Wednesday, December 2, 2009

The Value of a Wind Energy Land Association

In today’s agribusiness environment, a quite land rush is underway for potential wind energy projects. Particularly, east of the Mississippi, wind developers have been buying up land lease/option contracts in 10,000 to 40,000 acre plots for future development.

In the Midwest, this land grab is comparable to the California Gold Rush of the late 1840s. With access to major energy markets, this part of America also has favorable wind speeds and is underdeveloped or behind other exploited areas around the country for wind power.

Conversely, landowners are being enticed by feeble land lease agreements that may pay up to $40 an acre or $3,000 to $5,500 per megawatt for wind turbine placement. Other additional payments might come in the form of other allowances for the staging of auxiliary equipment, utility transmission lines, and access roads, etc.

Moreover, the sell tactics used by wind developers speak volume for the state of wind energy. Developers like to individually seek out and prey on unapprised property owners. This process has cause great heart ache for many such landowners since they usually are prohibited from talking to their neighbors about contract terms, if they pen the agreement.

With the average age of the American farmer at 62, a few elder land owners have reported that developers have persuaded them into signing an agreement below its normal value. There are also numerous complaints about where the turbines are to be placed on one’s property. It seems that everyone thinks that they may get one or two wind turbines on their land when shown the initial site plan for turbine placement - if they hurry up and sign the agreement. This judgment always seems to change after the signing of the initial contract.

According Paul Gipe’s website (A Wind Energy Expert), one of the top ways to deal with a wind energy developer is to form a Land Association. This forces the wind developer to deal with the association instead of isolated, uninformed landowners. This model plan is used quite commonly in Germany. In addition, it so happens that these types of associations are also gaining momentum out west. In Wyoming, there are eight established associations with potentially three others coming online by the end of this year.

Therefore, landowners must understand the value of forming a Wind Energy Land Association that can leverage and protect the landowners’ interest. The purpose of an association is to have property owners share information about community relations, contract negotiations, land values, wind potential, etc. This allows landowners to deal with potential developers as a group that can bargain for better lease prices and protect them from high pressure, low offer tactics. Revenue sharing is also spelled out in the association according to landholder rights and local resident needs.

In summary, with many wind companies scurrying to sign up area land for future wind farm development, property owners need to be able to discern all the possible issues associated with wind power option and land lease contracts (i.e. - loss of land rights, fair market value lease prices, and how will it affect their farm business and land values).

The power lies in the people and the strength of a land association is to fulfill the collective needs of its group, provide for local empowerment and information sharing, and establishing long-term commitments and visionary changes when needed. And most importantly, land associations allow landowners to bargain collectively for better lease prices and revenue payments. As the group shares in wind-generated profits, this creates a win/win situation for the landowners and the local community. No one goes away unhappy or mad.

3 comments:

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