Solar and Wind Lease Values Vs. Inflation and Declining Purchasing Power

February 9, 2024

Madison Street Energy (MSE), by making upfront, lump sum payments to landowners for their lease payments, enables landowners to obtain a much higher useful value for their lease payments than if they were to wait 30-50 years for all of the payments to slowly roll in. There are two main reasons why: 1. Inflation eats away at the value of future lease payments and makes them worth much less than they appear and 2. Receiving $1 today or $1 Million today is worth far more than receiving $2 or even $2 Million in the future.

Solar and Wind Leases usually have some type of annual escalation of the rent payment due a landowner. Leases signed before 2022 typically have escalations of 1-3% per year, with 2% being the most common. Since inflation blew up in 2022, Leases signed since then often have an adjustment based on the Consumer Price Index or CPI. These escalating payments would seem, at first glance, to address the inflation issue and its negative effect on future lease payment values. However, the way the US government calculates inflation and CPI is materially different than how it was calculated in the high inflation 70s and early 80s. If the same metrics were used today, annual inflation would be 3-5% higher, and we would be looking at a 6-8% current inflation rate v. the claimed 3.1% CPI.

Secondly, with the current elevated interest rate environment, a landowner can invest their lump sum payment in relatively safe yet high returning investments that could easily provide 6-10% in annual appreciation/interest. Instead of waiting for payments to be paid years from now which are worth 8-10% less per year, EACH YEAR, the landowner can ADD 6-10% value each year!

Working with MSE to obtain the true value of your solar or wind lease payment is easy and straight-forward. If you would like more information on how partnering with MSE could benefit you and your family, please contact us at or call 312-584-0852.

Illustration of inflation as a balloon that pulls the dollar to the top

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