(Editor’s note: The following transcript has been edited for clarity.)
Welcome to Resilience, the vodcast where we talk about the most pressing challenges and the biggest opportunities in the energy sector. I’m your host, Shellka Arora-Cox, a partner at Pillsbury Winthrop Shaw Pittman. I’m thrilled to have Laura Pagliarulo, the CEO and founder of SolaREIT, with me today.
Laura and I will be talking about the unique intersection of land and energy transition. Laura, welcome.
Laura Pagliarulo: Thanks for having me, Shellka.
Shellka Arora-Cox: Before we dive into the nitty gritty today and talk about the land and the dirt, let’s begin with your career journey. What was the inspiration that led you this unique position of land and energy transition? How did you get here?
Pagliarulo: I’ve been involved in renewables in various capacities for the past 20 years, with a strong focus on solar. Climate change has always been a core passion of mine. About four years ago, along with three co-founders, I launched SolaREIT. Our collective experience spans roles as project financiers, developers and offtakers. Through this work, we observed that when developers encountered landowners who wanted something other than the standard lease—used about 85% of the time—they often lacked the capital to either prepay the lease or purchase the land outright. As the demand for land for solar and battery storage continues to grow, many landowners, particularly those approaching retirement, may not be interested in a 35-year lease with annuity payments. We recognized how this model could apply across the developer community. We work almost exclusively with developers, helping them leverage land to their advantage.
Arora-Cox: Land is essential for solar and storage projects. Could you talk a bit about how crucial land is to a project’s success? Is it simply about finding the ideal piece of land, or is there more involved?
Pagliarulo: Absolutely. Speaking with my developer hat on, we don’t acquire early-stage assets directly but rather collaborate with developers, providing guidance where we can. The best sites for solar projects right now require careful planning, especially around interconnection. It’s essential to determine where the interconnection will take place and assess the available capacity within the interconnection queue. Interconnection delays have become a significant challenge; in 2023 and 2024, the average interconnection time was around five years. Across the U.S., approximately 1,500 gigawatts are currently stalled in interconnection queues, which is substantial.
Another critical consideration is the type of land—whether it’s farmland, cropland or other agricultural land. This aspect is often a major factor in shaping community reactions to a new solar farm. Developers need to be prepared to work closely with communities, not only to address their concerns but also to consider ways to respect the agricultural heritage or purpose of the land, in addition to the solar or battery storage project.
Arora-Cox: How does SolaREIT assist clients in navigating land-related challenges? Could you elaborate on the specific services and support you provide to help clients manage these issues effectively?
Pagliarulo: We work exclusively with solar and battery storage developers across the country, currently operating in about 19 states. When a developer comes to us, they typically have a purchase option they need to execute, and they look to us for our ability to add value to their projects. Often, developers prefer not to allocate their own capital to real estate. The cost of capital for development purposes is quite different from the capital we bring to the table, which allows us to structure more favorable options for them.
Here’s an example: Let’s say the developer has a $1 million purchase option. We can approach this in different ways. One option is to solve for the lowest possible lease rate, making their project more accretive by assuming a long-term lease with extensions, for instance, a 25-year lease. Another option is to pay above the typical market rate, depending on the specific area. Using Maryland as an example, if the average lease rate in that region is around $3,500 per acre, we might choose to offer $3 million or $4 million for the purchase option. In that scenario, $1 million would go to the landowner, and the remaining amount would go to the developer to use as development capital or for other project needs. Does that make sense?
Arora-Cox: Yes, that makes sense. You mentioned community impact, and while solar projects are certainly focused on sustainability and maximizing decarbonization efforts, they can also raise concerns related to land use and community impact. How does SolaREIT support clients in managing and balancing the goal of decarbonization with the potential effects on land use and community interests?
Pagliarulo: Often, we’re stepping into an existing lease, typically after the developer has secured the necessary discretionary permits and executed the interconnection agreement. We can structure a deal early on, but we don’t close until these milestones are in place. This timing can be well ahead of construction, but that’s when we officially close the deal.
Recently, I’ve observed some exciting developments in the industry. More developers are adopting forward-looking approaches to agriculture, which wasn’t as common even two years ago. Many are making efforts to address conservation concerns, for example, committing to topsoil preservation or restoring topsoil to its original state after construction.
