Monetization: Increasing the Value of Renewable Energy Leases on State Land

November 29, 2023

Renewable Energy leases provide ideal opportunities for State Land Offices to utilize their property to generate income for their beneficiaries. Unfortunately, it takes a material amount of time to generate that income since renewable energy lease compensation is paid out in annual installment payments over a term of 30 years or more. In addition, a standard provision in all renewable energy leases allows the project owners to terminate leases early for any reason without paying a penalty. If the wind/solar project owner were to default on its rent payment obligations the state would either incur the time and money required to attempt to recover the unpaid rent or write off the amounts as a loss.

Monetization provides states with the ability to maximize the value of their renewable energy leases by accessing trapped capital for immediate use and since no land rights convey in exchange for the monetization, the states’ land holdings are unaffected, and the states’ internal approval processes can be streamlined.

Madison Street Energy provides State Land Offices with the option to convert renewable lease rights (paid over time) into one immediate large lump sum cash payment. By investing an upfront lump sum payment into the state trust permanent funds, funding large long term capital improvements, providing capital to expand the state’s existing renewable energy lease programs, and providing trust administrators with funds to pay off existing debt or avoid taking on new loans; state governments can provide the greatest benefits to their payees while retaining all land rights and avoiding the risk of non-payment.

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