Renewable Energy: An Overview

Background

Renewable energy includes many different types of energy sources, such as solar, hydro, wind, geothermal, and biofuels. These sources constantly renew themselves and are considered virtually inexhaustible. In recent years, new focus has been placed on the development and improvement of renewable energy sources. New incentives and regulations have emerged, ranging from funding for research and development of alternative energy sources and production requirements designed to lessen our dependence on petroleum-based fuels, to new air emissions standards and tax credits for implementing renewable energy systems.

Solar

Solar energy is a renewable source of energy supplied by the sun. Solar energy can be converted to electricity using photovoltaic (“PV”) devices, commonly called “solar cells,” or through solar-thermal technologies at solar power plants. Solar cells change sunlight directly into electricity and are made of silicon or other conductive materials. When sunlight hits the solar cell, a chemical reaction takes place resulting in electricity. Solar-thermal technologies in use at solar power plants use the heat from solar thermal collectors to create steam, which powers a generator. According to the U.S. Department of Energy, the greatest potential for solar energy in the U.S. is in Southwestern states, where sufficient solar energy falls on an area of 100 miles by 100 miles to provide all of the nation’s electricity requirements. As of mid-2025, there are over 5.5 million solar installations in the United States, including both residential and utility-scale systems. The solar energy generated is enough to power more than 40 million U.S. homes. The conversion of agricultural land to utility-scale solar is a major point of contention because solar energy projects are extremely land intensive. Solar requires significantly more acreage per megawatt of capacity than wind power. The land under and immediately around the solar panels are typically removed from traditional agricultural production for the 25–35-year long lease term.

Hydropower

Hydropower, or energy derived from the movement of water, is the most commonly used form of renewable energy in the United States. Water that is moving quickly, such as in a fast-flowing river or from a waterfall, can be utilized for hydropower by channeling the water through pipes toward turbines. As the water moves the turbines, electricity is generated. Hydropower can also be developed by building dams along rivers to create reservoirs and lakes of water. When the demand for electricity is high, the dam is opened, and the water is pushed through turbines generating power. The lakes created by the dam also provide recreational opportunities such as boating and fishing. There are some concerns about the impact dams and turbines have on aquatic life and natural habitats due to changes in the course, flow or temperature of the water. Other more infrequently used methods of producing hydropower include tidal power, wave power, and ocean thermal energy conversion. Tidal power produces energy using the natural movement of water currents and tides. Wave power captures the energy produced from waves. Ocean thermal energy conversion uses the temperature difference between the surface of the ocean and deep ocean waters, called thermal gradients, to produce energy. In 2024, hydropower accounted for 96% of the nation’s utility-scale electricity storage through pumped-storage hydropower.

Wind

Wind, the movement of air, is created when the earth’s air is unevenly heated, and warmer air moves toward cooler air. Wind turbines are used to harness the energy produced by the movement of air, and usually have two or three long blades that spin as the air moves over them. The energy of motion contained in the air is converted to electricity as the blades turn a generator. To create a useable amount of electricity for a large population, several wind turbines placed together on a “wind farm” are necessary. Opponents of wind farms point to the problems inherent with placing these large turbines close to populated areas, the harm they cause to wildlife, and the noise that they generate during operation. In 2016 the United States completed its first offshore wind project and has since developed several more. Offshore wind turbines are mainly located in deep water and use undersea cables to transmit the electricity generated to the electrical grid. The United States has a total wind power capacity of 153 GW. Wind is the largest source of renewable electricity generation in the U.S., providing about 10% of the country’s total electricity. Generally, wind projects are more compatible with continued agricultural production because of their small physical footprint. Typically, less than 5% of the lease land is taken out of commission, which allows farmers to continue growing crops or grazing livestock right up to the foundation of the turbine.

Geothermal

Geothermal energy is heat from within the earth’s core about 4,000 miles below the surface. The heat is continuously produced inside the earth by the slow decay of radioactive particles, a natural process that occurs in all rocks. This heat produces either hot water or steam that is used to heat buildings or water, or to generate electricity in a geothermal power plant. Geothermal energy can also be extracted by pumping water underground to be heated by hot, dry rocks. Steam is then returned to the surface for use in generating electricity. Some drawbacks are that geothermal energy is costly to access unless it is close to the earth’s surface and geothermal technology is limited to mainly volcanically and tectonically active regions. In 2024, the U.S. generated 17 billion kWh of electricity from geothermal power plants, representing about 0.4% of total U.S. utility-scale electricity generation.