On the agricultural side, practices like sheep grazing are becoming more popular, not only to manage vegetation but also to introduce organic matter back into the soil over time. Other innovations include crop protection clauses in leases. Historically, solar and agriculture have been seen as incompatible, but there’s no reason they need to be.
Since our investment is in real estate itself, it’s ultimately up to the asset owners to decide how they want to manage dual-use options. It’s encouraging to see asset owners becoming more open to practices like dual-use under solar panels, accepting the potential risks and exploring new ways to integrate agricultural use within solar projects.
Arora-Cox: That approach enhances the asset’s value and can also shift the equation away from a “not in my backyard” (or NIMBY) mindset. This leads me to my next question: What strategies does SolaREIT advocate to transform attitudes from NIMBY to YIMBY (yes in my backyard)? How do you encourage communities to actively support projects and even embrace seeing renewable installations in their local areas?
Pagliarulo: A few responses come to mind. First, when a developer selects a site, they’re the ones establishing the initial relationship with the community, often engaging with local planning boards or conservation committees depending on the state. While that responsibility doesn’t fall directly on us, it does reflect on us, so we’re very intentional about partnering with reputable developers. The industry is still close-knit, and we work with well-regarded solar and battery storage developers who maintain strong, positive relationships within the communities they operate.
On our end, since we manage thousands of acres in our portfolio, we’re very open to initiatives that create community benefits. For example, we own the real estate for a project in Massachusetts where the developer is building educational trails focused on pollinator habitats within the solar installation. Giving the community access to these trails provides an educational resource and transforms what might initially seem like an industrial project into something beneficial and engaging for local residents.
We’re also supportive of agrivoltaics or pollinator-friendly features that some communities want to promote. While our control extends only to the area up to the fence line, we fully support these community-oriented features within the fenced area, though the ultimate responsibility and management within that area rest with the project sponsor, not us.
Arora-Cox: You mentioned the combination of solar and storage—a perfect match. When it comes to integrating solar and storage on the same land, is it just a matter of finding additional land, or are there more synergies involved?
Pagliarulo: It’s an interesting dynamic. Solar has a relatively large footprint, typically around five to seven acres per megawatt, whereas storage requires a much smaller area. Surprisingly, only a few states have mandated that solar projects must include storage. When storage is added to solar, the land requirement is minimal. Even with larger projects, like those in Texas, the storage footprint remains small compared to the space needed for solar.
What I often see in the media, though, is some confusion between generation and capacity. For instance, there are articles touting the installation of certain megawatt levels of generation, but they don’t always distinguish between generation (which solar provides) and capacity (which storage adds). Despite this distinction, solar and storage are incredibly complementary, each enhancing the value of the other.
Arora-Cox: Laura, what strategies are developers using today for securing and optimizing land for solar and storage projects?
Pagliarulo: I think we’re in a unique and advantageous position since we work with so many developers nationwide and have insight into the outcomes of their negotiations with landowners through the leases. I’d say the majority of developers are responsible players. Occasionally, we have landowners approach us directly, seeking to finance their lease. From a broader perspective, I believe the solar and battery storage industry faces enough challenges and developers shouldn’t have to deal with unnecessary complications in lease agreements.
However, we do occasionally see some concerning practices in leases that I’d caution developers against. For example, some leases include vague language around rent abatement, allowing the developer to withhold rent payments under certain conditions, such as casualty events or other specified reasons. We also sometimes see extended construction periods paired with very low construction rents, which can be problematic.
On a positive note, it’s encouraging to see more landowners and farmers advocating for themselves, including provisions like crop protection in their leases, which promotes synergy between solar and agriculture. Overall, we see many great developers who work well with landowners and maintain solid lease practices. But unfortunately, we still come across some less favorable agreements more often than we’d like.
Arora-Cox: When it comes to sustainability and environmentally responsible projects, you briefly touched on SolaREIT’s role, but could you elaborate on how SolaREIT approaches sustainability in relation to land use?
