Power play

With demand for green energy surging, there's money to be made in locking up rights to wind and solar sites.

By Paul Kaihla and Michael V. Copeland, Business 2.0 Magazine senior writers

(Business 2.0 Magazine) -- The green economy is booming, but you don't have to build a solar power station to get a piece of the action. There's literally a land rush on as renewable-energy companies look to secure locations for wind farms and solar arrays. If you move fast, you may be able to buy and flip the rights to the downtown rooftops and rural ridges that renewable-energy developers regard as prime real estate. There are two plays in this game, wind and solar, and each has its own rules.

Wind

"Wind cowboys" can buy an option to develop a turbine farm on a landowner's property for as little as $1 an acre in places like Montana, where the market is relatively unproven, or as much as $12 in California and other hot spots. Those option agreements usually last about five years - long enough for you to shop the project to a wind developer. Target landowners who are sitting on underused real estate. According to Montana wind developer Van Jamison, aging farmers whose kids don't want to take over the homestead are often first in line to do business.

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What to look for: A marketable site needs the wind to blow at an average annual velocity of at least 17 miles per hour. Most wind farms cover thousands of acres, so if you just have control of a 100-acre parcel of land, you'll need to sign up the neighbors. Finally, the site should be within 10 miles of transmission lines.

The payout: Your exit strategy is to sell the option or rights to a site for cash. Details of such deals are hard to come by, but according to Chris Taylor, an executive with wind farm operator Horizon Wind Energy, "when you hit pay dirt in this industry, it's a good one to be in."

The sweetest deal is to get a percentage of the "back end" and collect annual royalty payments. A lot of rights buyers get started by forming syndicates with investors who have a higher tolerance for risk.

Solar

You'll want to identify empty commercial rooftops, or even empty lots, that are suitable for installing solar arrays. Some companies are already filling up their available roof space. California's Fetzer Vineyards, for instance, hosts a 901-kilowatt solar power system on its roofs.

What to look for: Focus on states that offer the most generous financial incentives for solar power - California, Colorado, New Jersey, and Texas. Your ideal target for finding rooftop leasing deals is a business that wants to lock in electricity at a lower rate but doesn't want to buy its own solar array. Big shopping malls, national retail chains, and warehouses are ideal.

The payout: Once you find a suitable site, you can shop it around to the growing ranks of renewable-energy project investors and developers like SunEdison and MMA Renewable Ventures.

"We would definitely reward you financially for bringing these kinds of deals in the door," says Matt Cheney, CEO of MMA, a San Francisco company that finances, owns, and operates solar arrays. You can expect a commission between $100,000 and $250,000 from a deal that produces one megawatt of electricity.

With more than 20 states mandating big jumps in the use of renewable energy, and national greenhouse-gas emissions laws potentially on the way, now's the time to get up on the roof.  Top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.