What is a Wind Energy Lease?

You might be wondering what a wind energy lease is. First, let’s delve into some background on wind energy in general. The United States began using wind energy in the 1980s, but Dutch windmills have been producing mechanical power for centuries. Wind energy is considered to be one of the most popular forms of renewable energy. Wind turbines use wind energy to power an electric generator that supplies an electric current. These wind turbines are usually grouped together in a wind farm to generate bulk electrical power.

Wind energy is a non-polluting and clean form of reusable energy. It is one of the free and clean energy sources that will not run out in supply, so no matter how much is used today there will still be the same supply in the future. It is also one of the most effective green energy sources, being that it releases no air pollutants or greenhouse gases.

A wind energy lease is established when an alternative energy company seeks to develop a wind farm on a piece of property not owned by them. They establish a ground lease on a person’s property, develop the wind turbines and other mechanical necessities, then generate power which they sell off to electric companies that eventually powers your iPad for your Netflix binges. See? The concept of a wind energy lease isn’t so hard to understand!

Basically Wind Power = Netflix and that’s all you really need to know.

Why Should I Lease my Land to a Wind Company?

There are many benefits of a wind farm land lease agreement. Of course the most notable benefit of a wind energy lease is the striking profit margin. So, how much money can a wind farm make? According to new data released by the American Wind Energy Association, US wind farms now pay $222 million dollars a year to farming families and other rural landowners. Landowners in 26 different states receive over $1 million dollars each year – thanks to wind energy leases.

The general rule of thumb in wind farm lease payments is $4,000 to $8,000 per turbine, $3,000 to $4,000 per megawatt of capacity, or 2-4% of gross revenue.

Providing wind turbine power is 100% passive income, seeing that it comes with absolutely no maintenance. Think about if you were to rent out your apartment. You would collect the monthly rent checks without having to take care of your property or maintain it. In a wind farm land lease agreement, the same principle applies. The wind development company pays you rent every month to house their turbines all while giving back to the world by making clean energy available to the people in your state.

How to Know if Your Property Qualifies for a Wind Farm Lease

The land requirements for housing a wind farm are very similar to the requirements of a solar energy farm. Eligible land must contain dry soil and be far away from any wetlands or flood zones and cannot fall under any environmentally protected areas. Land that is flat and unobstructed by vegetation are ideal. Because wind turbines produce significant noise it is also important for wind farms to be situated far away from densely populated areas. In order to generate a megawatt of energy about 60 acres of land is required, and if the property has access to transmission lines, it’s even better! Don’t worry about the soil being too soft, during construction the subsurface soil will be mixed with clay and then compressed to produce a stable pile foundation.

What You Need to Know About Wind Energy Farms Before You Sign a Land Lease

There are some important questions to ask the wind developer when discussing a wind lease. The amount of land the developer will need – not just for the turbines but also for roads needed to access the turbines and electrical equipment. It’s also important to determine what the wind farm developer will still allow you to do on your property. Furthermore, what are the tax repercussions of signing a lease agreement for a wind farm? For example, a farmer might be receiving tax incentives from their state because they own an agriculturally zoned property. If the zoning needs to be changed to develop the wind farm, they would no longer receive those incentives.

Sometimes a fixed payment per month is offered, or the developer will offer payments based on the revenues they make from their turbines. If that is the case you agree to, make sure you find out how much information and what type of information they will be disclosing to you about their revenue numbers. It’s also important to figure out if the developer has liability insurance.

These are just a few questions to ask the company that decides to lease your land during the negotiations process. Wind energy leases are a lucrative way to make the most of your property. Our industry experts can help guide you through the process if you list your land with us!