The land lease of a solar park from the investor's side: why it is a Mietvertrag, what the rent costs per kilowatt and how you step into the contract

The land lease is the oldest document of a solar park. It is signed before there is a permit, a grid connection or a single module, often years before the installation is sold. Whoever comes in later finds it ready-made, with every amendment, option and gap that accumulated during project development. Little of it can be renegotiated; all of it can be read.

This article works through the points at which the contract can cost the buyer money or tenure: the legal classification and the form, a change of ownership of the land, the basis and the dynamics of the rent, the area the rent is paid on, the buyer's own entry into the contract and the tax side. It describes the framework, not a specific project.

Is the land lease of a solar park actually a lease?

No. Legally it is, as a rule, a Mietvertrag, a tenancy. The difference lies in the fruits: a Pacht under German law is the handing over of a thing together with the right to draw its fruits (§ 581 Abs. 1 BGB), a Miete is the handing over for use only. In 2018 the Federal Court of Justice ruled on a usage agreement over roof and open-field areas that the electricity of a photovoltaic installation is not a direct natural fruit of the land: it comes from the installation, not from the soil. The contract is therefore a tenancy over land to which § 578 BGB applies (BGH, judgment of 7 March 2018, XII ZR 129/16, paras. 13 f.). That the industry still speaks of Pacht, Pächter and Verpächter changes nothing about the classification; the terms appear in this article too, because they appear in the contracts.

In practice this means that the rules on form, termination, change of ownership and the landlord's lien come from tenancy law in the version that § 578 Abs. 1 BGB prescribes for land. Should a court treat a contract as a Pacht after all, § 581 Abs. 2 BGB leads back to the same provisions, so the outcome barely changes. The one real exception is the agricultural lease under § 585 BGB, which hands over land predominantly for farming and follows its own rules; it does not apply to a ground-mounted installation, while for agrivoltaics the distinction can matter in the individual case (Investing in agrivoltaics: dual land use, revenues and tax leverage at a glance). The classification is not entirely undisputed: in 2016 a higher regional court treated a usage agreement for a wind turbine neither as tenancy nor as lease but as a contract to grant a Dienstbarkeit. For the review that is one more reason to read the contract as if the stricter regime applied.

What form does the contract need, and what happens if it is defective?

Since 1 January 2025 text form suffices; before that, written form was required. The basis is § 550 BGB: a tenancy agreement concluded for longer than one year that does not observe the form counts as concluded for an indefinite period. For land the legislator softened this rule with the Fourth Bureaucracy Relief Act: § 578 Abs. 1 BGB provides that text form replaces written form, so a contract concluded by e-mail or with scanned signatures now passes. For contracts and amendments concluded before 2025, the question remains whether written form was observed at the time.

The consequence of a formal defect is the point a buyer has to understand. A contract for an indefinite period can be terminated with ordinary notice, by either side. Termination is permitted at the earliest at the end of one year after the land was handed over (§ 550 sentence 2 BGB); after that the statutory notice period of § 580a Abs. 1 Nr. 3 BGB applies, for commercially used undeveloped land to the end of a calendar quarter. An installation calculated for twenty years can then lose its site on a few months' notice, or the landowner uses the threat of termination to push through a higher rent. Whether the Dienstbarkeit entered in the land register holds the site in that case depends on its wording; it is frequently tied to the existence of the contract. Nobody should rely on it.

Two clarifications by the Federal Court of Justice help when reading older contracts. First, written form is satisfied if both sides sign identical counterparts; the counterparts do not have to be delivered to the other party (BGH, XII ZR 129/16, para. 22). Second, a contract whose fixed term only starts on commissioning is not automatically terminable in the meantime: if the start of the term is tied to an event whose occurrence is uncertain, that is a condition precedent, and the exclusion of ordinary termination for this interim period can also be agreed tacitly (BGH, judgment of 12 March 2025, XII ZR 76/24, on a usage agreement for a wind turbine). The form can only be checked on the complete document: the contract, every amendment, every exercised option, every change to the area or the rent. If an amendment is missing from the data room, the form has not been checked.

What happens to the contract if the land is sold or auctioned?

