Wind Turbine Lease Education Program

Ron HaugenProject Director

North Dakota State University Extension Service

04/18/23

Extension Risk Management Education National Conference St. Louis, Missouri

April 12, 2011

Grants Provided by North Central Risk

Management Education Center GRANTS:•Wind Turbine Lease Education Program

•Wind Turbine Lease Provisions and North Dakota Regulations Education

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Background

• Wind power potential

• Questions about leases

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2007 Installed Wind Power – 16,818 MW3,500+ under construction

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United States Annual Average Wind Power Potential

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Wind Energy PotentialTHE TOP TWENTY STATES for Wind Energy Potential

as measured by annual energy potential in the billions of kWh, factoring in environmental and land use exclusions for wind class of 3 and higher.

B kWh/Yr B kWh/Yr North Dakota 1,210 11. Colorado 481 Texas 1,190 12. New Mexico 435 Kansas 1,070 13. Idaho 73 South Dakota 1,030 14. Michigan 65 Montana 1,020 15. New York 62 Nebraska 868 16. Illinois 61 Wyoming 747 17. California 59 Oklahoma 725 18. Wisconsin 58 Minnesota 657 19. Maine 56 Iowa 551 20. Missouri 52 Source: An Assessment of the Available Windy Land Area and Wind Energy Potential in the Contiguous United States, Pacific Northwest Laboratory, August 1991. PNL-7789

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1. 2. 3. 4. 5. 6. 7. 8. 9.10.

North Dakota Wind Farms

ProposedExisting

WHY GROWTH IN WIND ENERGY?• Renewable power

• Environmentally friendly– A 1 megawatt turbine in a “good” wind area will:

• 2.6 million kilowatt-hours electricity per year• Serve about 300 average households• Eliminates 5 million pounds of greenhouse gasses(CO2)

– Equivalent of 16 carloads of coal

• Helps the local economy– Property taxes– Lease agreement revenue– Employment

• It can be a very good economic investment

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Need for Lease Education

• No Standardized contracts

• Questions about leases

• Are wind companies taking advantage of land owners?

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Landowner Options• Lease your land to a wind

project– Local project– External developer

• Be a partner in a community wind project

• Own a residential/farm size turbine for your own power

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Wind Energy Leases and Easements• Most common way that landowners are participating in wind

energy development – No cash outlay– Low financial risk

• Few standards: range from good to bad to ugly.• Compensation varies widely based on:

– turbine size– wind resource– price of energy – knowledge level of landowner– and many other factors.

• Long term commitments – usually last 20 to 40 years.• Best results when landowners make informed

decisions.• Consult an attorney before signing.

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Wind Energy Agreements

• Never agree to confidentiality agreements• Have your insurance agent review the

agreement• Will any USDA land use restrictions be

violated (FSA mortgage, CRP etc.)?– Consider clause requiring developer to

indemnify landowner for any lost government payments or for imposition of any penalties

• Decommissioning Rules 13

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RISKS

• Financial risk

• Legal risk

• Liability

Contract should specify the project developer and any company to which the contract may be assigned in the future are responsible for any financial obligations you may incur as a result of:

noise pollution visual pollution vandalismaccess roads construction period ice sheddingblade drop/throw shadow flicker firestray voltage electromagnetic fields lightening strikescommunications microwave towers radar stationsTV and radio signals emergency radio signals bird killwater/air pollution

Liability IssuesLiability Issues

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Much of the wind development has beenMuch of the wind development has been established using a “Divide and Conquer” established using a “Divide and Conquer”

strategystrategy

• Company representative contacts individual landowner

• Drops off a contract• Requires decision to sign within a short time frame• Expects landowner to commit to a 20 to 50 year

agreement• Contracts include a confidentiality agreement

• Landowners organize into a business entity• Market their resource as a package• Landowners are compensated with or

without a tower• Hire an experienced attorney to work for the

group

The Correct ApproachThe Correct Approach

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Before you sign on the dotted line…

• How much of my land will be tied up and for how long?

• How much will I be paid and how will I receive payments?

• Are the proposed payments adequate now and will they be adequate in the future?

• Have all the liability issues been considered?• How will a wind project impact my other land uses?• Have I considered all contract specifications?• Have I considered all of my other options and is this the

best one for me?

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North Dakota Laws

• Code of Conduct for Wind Energy Leases

• Wind Turbine Sales Tax Exemption, Income tax Credits and Property Tax Credits

• Wind Rights Legislation

• Tower Siting Regulations22

Grant Administration• Collaborated with the North Dakota

Department of Commerce – They helped with meeting locations at proposed

wind farm areas

• Had several meetings in conjunction with the North Dakota Public Service Commission– A commissioner was in attendance or called in a

several meetings

• Project team had planned on fewer larger meetings with experts, but did more smaller meetings with ourselves as presenters

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Number of meetings and attendees

• 25 meetings at 20 locations

• 1023 attendees

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Wind Turbine Lease Education Meetings 2008-2011

25North Dakota

Make-up of attendees

• About 20% have signed a lease

• About 40% have been approached about a wind turbine lease

• Majority were land owners

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Grant is ongoing

• Need for more educational meetings

• Will do an impact study

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Take Away Points• Need for further wind turbine lease education• Keep abreast of state and local laws and

regulations• Need for ‘small wind’ analysis and education• Need for community and cooperative wind

farm education• Education needs to be current with the

dynamic issues of wind energy

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Thank you,Any Questions?

Ron HaugenProject Director701-231-8103ronald.haugen@ndsu.edu

Credits:Lynn Hamilton, Michigan State University & Cal PolyDwight Aakre, NDSU Extension ServiceCole Gustafson, NDSU AgribusinessRon Beneda, NDSU Extension Service, Cavalier Co.American Wind Energy Association