The Development Term is a pre-construction phase of the Solar Agreement. Development Terms are typically five years but should be negotiated to reduce its duration as much as possible. The Development Term commences upon the Effective Date of the Solar Lease, meaning that the Lease Option, if any, has been exercised and the Solar Lease is now “effective”. It is possible that some leases may refer to the Development Term as the “Option Period”, but the Development Term typically involves the Solar Company undertaking significantly more efforts regarding permitting, zoning, and easement acquisition to determine whether the project is feasible. Solar Companies often include rights to automatically extend the development term at the company’s request, but property owners should avoid granting company extension options whenever possible.
Many Solar Companies make annual rental payments during the Development Term. The Development Term typically ends immediately prior to the Construction Term.
Property owners must negotiate to maximize annual compensation throughout the Development Term while negotiating to reduce the time allotted for the Development Term. Also, Property owners should seek to eliminate company options to extend the Development Term or require additional compensation for any extension of the Development Term.
