Leasing land for wind farms provides landowners with the opportunity to earn passive income on their land while contributing to the production of renewable energy. Wind projects typically provide contracts in two forms – a wind lease or a wind easement agreement. The issues involved in a wind lease agreement or an easement are similar, and both are legally binding contracts. However, there are distinct differences between the two.
Key Takeaways:
Wind Leases: Long-term contracts (20-50 years) allowing developers to build and operate turbines, providing landowners with payments and establishing a landlord/tenant relationship.
Wind Easements: Grant developers specific land usage rights (e.g., construction, noise) without full possession, often remaining with the land permanently.
Pros: Generate passive income, support renewable energy, and maintain agricultural use.
Cons: Potential noise, visual impact, tax implications, and dependency on continuous developer operations.
Different Types of Wind Easements
What is a wind easement? A wind easement is a legal agreement between a landowner and a wind developer. This agreement allows the developer to use the landowner's property for a specific purpose. These rights don’t allow the developer to possess the land, but they do let them use it in specific ways to support a project. Types of wind easements:
Construction easements: The right to construct turbines or supporting infrastructure on a property.
Non-obstruction easements: An agreement to not build anything that could hinder the amount of wind reaching the turbines.
Transmission easements: To install, maintain, and access electrical infrastructure that would support the wind project (transmission lines or other facilities).
Access Easements: The right for a developer to cross non-leased land for construction, operation, and maintenance of the turbines. This may include allowing the wind company to access existing roads or to create new roads.
Noise easement: The right to produce noise within reasonable levels over a certain radius from each turbine.
Similar to a wind lease, payments for wind easements can either be in a lump sum or through periodic payments. They are typically paid on a per acre per year basis, but the payment terms vary per agreement.
What is a Wind Lease?
A wind lease is a long-term legal contract that lets a wind developer build and operate wind turbines on your property for a specific time. The wind developer typically sells the electricity generated by the turbines back to the local utility company. In exchange for the use of their land, landowners get paid lease payments.
Wind lease agreements create a landlord/tenant relationship. The right to use the land comes with some control over the leased property. The landowner must not interfere with the wind company's rights as stated in the agreement.
The time period for wind leases can range from 20-50 years. Throughout this term, property owners receive wind lease payments per turbine, per acre, and/or through royalties.
Pros of Wind Leases & Wind Easements
Make Money
A wind lease is a great way for landowners to earn long-term passive income. Since you can earn money every year for a few decades, you can take advantage of selling those payments for a lump sum. This allows you to avoid potential inflation that would affect the value of your payments. You can learn more about getting paid for wind leasing here.
Grow Crops and Graze livestock
Landowners can still farm (grow crops, graze livestock) while having wind turbines on their agricultural land, even though each lease varies. To produce wind power properly, wind turbines must be placed far apart from each other, but they require very little land to actually operate.
Support Clean Energy Generation
Wind turbines do not require fossil fuels to operate. They do not release emissions that can pollute the air or water, either! Landowners can support the growth of clean energy in the United States by leasing land for wind turbines.
Create Local Jobs
Wind projects create hundreds of local jobs. According to the U.S. Bureau of Labor Statistics, wind turbine service technicians are the second fastest-growing job of the decade.
Cons of Wind Leases & Wind Easements
Turbines Can Be Noisy
Some consider the noise produced by wind turbines a nuisance. With a Noise Easement, a landowner may grant the developer the right to generate noise levels up to a certain decibel level. However, new technology has helped to decrease the amount of noise produced by wind turbines.
Many Easements Are Permanent
Wind easements are commonly perpetual and remain with the land regardless of whether it is sold or leased. However, temporary easements that expire after a certain number of years may be negotiated.
Many People Consider Turbines unsightly
You can easily see wind turbines, especially across flat landscapes. Depending on your viewpoint, you may find these unsightly. Since wind farms require large amounts of land, many projects are placed in remote locations.
Property Taxes
Although landowners can make significant amounts of money by leasing their land for wind turbines, there are tax implications they should be aware of. Income earned from wind lease payments is taxed as ordinary income.
Wind Lease Payments Are Not Guaranteed
The wind developer reserves the right to stop production at any point. In some cases, energy companies have gone bankrupt, halting the rental payments paid to landowners. Contracts typically specify what will happen in these worst-case scenarios. For this reason, many landowners choose to sell their wind lease payments for a lump sum upfront. The best way to do this is on an open marketplace like LandGate.
Discover Your Land’s Wind Lease Value
Both wind leases and wind easements let landowners earn income by partnering with wind energy developers. A contract with a wind developer may include both a lease and an easement. Similar to a wind lease, wind easements do not transfer legal possession of the land to the wind company. Since lease and easement agreements are completely negotiable, landowners must consider legal counsel when reviewing both lease and easement agreements.
Are you curious about your land's value for a wind farm lease? Find your parcel on our map to get your free property report and wind lease estimates today!