Biofuels

The agriculture industry has found strong footing in the world of renewable energy through biofuels. These are fuels produced from biomass, or any plant-derived organic matter available on a renewable basis. Biomass includes agricultural food and feed crops, agricultural crop wastes and residues, wood wastes and residues, aquatic plants, animal wastes, municipal wastes and other waste materials.

The two most common types of biofuels for transportation are ethanol and biodiesel. Ethanol is typically produced through a biological process of fermentation of biomass high in carbohydrates. Corn is used most often in the United States. Ethanol is mostly used as a blending agent with gasoline to increase octane and to reduce air emissions. Most vehicles can operate on a gasoline-ethanol blend without any modification. A new type of ethanol- cellulosic ethanol- has recently emerged. This type of ethanol can be produced from a wide variety of biomass materials, most importantly from non-food plant materials. Proponents of cellulosic ethanol argue that it is better than conventionally produced corn-based ethanol because cellulosic ethanol uses non-food portions of renewable feedstock and can be produced from other non-food biomass such as switchgrass, wood products, and by-products of other crops. However, the refining process for cellulosic ethanol is more complex than that for conventionally produced ethanol, making it prohibitively expensive to produce with the current technology.

Biodiesel is an alternative fuel for use in diesel engines that is made from fats or oils such as animal fats and new or used vegetable oils. The most commonly used oils are soybean, rapeseed and sunflowers. Biodiesel is created in a process called transesterification where glycerin is separated from the fat or oil. This process creates two products – biodiesel and glycerin (used to make soap). It is usually blended with petroleum diesel in ratios of 2 percent, 5 percent or 20 percent, but can also be used as pure biodiesel. Biodiesel is one of the most common types of biofuels in the United States and can be used in most diesel engines without any modification. It is clean-burning, domestically produced and a renewable source of energy. The use of algae as a renewable fuel source has been growing in popularity in recent years and many companies are searching for ways to make producible at commercial level to be processed into biodiesels. Other forms of energy can be produced from biomass as well. According to the U.S. Department of Energy, bioenergy technologies use biomass resources to produce a variety of energy related products including electricity, liquid, solid and gaseous fuels, heat, chemicals, and other materials.  In 2023, biomass accounted for about 5% of total U.S. primary energy consumption. This includes biofuels (like ethanol and biodiesel) which made up 53% of all biomass energy consumption. The industry now also includes a growing focus on the development of renewable diesel and sustainable aviation fuels (“SAF”), often produced from waste fats and oils, with significant incentives provided under recent federal legislation. Furthermore, recent data shows that wind and solar have surpassed biomass as the leading sources of renewable electricity generation in the U.S.

Common Legal Issues with Renewable Energy

Engaging in renewable energy projects, whether as a developer, farmer, rancher, landowner or attorney, requires navigating a complex web of legal issues, regulations, and long term contractual commitments. It is highly encouraged to contact an in state attorney who specializes in these agreements prior to entering any agreement related to renewable energy to ensure all terms are fair, the risks are managed, and you fully understand your legal obligations. The following sections introduce common legal issues that arise in these projects to be aware of, such as how land is used and permitted, the complexities of long-term lease agreement, and the critical necessity of due diligence before any deal is finalized.

Alternate Land Use (Farmland vs. Energy Production)

Leasing agricultural land for a utility scale energy project can fundamentally alter the land’s purpose by converting the land from food or fiber production to an energy generation site. When leasing land for solar or wind projects, the land is taken out of agricultural production for the duration of the lease—often 25 to 35 years. Wind projects typically allow for the continued crop or livestock production around the wind turbines due to a small land footprint, thereby creating a supplemental revenue stream. Conversely, utility scale solar projects tend to be land intensive and typically restrict or prohibit use of property immediately around the solar equipment. The solar lease therefore is a replacement of the agricultural revenue from the land.

