Have you been contacted by a wind developer looking to lease your land to construct a wind farm? If you have a large plot of land in a windy area, a wind farm land lease could turn into years of passive income for you and your family.

 The idea is simple – wind developers use a small fraction of leased land to build turbines and power substations, while paying for the right to use the land. As with any long-term any contract, however, you will want to deeply understand how the industry works before committing to an agreement.

"If you have a large plot of land in a windy area, a wind farm land lease could turn into years of passive income for you and your family."

First of All – Why So Long?

Even the most enthusiastic landowner can be taken aback when first confronted with the terms of the land lease. Many landowners haven’t even begun to imagine what possible developments they may wish to undertake during that time.

But wind power is very much a long-term investment. Consider the following:

 • The first three to six years of a typical wind lease contract is taken up by testing, leasing, permitting, setting up the power purchasing agreement, and construction.

 • Once construction begins, actual power generation may not begin for additional years pass.

 • Wind turbines have a life expectancy of about 25 years to 35 years.

 Considering that the wind farm may only start generating electricity after five to nine years, and that the bulk of the cash-generating work only takes place after that, it makes sense that the lease must be for as long as possible.

Contract Terms to Discuss with Wind Power Companies

Since long lease terms are common in this industry, landowners will want to raise a few important questions during the lease negotiation process.

 1. Landowner Obligations

Beyond leasing land for the construction and operation of wind turbines, what else does the contract specify landowners do? What are landowners prohibited from doing? In many cases, wind farm contracts can affect the height and location of new building plans, and can also affect draining upgrades. Experts recommend performing any major property improvements before turbine construction begins. This is because wind lease contracts typically stipulate that landowners must ask approval for such improvements, so as not to damage wind farm capacity.

 2. Wind Turbine Damage

What happens if the turbines become damaged? Which party’s insurance covers wind turbine repair, and under what conditions? This is important for landowners who also lease property to hunters or other third parties. Generally, developers should indemnify landowners from damage claims that stem from third-party land use.

 3. Post-Lease Clean-up

Since wind power is a relatively new phenomenon, not many landowners have had the chance to experience a post-lease clean-up operation. A wind lease contract should address and specify each party’s obligations after the lease ends. Additionally, landowners should have a means of removing inoperable machines even if the wind developer goes out of business – through a performance bond, for instance.

 4. Aerial Spraying for Farmers

Farmers who rely on aerial spraying and crop dusting need to examine wind turbine placement plans and find mutually beneficial ways to ensure continued crop dusting operation. Turbines do not take up much surface area, but they occupy a great deal of air space – this can get in the way of crop dusting operations if not brought up during the leasing discussion phase.

"In the end, farmers and landowners participate in the renewable energy economy because it pays well. Individual turbines are capable of producing thousands of dollars as annual royalties to the landowner, so the incentive to lease land is considerable.”

Calculate Royalty Payments

In the end, farmers and landowners participate in the renewable energy economy because it pays well. Individual turbines are capable of producing thousands of dollars as annual royalties to the landowner, so the incentive to lease land is considerable.”

 Landowners should carefully evaluate the long-term benefits, along with the possible issues dealing with clean-up, farming, obligations, and damages.”

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