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There are a lot of factors that go into what you will be paid when you lease land for wind. The LandEstimate™ for wind rights is derived from using metrics like distance to transmission lines and substations, average wind velocity, topography, property size, ease of access to your property, current and future demand for electricity, state and federal incentives, and more.
The lifespan of new generation wind turbines is 20-25 years. From the time you sign the initial wind farm lease agreement, you could have a 30-40 year relationship with the wind farm developer.
There are quite a few ways to be paid when you lease your land for wind turbines. Across the country, deal terms vary. But generally, for Utility Scale Wind Farms, the developer will pay you $5 - $40 per acre per year until they start generating electricity. At that point, the rentals increase through the life of the wind farm. Additionally, wind farm developers are also paying landowners a royalty. The royalty is based on the revenue generated from the wind farm and paid to the landowner as a percentage of revenue. Lately we are seeing the royalty rate starting at 4% in year 1 and increasing to 10% in year 20. The royalty payments can be less predictable and dependable than a large fixed annual rental payment. However, the royalty payments also have the ability to be higher than a fixed annual rental payment.
A wind lease option is an agreement that gives the wind developer the exclusive right to enter into a lease agreement to develop a wind farm on your land. The option period of 2 - 6 years gives the developer time to obtain necessary regulatory permits, enter into power purchase agreements with electricity purchasers, obtain financing, conduct environmental studies, etc.
A wind lease option does not mean you are guaranteed to have wind turbines on your property. Wind developers use a wind lease option to ensure that they will have the exclusive right to enter into a formal wind farm land lease agreement before they invest time and money into their evaluation.
A fixed annual payment for a wind lease is a pre-negotiated amount of money you will be paid annually for your wind farm lease. The number of years is also pre-negotiated and usually 20-25 years, with an option to extend the number of years. Unlike most solar farm lease agreements, there is a good chance that your wind farm lease agreement would also provide for royalty payments to be paid to the landowner. Royalty payments are based on a percentage of the revenue received by the developer.
A Power Purchase Agreement is an agreement between the wind farm developer and a company wanting to purchase the electricity. The wind farm developer will need this agreement in place prior to making the large investment to build the wind farm on your land.
In a fixed annual rent payment lease, the landowner will not benefit from higher future electricity prices. However, if your lease provides for a royalty payment, your monthly royalty check would increase as the wind farm developer receives increased revenue as electricity prices increase.
You will be responsible for property taxes on the portion of your property that is not developed for a wind farm. The wind farm lease agreement generally provides that the developer will be responsible for the taxes assessed on the wind farm developed lands.