Wind Farm Leases (See also Solar Farm Leases)
What you can expect from wind farm project developers?
- The structure of your agreement with the project developers will likely take the form of an Option Agreement or Agreement for Lease, meaning that you, as landowner, provide the developer with the “option” to enter into a Lease over the part of your land where the project will be constructed. Whether the “option” is exercised is usually dependent on whether the developer receives the appropriate approvals and financing to proceed with the proposed wind farm. However, at the initial stage, the developer will aim to “lock you down”.
The terms of Wind Farm Leases are usually agreed upon during negotiations of the terms of the Option Agreement or Agreement for Lease. The developer and it’s financier will require the terms to be finalised as much as possible so they can account for every detail of the greater project. The proposed Lease will form part of the Option Agreement or Agreement for Lease.
- The developer will approach a number of neighbouring landowners and the project will usually be constructed across a number of properties.
- The developer may attempt to negotiate with each landowner individually and withhold the details of any agreement with any other landowner from you.
- The terms of the Option Agreement or Agreement to Lease may include a number of different layout plans for the project dependent on financing and the viability of what is proposed. Therefore, you could be faced with one attractive option and one less attractive option.
- Once you sign the Option Agreement or Agreement to Lease, you are bound.
- If the developer exercises the option, then it will notify you which layout option it is proceeding with and you are bound to that layout.
- The developer will then proceed to construct the wind farm on your land.
- After the developer has constructed the wind farm on your land, it may sell the project to an investor who will be bound by the Lease. You may also be subjected to ongoing maintenance of the wind farm.
- Developers may try to blind your good sense with the prospect of large sums of rent or income from the wind farm. An Option Agreement, Agreement for Lease and Lease should all be carefully considered beyond merely the income terms. You should consider the effect of roadways and accesstracks built by the developer during and after construction, overhead and underground powerlines, contamination of your land by the construction workers and maintenance workers, the distance of the wind farm from your residence, the effect of the wind farm on your livestock, the use of materials in the construction of fences and tracks to ensure they are up to your standard, the deprivation of use of surrounding land, fire, accidents, acts of god and all manner of provisions that favourably or, at least, adequately deal with your interests in the land. For this reason, negotiating provisions unique to your land and business will be necessary. The agreement should not be “one size fits all”.
- Wind Farm Leases may be for a substantial term, such as 25 years meaning that the Lease could affect future generations. You need to carefully consider the impact of a long term Lease on your future aspirations for your land and family.
- Being left out in the cold. There is something to be said for strength in numbers and developers are more likely to acquiesce to demands from a group of landowners acting in common than a single landowner. Banding together tends to yield more attractive results for the landowners who represent a majority interest in the viability of the project. However, being represented as a member of a group doesn’t preclude your unique needs being represented independently from the group. A group can also share in the costs.
- The developer may require you to enter into supplementary agreements, particularly once the demands of its financier are better known. These agreements can be onerous or redefine some aspects of your negotiations and it will become important to understand both the minutia of detail as well as the overall picture.
Wind Farm Leases, like Solar Farm Leases should be carefully considered. Aitken Lawyers are experienced in renewable energy leases, call the team today to discuss your situation on 02 9897 0000.