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Wind Contracts

A Farmer's Perspective
Colette McLean
Essex County

 Please seek the advice of


a lawyer before signing a
contract
Wind Contracts

Ontario Federation of Agriculture


www.ofa.on.ca/policyissues
2 ½ Dozen suggestions for Wind Power leases
for Farmers

Other sources
www.windaction.org
www.wind-watch.org
Wind Contracts

2 components:

Option agreement
− Usually for 5 years
− Payment usually of min. $1000 per year
− Once signed, grower is bound to the contract
− Developer can pull out at any time


Land Lease agreement
− Usually for 20 years, automatically renewed for
additional 20. (some are up to 50 years)
− Revenues are based on % of sales, avg over all
turbines in project area
Wind Contracts

Option agreement
− 5 years can be considered a long time

inhibits other developments
− Does not guarantee a turbine

But can subject you to no setbacks to lot lines
− Can subject you to other developments

(transmission lines, roadways, switching stations and
transformer stations)
− Once expired, not in any way obliged to
continue (Port Burwell)
Wind Contracts

Land Lease agreement
− Lease not an Easement
− Easements are difficult to discharge
− only on land the turbine will be located
− Term of 20 yrs is due to Planning Act

may want more time & notice when renewal is due
− Revenues depend on SOA or PPA

(usually 2-3% or a straight outright payment/yr

$5,000 to $12,000/yr

Revenues during construction
Wind Contracts

OTHER PITFALLS

First Rights of Refusal on sale of land or on
development or granting future rights
− (eg. gas, gravel, your own renewables)

Postponement of mortgage

Construction Liens

Maintenance & Location of Roadways

Renegotiations of terms

Arbitration for damages

Indemnification for damages to turbine,
worker safety, neighbours rights
Wind Contracts
PITFALLS (Continued)

Property values – landowner & neighbour

Effect on Financing??

Effect on landowners insurance??

Does developer have licenses(OEB), contracts(OPA),
or rights of connection (Ont. Hydro) etc?
− Wind Development has dominated all transmission
capability in Ontario, no more room

Is developer selling to a subsidiary?

Is developer getting carbon credits?

Will developer use your property for other activities
(storage, fuelling (spills))?
Wind Contracts
PITFALLS (continued)

Removal costs - responsibility?
− Include all wiring, all of the foundation
− scrap value is limited, $30/tonne
− est.cost in Europe $1.3 million

Bankruptcy – right to terminate

Legal fees – developers cost

Equipment removal
− time should be stipulated

Appearance of turbine

Stipulate times for maintenance work

How will disrupted lands be refurbished
− (tiles, imported soil, loss of crops)
Wind Contracts
PITFALLS (continued)

May limit future construction (new barns etc)

Non Disclosure Agreements (Ripley)

Contracts are with off-shore developers

Change over of lease – notification

MAKE SURE EVERYTHING IS IN THE


CONTRACT, developers tend to flip these
projects for a profit, no guarantees that next
developer will honour any agreements unless in
writing.
Other Concerns for Landowners

Stray voltage (Ripley, Goderich)

Noise levels could be noted in contract
− Manitoba, 65 db's

Noise assessments do not include transformer noise
& weather effects (Shears)

Flicker (30 mins/day to max. 30 hrs/yr)-not regulated

Potential Ground water issues

Roadway accessibility, responsibility, maintenance

Interference with Satellite, internet

Lighting issues

Spills

Tree or obstruction removal
Other Concerns for Landowners
SETBACKS

Setbacks are often reduced for landowners
(250 metres)
Other Concerns for Landowners

Setbacks from lot lines - 50 metres.
− Vesta manual suggests a 400 m radius safety
zone when turbine is in operation.
− GE recommends a 1.5 x turbine hgt + radius for
ice throw
− Need to maintain farmer's normal activity
− Lightning strikes, Fires, collapses
Other Concerns for Landowners

Land must be rezoned to Light Industrial

Developer needs to pay the tax difference
− Tax needs to go through landowner's invoicing
- company than reimburses
− Taxes are capped @ $40,000/MW

Rated as business income (avg. income tax
rate 30%)
Other Concerns for Landowners

DO NOT GIVE UP YOUR RIGHTS

Wind developers can often times appropriate
your development rights for a long time as
well as extend their rights as tenants. (eg.
sell excavated soil, use your water sources)

Who will control the land in the next 10, 20,
30 years – foreign corporations?? What will
be the long term affect on rural Ontario?

Many development are on prime agricultural
lands with specialty crop capabilities.
Planning for Wind

Provincial Policy Statement stipulates that
Ontario's long-term prosperity, environmental
health and social well-being depend on wisely
managing change and promoting efficient land
use and development patterns. Efficient land use
and development patterns support strong, liveable
and healthy communities, protect the
environment and public health and safety, and
facilitate economic growth.