Pagliarulo: We closely track a few key things. First, I’d say we actively encourage and support projects developed on brownfields. In these cases, we don’t buy the land but instead work with developers, potentially through easement purchases for such sites. This approach is particularly helpful because these projects often have tight financial margins. Lease costs for land typically account for 10 to 15 percent of an average project’s budget, sometimes even more, which can further squeeze margins. To address this, we’ve developed ways to transact on rooftops, canopies and brownfields. The brownfield approach is a story we should emphasize more—especially since it’s more costly and everyone’s looking to improve project economics. From an environmental standpoint, when we acquire land, we sometimes control more than is directly needed for a project. For example, we might buy a 70-acre parcel but use only 60 acres, leaving 10 acres for additional purposes. Right now, we’re actively exploring how to utilize that extra acreage, which is exciting. Should we use it for restorative wetlands, sublease it to a farm, or develop a pollinator habitat? Personally, I’m in favor of restorative wetlands in certain areas. These are some of the possibilities we’re currently evaluating.
Arora-Cox: And with these projects, we both know that land is key, right? It’s all about location, location. As land becomes scarcer, looking ahead, how do you see the market evolving over the next two to three years?
Pagliarulo: I’d say that land itself isn’t scarce since there’s plenty of it, but high-quality sites are becoming increasingly hard to find. As we discussed earlier, especially in Texas, most of the prime locations for battery storage projects have already been claimed. With solar, having an ideal site wasn’t as crucial early on, but with battery storage, it’s all about the location. It depends on factors like which node you’re connecting to, the volatility of that node, and whether there’s a high-voltage interconnection on the property. Proximity to substation and interconnection costs are also key.
I think many people overlook that simply having land isn’t enough. I remember reading a study suggesting that if we covered an area the size of Lake Michigan with solar panels, we could power the country. But it’s not that simple. The grid has to be able to distribute that energy efficiently, so installations need to be close to load zones. We saw this issue in Maine, where ambitious solar goals led to zero or even negative pricing for solar because the population wasn’t large enough to support it. I hope that helps answer your question.
Arora-Cox: It does answer my question, but let me rephrase it. Land itself isn’t scarce, there’s plenty of it. What’s scarce is a good location. So, it’s really about finding that ideal piece of land for your project, and that’s no easy task. What are the key challenges you see developers facing today?
Pagliarulo: I think the major issues right now revolve around interconnection queue reform. Many of the projects we track experienced significant delays from the notice to proceed (NTP) stage to the commercial operation date (COD) due to utility interconnection studies. Interconnection costs have increased exponentially, which is a major challenge for developers.
Apart from that, public opposition to projects in certain areas is another issue. The solar and battery storage industry needs to adapt, and some companies are already doing so by engaging with communities. Interestingly, I’ve even seen lease agreements that require decommissioning after 40 years, with a stipulation to restore the land to farmland. I have mixed feelings about that; if we own the land in that scenario, we just must factor it into our planning.
Arora-Cox: Shifting gears a bit as we near the end of our conversation—on a lighter note—Laura, any words of wisdom based on our discussion today? Or, how do you unwind when you’re dealing with challenges around land or other issues?
Pagliarulo: Those are two questions! For words of wisdom, I’d say that the developers we work with are increasingly viewing land as an opportunity rather than an obstacle. The savvy developers, especially those in the utility sector—though it’s starting to reach distributed generation as well—are prioritizing purchase options, which they can leverage for added value in the future. If you’re not pushing for those options, you’re likely leaving money on the table. This is an important message for developers: Land isn’t just a box to check for site control and move on. The most strategic developers are actively securing purchase options to maximize long-term value.
As for how I unwind, I do a lot of gardening, especially weeding on stressful days! Spending time with my dog also helps, as well as being present with my kids, who are nine and 15. Putting my phone down, going for a walk, and being in the moment with them is a great way to relax.
Arora-Cox: Excellent. It really is about simple things. Laura, thank you so much for being with us today.
Pagliarulo: It was great talking to you. Thank you.
Arora-Cox: That’s it for today. Tune in next time for more Resilience.
PREVIOUS EPISODES
Resilience: Transforming the Energy Sector – AI and the Energy Transition | Episode 1 (10.7.24)
Resilience: Transforming the Energy Sector – The Solar M&A Landscape | Episode 2 (10.23.24)