that negotiations were somewhat easier.

• 10% indicated that negotiations were about the same.

• 3% indicated that negotiations were somewhat harder.

Most respondents indicated that lease terms do not change every year:

• 7% indicated that every year some terms of the lease change.

• 68% indicated changes occur periodically.

• 25% indicated that lease terms seldom change.