On a sale it survives; in a foreclosure auction and on a sale out of an insolvency estate it is not safe. If the owner sells the land, the acquirer steps into the rights and obligations under the tenancy in place of the seller (§ 566 Abs. 1 BGB, applied to land via § 578 Abs. 1 BGB). The principle that a sale does not break a tenancy therefore protects the solar park as well: the new owner has to accept the contract with all its terms, rent level and term included.

The two exceptions are precisely the cases in which an owner typically changes involuntarily. Whoever acquires the land in a foreclosure auction may terminate the tenancy or lease with the statutory notice period, though only at the first date on which termination is permitted (§ 57a ZVG). If an insolvency administrator sells the land out of the estate, the acquirer has the same special right of termination (§ 111 InsO). In both cases the best contract is no help; only a right attached to the land itself helps. That is the job of the limited personal servitude, the beschränkte persönliche Dienstbarkeit, and whether it does that job is decided by its rank against the owner's land charges. Both are explained in Grid connection, easement, building rights: how to tell whether a direct investment has truly secured its site; what becomes of the contract itself in the insolvency of the owner or of the contracting party is walked through scenario by scenario in Provider or operator insolvency: what happens to your direct investment.

How is the rent set: per hectare, per kilowatt or as a share of revenue?

In three models, and they only become comparable after a conversion. Fixed rent is an amount per hectare and year regardless of what the installation feeds in. Revenue-based rent is a percentage of electricity income, usually of the proceeds from feed-in and direct marketing. The hybrid combines both: a percentage of revenue, but at least a fixed floor per hectare. Where the range of fixed rents sits today and why it is so far above farmland rents is described in Investing in solar parks: revenues, costs and tax leverage at a glance; the Thünen Institute cites rent offers of more than 2,500 euros per hectare for ground-mounted installations in its estimate of future land demand, and the Federal Statistical Office reports an average rent of 357 euros per hectare of agricultural land for 2023.

For the buyer of an installation, however, the hectare is the wrong unit, because purchase price, revenue and depreciation are all calculated in kilowatts. The conversion factor is land use per megawatt: the Thünen Institute works with 1.4 hectares per megawatt in its projection and names one hectare per megawatt as the optimistic value; modern parks sit in between, and how the layout shifts land use is shown in South, east-west or vertical: which solar park layout pays off for investors. At 1.2 hectares per megawatt, 2,500 euros per hectare become exactly 3.00 euros per kilowatt and year, at one hectare 2.50 euros, at 1.4 hectares 3.50 euros. The table below runs the three models for a one-megawatt park on 1.2 hectares, with three revenue assumptions and openly stated own values.

The table shows the mechanics, not the market. Fixed rent is cheap for the operator in good revenue years and expensive in bad ones: at 5.0 cents it takes 7.2 percent of revenue, at 8.0 cents 4.5 percent. Revenue rent spreads the price risk across both sides but costs more in good years. The hybrid gives the landowner both, the floor and the participation; for the operator it is the most expensive model whenever the floor kicks in during weak years. Which model the specific contract contains therefore belongs not in a footnote of the calculation but in the sensitivity analysis: a model that carries the rent as a fixed amount although the contract provides for a revenue share is too optimistic in good years.

One distinction: the financial participation of the host municipality under § 6 EEG, 0.2 cents per kilowatt-hour fed in, is not rent but a separate item paid to a different recipient, and it belongs in the calculation as such.

How does the rent change over twenty years?

Usually through an indexation clause, and that is only permitted within the limits of the German Price Clause Act. A clause that automatically links the rent to the consumer price index is allowed under § 3 Abs. 1 Nr. 1 PrKG if the contract is concluded for at least ten years or one side waives ordinary termination for at least ten years, and if the benchmark is an official price index. Site contracts for solar parks meet that easily with their terms; what matters when reading is whether the adjustment runs automatically or only above a threshold, whether it works in both directions and from which base year it is calculated. Alongside that there are stepped rents with fixed increases, and revenue rent needs no indexation because it moves with electricity prices.

