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How Do Wind Leases Work?

Close up photograph of a wind turbine

Wind power is a rapidly growing source of renewable energy development in the United States. According to the US Department of Energy, the US has installed over 144,000 megawatts of wind capacity, making it the largest renewable energy source in the country. Wind turbines, the machines that produce electricity from wind energy, are crucial for harnessing this energy. This guide will explain wind leases and what landowners can expect when leasing land for a wind farm.

Wind leases are long-term legal agreements between a landowner and a wind energy company. The landowner grants the developer the right to install and operate wind turbines on their property. Then, the wind developer typically sells the electricity generated by the turbines back to the utility company. The landowner receives lease payments in exchange for allowing the use of their land.

How do landowners get paid for wind leases?

The wind company compensates landowners for allowing them to place wind turbines on their land. The amount of these payments varies depending on the wind company and the lease agreement itself.

Lease payments for wind projects can adopt various structures. Some leases pay fixed amounts per turbine or per acre, while others include royalty payments. Royalty payments are a percentage of the money made from the energy generated from the turbines. Many wind leases use a mix of these methods.

If the landowner gets paid per turbine, the payment amount is usually based on the amount of energy that the turbines generate. Annual payments of $5,000-8,000 per turbine are typical, but this fluctuates depending on the specific lease agreement.

How many acres of land do you need for a wind farm?

While there is no definitive answer to this question, wind farms generally require very large parcels. Wind turbines themselves require a lot of space, and wind developers place them far apart to account for turbulence. In fact, just one wind turbine can require up to 80 acres of land.

As wind developers evaluate parcels of interest, acreage is not the only consideration. There are many different factors that determine if land qualifies for a wind farm. Wind developers also consider proximity to electrical infrastructure, such as substations and transmission lines. The closer a property is to electrical infrastructure, the more attractive it is for a wind farm. Other considerations include exclusion zones, local wind power incentives, wind speeds, and more.

Using LandGate's free property report, landowners can receive a free wind lease estimate for their parcel. This calculation accounts for the above factors and more to provide you with an accurate estimate for your land's wind leasing value.

What is the process for leasing land for wind turbines?

  1. Development phase: Also referred to as the option period, this is the 2-6 year term that gives the wind developer the exclusive right to construct turbines on your land. During this term, the wind developer obtains the necessary permits, acquires financing, conducts feasibility studies, and more to ensure that they can begin construction. The wind developer pays the landowner a modest amount ($5-40 per acre) during this time.

  2. Construction phase: During this period, the wind developer constructs the wind turbines and the supporting infrastructure. This phase could last anywhere from 2 months to 1 year depending on how many turbines the developer plans on building.

  3. Production phase: This is the phase in which the wind farm is fully functioning and generating electricity. This phase can last for 20 years or longer, depending on the lease. The typical wind farm lease length is 30 years. Many wind leases include options for the wind developer to extend the lease by 5 or 10 year increments.

  4. Decommissioning phase: Unless the wind company moves forward with any options to extend the lease, the wind turbines and supporting structures are removed from the property, and it is restored to its original condition. The developer is responsible for this phase.

During the production phase, there may be certain implications on what a landowner can and can't do with their land during the wind lease. While the wind energy facility is operational and producing energy, landowners may be able to simultaneously graze livestock and cultivate crops on their land. Landowners might also face restrictions preventing specific activities on their land, such as building obstructive structures.

In some cases, the production phase does not last the full term of the lease. For example, the wind developer may go bankrupt. In these cases, the wind farm may be sold to another developer, who would take over the lease and continue operating the project as planned. This means that there is a potential for gaps in the lease payments, but the developer who purchases the wind farm would be responsible for any back payments. For that reason, many landowners choose to sell their wind lease payments for a lump sum up front.

How can landowners lease land to wind developers?

Landowners can list their land for lease for wind farms for free on LandGate's online marketplace. Wind developers use our data to find parcels of interest and plan/ manage their projects. The first step is to find your land on our map and receive your free property report. Publish your free listing today!


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