Hosting a wind or solar project? This is what a litigation lawyer wants you to know 

A leading litigation lawyer has outlined the forgotten costs of hosting renewable projects and encouraged landholders to seek advice at the right time.

If not, a legal fight against a project could cost up to $500,000.

That was the warning given by AJ and Co Lawyers senior legal advisor Leanne O’Neill during her address to the Property Rights Australia conference in Emerald on June 7.

As Queensland pushes towards its goal of sourcing 80 per cent of its energy from renewables by 2032, rural and regional landholders may become part of large-scale development negotiations.

Ms O’Neill spoke to the crowd, having been involved in the development, drafting and implementation of many regulatory frameworks governing land use, management, and development. She also held several senior legal roles in state government.

While renewable energy projects represent a lot of opportunities for communities and hosting landholders, Ms O’Neill said they represented a lot of risk as well, especially when it came to payments. She warned landowners about the risks of signing wind project agreements that might never lead to actual development.

These “option” agreements could tie up land for years without financial return, especially when approvals fell through. “You might have tied your land up for three years and you’ve got nothing to show for it, nothing at all,” she said. “Many, many wind farms don’t go ahead. The statistic is actually surprising. It’s something like 89 or 85 per cent … it’s a huge number.”

Ms O’Neill said that even after construction started or had concluded, wind projects might not be able to connect to the power grid, which was often the trigger for landowners to start getting paid.

“If you can’t get a connection, when do you think your payments will kick in? Most of these agreements have payments kicking in … once it’s connected to the grid,” she said. “I have seen it when the actual wind farm has been built, and they couldn’t get connection.”

There’s also a financial risk if a wind farm failed or folded. She warned landowners could be stuck with costly infrastructure and no support to remove it. “To decommission a wind turbine will cost more money than any financial return you have under it,” she said. “You might get $500,000 for the turbine over the life of the project. It might cost you $750,000 or more to decommission.”

Ms O’Neill said there were no statutory protections for renewable energy projects, unlike for mining. She warned that unregulated agreements were a huge issue. “It’s going to cost you somewhere in the order of $350,000 to half a million dollars to object. This is not a cheap exercise,” she said.

“What I see is the projects aren’t often done that well, and I’m also seeing really significant risks with landholders because they don’t get lawyers involved at the right time. Company structuring, you’ll need some advice around that before getting into any of these agreements. You are consenting to the creation of an interest in your land … it does mean that you might end up in the position of having to step into the shoes of the wind farm operator.”

She warned about so-called “neighbour payments,” where adjoining landowners were paid to not object. However, it’s at the cost of signing away their rights to speak out publicly or legally challenge the project. “You’re signing away your right to object to the wind farm. You’re signing away your right to say anything adverse,” she said.

“These are all coupled with a lovely confidentiality clause that basically says, ’don’t say anything. Here’s your million dollars and you’re not allowed to object, essentially.”

She said wind farm payments were not considered compensation or farming income and that they’re taxed as ordinary income, which could reduce what landowners actually receive. “This is not compensation, this is basically income, and it’s not agricultural income either,” she said.

She encouraged landowners to demand legal and accounting fees be covered by the proponent. “Landowners don’t realise it, but you’re holding up the cards,” she said. “You can make it a condition of the negotiations that your professional legal and accounting fees are paid.”

She also addressed the importance of adjusting compensation terms over the 20 to 25-year life of a typical wind farm lease. Without escalation clauses, payments could quickly fall behind market value. “Five years ago, agricultural prices were very different … If you don’t have an escalation clause, you’re stuck at that value for 25 years,” Ms O’Neill said. “These agreements need to enable people to pivot their land management activities over time.”