Landowners must carefully consider the impact that installing solar panels has on the landowner’s property taxes. If the land is enrolled in a Present Use Value (“PUV”) or a similar tax deferral program for agricultural land, installing solar panels may be an activity that is considered “commercial” and therefore not an agricultural activity for the program. This will then trigger a tax rollback, making the landowner liable for multiple years of previously deferred taxes plus interest. This is an area of negotiation with the solar developer to assume both the value of the rollback taxes as well as the increase in and the annual property taxes on the leased land.

Landowners should be careful to contemplate how solar or wind projects may conflict with existing property rights, such as mineral rights. In many jurisdictions, the mineral estate is considered dominant. Consequently, the mineral rights holder has the right to access the surface, which in turn may interfere with the operation of the solar or wind project. Also, local governments through zoning ordinances can mandate distance requirements between energy infrastructure, property lines, public roads, or residential areas. These ordinances governing renewable energy ultimately control the amount of land available to deployment.

Lease Agreements and Landowner Rights

These are not your typical farm leases, renewable energy leases function as an option, easement, and lease simultaneously. Often, the lease agreement doesn’t even guarantee a renewable energy lease. When leasing land for solar, the land is effectively taken out of agricultural production for the duration the lease sets forth, which is generally 25 to 35 years and occasionally longer. While some projects like wind orthose focused on agrivoltaics may allow for continued farming, utility scale solar facilities may not. Generally, during the lease period for a solar project, the landowner’s rights are severely limited, because the solar company will want complete control of the leased property to protect the solar project. It may be possible to negotiate reserved rights on the property during the leasing period, like limited agricultural use or solar grazing. It is also important to consider that agrivoltaics and solar grazing are a future of the industry and should be contemplated when entering into a lease.

Renewable energy leases also often grant the developer broad rights to assign the lease or sublease the land to an operating company or subsequent buyer. This means there is a likelihood the landowner may have to deal with a new entity over the course of the lease. Landowners may negotiate the right of review and approval of any assignment to ensure the new entity will have the financial capacity and be able to fulfill the lease obligations. Also, leases tend to contain decommissioning clauses, that dictate the developer’s responsibility to remove all equipment, foundations, and cables, as well as restore the land to its original grade and soil condition when the lease ends. The possibility of the developer not being able to restore the land due to default or bankruptcy should also be taken into consideration and negotiated within the lease.

Due Diligence

Before construction of the renewable energy project begins, the developer typically initiates an option period for due diligence. This is a period of 2 to 5 years, during which, the developer will conduct a land and title review and a regulatory compliance review to secure necessary permits and verify site suitability. During the due diligence period, the developer performs a title check. Landowners should be sure that the title is free and clear of encumbrances like existing mortgages, conservation easements, or other use agreements that could cause the project to be delayed or even terminated, potentially costing the landowner the opportunity for a renewable energy lease. It is also important to note that if the land is enrolled in a United States Department of Agriculture (“USDA”) program like Conservation Reserve Program (“CRP”), the landowner will be legally required to repay the government all past funds plus interest and penalties if the contract is terminated early for development.

Major Statutes

One Big Beautiful Bill Act of 2025

The One Big Beautiful Bill Act (“OBBBA”) of 2025 significantly restricted U.S. federal support for clean energy. The Act eliminated several consumer tax credits, including the clean vehicle credits, the residential clean energy credit, and the energy efficient home improvement credit. Furthermore, the OBBBA made changes to the Clean Energy Investment Credit and Clean Electricity Production Credit, by imposing an accelerated phase out schedule for new wind and solar facilities. The Act, however, extended the Clean Fuel Production Credit by two years through 2029, and it concurrently reduced the credit’s value for sustainable aviation fuel.

Inflation Reduction Act of 2022 

The Inflation Reduction Act (“IRA”) of 2022 fundamentally reshaped U.S. clean energy policy, by incentivizing domestic clean energy production. The Act extended and modified the Production Tax Credit (“PTC”) and established the Clean Electricity Production and Investment credits. To strengthen the clean energy supply chain, the Act established the Advanced Manufacturing Production Credit for domestically made solar, wind, and battery components. Also, the Act dedicated funding to the Rural Energy for America Program (“REAP”). The Act established the Clean Fuel Production Credit for low emission fuels as well as the Sustainable Aviation Fuel Credit.