How much the dynamics matter is shown by the worked example from the table. A fixed rent of 3,600 euros a year adds up to 72,000 euros over twenty years. With indexation of 2 percent a year it stands at around 5,350 euros in year twenty, and the total rises to around 87,500 euros. A step of 10 percent every five years gives around 83,500 euros. The difference between static and dynamic rent in this example is therefore around 15,000 euros per megawatt, and it belongs in the provider's model. A model that carries the rent flat over twenty years although the contract contains an index clause underestimates the costs of the second half of the term.

On which area, and from when, is rent paid?

On the area the contract defines, and that is rarely just the module field. Besides the module rows a park occupies the access road, the transformer and grid-transfer station, the fence with the strip behind it and often compensation areas that the development plan or the permit requires. Contracts differ on whether the rent is paid on the area actually built on, on the fenced area or on the whole parcel. For a parcel of 1.5 hectares of which 1.2 hectares are built on, that is a difference of a quarter. It can only be checked with the area schedule: parcels, square metres per use and the site plan of the installation belong side by side. Whether the ancillary areas and the cable route to the grid connection point each have their own security is covered in Grid connection, easement, building rights: how to tell whether a direct investment has truly secured its site.

The second point is the start. Years usually pass between signing and commissioning of a ground-mounted installation, and contracts differ on what flows in that time: nothing, a waiting fee or option fee, or the full rent from the start of construction. For the buyer of a finished installation that is history, but it can have after-effects, for instance where a prepayment was made that is embedded in the purchase price, or where an option phase ends with a special termination right for the landowner if the installation is not commissioned by a deadline. Such deadlines are in the contract, not in the exposé.

How does the contract reach me when I acquire the installation?

In only two ways, and the second is the weaker position. The first is assumption of the contract: the seller leaves the contract with the landowner and the buyer takes their place. That requires the landowner's consent, either for the individual case or as a transfer clause granted in advance in the contract. The second way is a sublease: the seller or a company of the provider remains the landowner's contracting party and lets the buyer use the partial area for their installation. That too requires the landowner's permission (§ 540 Abs. 1 BGB). The difference shows in the worst case: if the main contract ends, the landowner can demand the land back from the subtenant as well (§ 546 Abs. 2 BGB). The subtenant has no claim of their own against the landowner and depends on the contractual loyalty and solvency of their own contracting party. What that means in the insolvency of the main tenant is described in Provider or operator insolvency: what happens to your direct investment.

When acquiring a defined part of an installation, three further questions arise. Which partial area belongs to your installation, and is it precisely designated in the contract or on a site plan? Which share of the total rent falls on it, and is that agreed as a separate amount or as a quota? And who is liable to the landowner for the total rent if another buyer fails to pay? A contract that lets the entire area to one contracting party without separating the buyers from one another spreads the default risk across all of them.

The Dienstbarkeit does not follow the contract automatically. A limited personal servitude is not transferable; its exercise may only be left to someone else if that is permitted (§ 1092 Abs. 1 BGB). If it is registered in favour of a legal entity or a partnership with legal capacity and entitles the holder to operate an energy generation installation, it is exceptionally transferable (§ 1092 Abs. 3 BGB). For a buyer who runs the installation as their own business this means: either a servitude of their own is granted in their favour, or the existing one expressly permits its exercise to be left to them. Who is registered as the beneficiary is therefore not a formality but the question of whether the in-rem site right sits with your installation at all.

A final point concerns the modules themselves. The landlord of land has a lien on the things the tenant has brought onto it for claims arising from the tenancy (§ 562 BGB, applied to land via § 578 Abs. 1 BGB). In the event of rent arrears the landowner could therefore seize modules and inverters. Carefully negotiated contracts therefore contain the landowner's waiver of this lien, and the financing bank demands it in any case because it needs the installation as collateral. If the waiver is missing, a creditor stands ahead of the bank that nobody had reckoned with.

How does the rent work for tax purposes on my side as operator?

