Understanding yearly payments & profit-sharing model
YEARLY PAYMENTS:
- The yearly payment structure ensures that landowners receive their fair share of profits based on actual energy production and revenue generated. Here’s why this method is used:
- Aligned with Energy Sales Cycles – Utility companies purchase energy in long-term contracts and settle payments over quarterly or yearly periods. This means revenue distribution is most efficiently handled on an annual basis.
- Accurate Revenue Calculation – Since energy production fluctuates throughout the year due to weather conditions and grid demand, an annual model ensures a more accurate calculation of profits rather than estimating monthly payments.
- Lower Administrative Costs, More Profit – By consolidating payments into one yearly transaction, administrative fees and processing costs are minimized, allowing landowners to keep more of their earnings.
- Stable & Predictable Income – Unlike traditional leases, where a fixed monthly rate is set regardless of land usage, this model provides higher potential earnings depending on the farm’s output.
HOW DOES THE PROFIT-SHARING MODEL WORK?
- Unlike a standard lease that offers a fixed payment, our profit-sharing model means landowners receive a shared percentage of total energy sales. This method is more lucrative than a standard monthly lease because:
- Higher Earning Potential – Instead of receiving a flat fee, landowners benefit from growing energy demand and rising electricity rates, increasing their earnings over time.
- Inflation Protection – A fixed lease does not adjust for inflation, whereas revenue-sharing payments increase in value as energy prices rise.
- Performance-Based Earnings – Since payments are tied to solar energy production, landowners directly benefit from technological advancements and efficiency improvements in the solar farm.
- No Cap on Profits – With a standard lease, landowners receive a set monthly payment, but with profit-sharing, earnings can increase significantly over the 30-year contract.