Agricultural Improvement Act of 2018

The Agricultural Improvement Act of 2018 authorized mandatory funding for various programs listed under the Energy Title that are aimed at benefitting the bioenergy and biofuels industry. This included funding for programs such as the Biobased Markets Program, Biorefinery Assistance Program, Bioenergy Program for Advanced Biofuels, Rural Energy for America Program, and the Carbon Utilization and Biogas Education Program. The Act also expanded the previous definitions of what constitutes renewable chemicals and biobased products to allow for more innovative developments in renewable energy.

Food, Conservation and Energy Act of 2008

The Food, Conservation, and Energy Act of 2008 included several energy-related provisions. Among other things, it established the Biomass Crop Assistance Program which encourages the production of feedstocks for cellulosic ethanol, provides multi-year contracts to growers of dedicated energy crops, and creates incentives for the production, storage and transportation of biomass to bioenergy facilities. The Act also established a sugar-to-ethanol program, and provided millions of dollars for a biobased marketing program, and a Biodiesel Education Program. Finally, the Act established the Rural Energy for America Program which provides grants and loans to farmers for the purpose of purchasing renewable energy systems and making energy efficiency improvements.

Energy Independence and Security Act of 2007

The Energy Independence and Security Act of 2007 was designed to improve vehicle fuel economy and reduce U.S. dependence on oil. It increased the Renewable Fuel Standards created by the Energy Policy Act of 2005 by nearly five times and extended the requirements through 2022. Additionally, it aimed to reduce the demand for fuel by setting a new national fuel economy standard of 35 miles per gallon for passenger cars and light trucks by 2020. Other provisions of the act were aimed at increasing efficiency in homes and businesses.

Energy Policy Act of 2005

The Energy Policy Act of 2005 was the first major energy legislation to be enacted since the Energy Policy Act of 1992. The Energy Policy Act of 2005 includes a variety of incentives and programs to encourage the development and production of alternative fuels. One of the most important was the creation of the Renewable Fuel Standards (“RFS”), which requires refiners, blenders and importers of gasoline to blend a certain amount of renewable fuels with gasoline each year. The initial requirements were to incorporate approximately 4 billion gallons of renewable fuels in 2006, increasing over time to 7.5 billion gallons in 2012. However, the RFS requirements were increased and extended by the Energy Independence and Security Act of 2007. The new RFS requires 9 billion gallons to be blended in 2008, and increases that requirement to 36 billion gallons by 2022. A refiner, blender or importer of gasoline can meet the RFS requirements through the purchase or trade of “credits.” Credits can be earned by producing over the baseline requirements. Those refiners that produce more than they are required can sell their credits to gasoline suppliers and importers. This allows suppliers to meet the RFS requirements while using less renewable fuel than required.

American Jobs Creation Act of 2004

The American Jobs Creation Act of 2004 authorized the Volumetric Ethanol Excise Tax Credit, providing blenders with a $0.51/gallon credit for every gallon of ethanol that is blended with gasoline. It serves as an incentive to the petroleum industry to blend ethanol into gasoline and helps to make ethanol more affordable to consumers. The tax applied through December 2010, was renewed for another year, and expired on December 31, 2011.

Farm Security and Rural Investment Act of 2002

The Farm Security and Rural Investment Act of 2002 was the first farm bill to contain an energy title. It included provisions that are designed to increase federal government purchase and use of biobased products through the BioPreferred program. Additionally, USDA provides opportunities for the development of biofuels and other renewable energy through loan guarantee programs.

Biomass Research and Development Act of 2000

The Biomass Research and Development Act of 2000 was first authorized by the Agricultural Risk Protection Act of 2000. The act directed the Departments of Energy and Agriculture to coordinate on biomass research and development, and establish a technical advisory committee.  That committee is known as the Biomass Research and Development Board and Technical Advisory Committee. Its main function is to coordinate with other federal programs, and promote the use of biobased industrial products. The Biomass Research and Development Initiative awards competitive grants, contracts and financial assistance to those who research and develop low cost and sustainable biobased Industrial products. Funds have been appropriated to the Department of Energy and the Department of Agriculture through these programs.

The Biomass Research and Development Act was repealed by the Food, Conservation, and Energy Act of 2008, but reauthorized by the Agricultural Improvement Act of 2018.