As an ordinary operating expense, with three side questions. The rent reduces the profit of the business like maintenance and insurance (§ 4 Abs. 4 EStG), in the year of payment under cash-basis accounting and in the year it economically belongs to under accrual accounting. The first side question is VAT. Letting and leasing land is VAT-exempt (§ 4 Nr. 12 Buchst. a UStG); the landowner can however waive the exemption and invoice the rent with VAT if they let to a business for its business and that business uses the land for supplies that do not exclude input-tax deduction (§ 9 Abs. 1 and 2 UStG). For an operator who sells electricity subject to VAT the option is cost-neutral: they deduct the VAT on the rent as input tax. It is only deductible, though, if the landowner has actually opted and issues a proper invoice; the basics are explained in VAT on PV and storage direct investments: why 19% is charged here, and how it flows back.

The second side question concerns lump-sum payments. If the rent was paid in advance for the whole term or for many years, it does not take effect in the year of payment. Whoever keeps accounts recognises a prepaid expense and releases it over the term (§ 5 Abs. 5 sentence 1 no. 1 EStG); whoever determines profit on a cash basis has to spread advance payments for a use of more than five years evenly over the period (§ 11 Abs. 2 sentence 3 EStG). When acquiring an installation whose rent has already been prepaid, the unused part belongs in the purchase-price allocation.

The third side question is the landowner's side, and it explains why contracts contain clauses that at first sight have nothing to do with the installation. If agricultural land is built on with a ground-mounted installation, under the coordinated decrees of the federal states it is allocated to real property for property-tax purposes and moves from property tax A to property tax B; for inheritance and gift tax, land left to third parties for use counts as administrative assets and thereby loses the relief for business assets (§ 13b Abs. 4 Nr. 1 ErbStG). The landowner bears both, and prices both in: into the rent level, into tax clauses under which the operator reimburses additional burdens, or into both. For the buyer such clauses are a cost item without a ceiling unless they are capped.

Which questions should you ask the provider?

The land lease is the document from which a provider's diligence can be read most quickly, because it is older than any exposé and because each of its gaps works for twenty years. These questions belong in every conversation, and each of them is to be answered with a document:

• Is the contract available in full, with all amendments, exercised options and changes of area, and was each of those changes concluded in the form that applied at the time?
• Who is the landowner's contracting party: you yourself after an assumption of the contract, or does a company of the provider remain the main tenant with you as subtenant?
• Does the contract contain a transfer clause, or is the landowner's consent to your entry available in writing?
• Who is registered as beneficiary of the Dienstbarkeit in the land register, does it cover your partial area, and is leaving its exercise to you permitted?
• Under which model is the rent calculated, how high is it in euros per kilowatt and as a percentage of the calculated revenue, and does the same model appear in the calculation?
• Which indexation or step applies, from which base year, and is the dynamic included in the model over the full term?
• On which area is the rent paid, module field, fenced area or parcel, and does the area schedule match the site plan?
• Has the landowner waived the landlord's lien, has the landowner opted for VAT, and does the contract contain tax clauses on property tax or inheritance tax, with or without a cap?

If several of these questions are met not with a document but with reassurance, that in itself is a finding. Which other warning signs can be read from a provider is collected in How to tell a trustworthy provider of energy direct investments; which costs besides the rent must be disclosed openly is listed in Transparent costs: which fees a direct investment involves, and which ones are hidden.

How we check the land lease in our project review

We read the contract in the original with all its amendments, not the summary in the exposé. From it we take four things into our own model: the rent model, converted into euros per kilowatt and into a percentage of revenue according to the P50 yield report, the dynamics over the full term, the area the rent is paid on, and the route by which the contract reaches the buyer. If the contract provides for a revenue share and the model carries a fixed amount, we convert the model; if the indexation is missing, we add it and flag it as an assumption. A project stands out for us if the buyer would only become a subtenant without the Dienstbarkeit covering them, or if an amendment that changed the area or the term is missing: then the form cannot be checked, and a contract that cannot be checked is an open item for us, not a secured site. If you would like a specific offer reviewed, you can bring it to a no-obligation initial consultation.

How the term and extension options of the contract play out at the end of the subsidy period, and why a contract for more than thirty years becomes terminable under § 544 BGB, is covered in A solar park after 20 years: continued operation, repowering or decommissioning?. What the same contract provides for the decommissioning at the end of the term and which security the landowner demands for it is set out in Decommissioning a solar park: who pays, how large the bond is and what it costs.