How will I get paid when leasing land for wind turbines?
There are quite a few ways to be paid when you lease land for wind turbines. Across the country, deal terms vary. But generally, for Utility Scale Wind Farms, the developer will pay you $5 to $40 per acre per year until they start generating electricity. Once the wind lease enters the construction phase, the payment amounts increase. Landowners can be paid per acre, per turbine, and/ or based on how much energy is produced from the turbines (called a 'royalty'). The wind lease royalty is based on the revenue generated from the wind farm and is 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 can be higher than a fixed annual rental payment. Wind leases that pay royalties typically have a guaranteed annual payment (regardless of the performance of the turbines), also referred to as a minimum payment. If the wind lease pays on a per-turbine basis, the size of the turbine generally determines the payment amounts, and how many megawatts of energy each turbine produces. $5,000-$8,000 per megawatt is generally typical. Learn more about wind lease payments here.
What is a wind lease option?
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 to 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.
Does a wind lease option mean I am guaranteed to have a wind farm on my property?
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.
What is a fixed annual payment in a wind lease agreement?
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 to 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.
What is a Power Purchase Agreement?
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 before making the large investment to build the wind farm on your land.
As electricity prices increase, am I compensated in my wind lease contract?
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.
Will I have to pay property taxes if my property is developed as a wind farm?
You will likely 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. However, please keep in mind that all wind lease agreements are negotiable with the wind developer.
Can I sell my wind rental payments?
Landowners receiving payments from wind farm developers can market and sell those future payments. Property owners can market the payments they receive from a wind lease with LandGate. Find your parcel on our map to get your free Property Report and follow the process to create a listing.
