Having been asked by farmer clients to look at a number of windturbine lease propositions we want clients to be aware that there are a number of potential pitfalls in proposed lease agreements. Key points:
- Rental income is the most uncertain element. As the German operators of the world’s biggest “wind carpet” have observed “the wind blows as it will, where it will and when it will”. The amount of electricity generated (to which rental levels are linked) is neither controllable or forecastable. Do not be too influenced by the developer’s income offer – if it looks to good to be true it probably is.
- A wind turbine will almost certainly reduce the value of your property.
- Make sure the developer has substantial assets to back its obligations.
- Make sure the developer pays your professional costs, whether or not a deal is actually entered into.
- Make sure the option and lease cannot be transferred indirectly by a sale of shares.
- Make sure the developer is under an obligation to do all it can to ensure that turbines are built on the landowner’s land and generate electricity and therefore income.
- It is most important to ensure the site will be reinstated at the end of the lease and that performance of this obligation by the developer is secured.
Download original document: “Wind Turbine Land Leases and Options”
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