The U.S. is home to one of the largest and fastest-growing wind markets in the world. In fact, according to the U.S. Energy Information Administration, in 2022, wind turbines were the source of about 10.2% of the total U.S. utility-scale electricity generation.
Although there are many benefits to leasing land for a wind farm, there are also drawbacks that property owners should consider before signing a wind lease offer. Given the long term nature of wind lease agreements, it is important that property owners conduct thorough due diligence to ensure that a wind land lease aligns with their needs and goals.
What is a Wind Lease?
Wind leases are long-term legal agreements between a landowner and a wind energy company. The property owner grants the wind developer the right to install and operate wind turbines on their property. Then, the developer typically sells the electricity generated by the wind turbines back to the local utility company. The landowner receives lease payments from the wind developer in exchange for allowing the use of their land.
Pros of Wind Leasing
No upfront costs: One of the main advantages of solar leasing is that there are no upfront costs for property owners. The solar company will cover all the costs associated with installing, maintaining, and operating the solar panels on the leased land.
Guaranteed income stream: By leasing land for a solar farm, property owners can secure a steady income stream over the course of the solar projects through solar lease payments. The amount of these payments ranges based on many factors, but property owners are generally paid $700-2,000 per acre per year.
Limited risk and liability: Since the solar company is responsible for the installation, maintenance, and operation of the solar panels, property owners have limited risk and liability. This means that in the case of any accidents or damages, the solar company is responsible for covering the cost of any damages.
Contribute to Clean Energy Generation: By leasing land for a solar farm, property owners are contributing to the production of clean and renewable energy, reducing their carbon footprint and helping to combat climate change. Not only do solar leases benefit the environment, they also have many benefits for property owners.
Cons of Wind Leasing
Potential Loss of Land Use: Leasing land for a wind farm may limit the landowner's ability to use the land for other purposes during the lease period. However, the extent of this limitation depends on the negotiations between the landowner and the wind developer. In most cases, the land can still be used for crops or agricultural activities during a wind lease. This is because wind turbines themselves occupy a relatively small area and are spaced out at significant distances from each other.
Payments are NOT Guaranteed: The wind company can stop operating the wind farm at any time due many reasons, meaning that wind lease payments are not guaranteed to continue for the entire term of the lease agreement. However, property owners can sell their wind lease payments up front for a lump sum to mitigate this risk. When a property owner decides to sell their wind lease payments in exchange for a lump sum upfront, the purchaser (typically an investor responsible for a hedge fund) assumes the risk of potential payment discontinuation.
Long-Term Commitment: Wind leases are established as long-term agreements, spanning from 20 to 50 years. While the extended duration of these leases may not be inherently unfavorable for landowners considering wind farm leasing, it is a crucial factor that necessitates careful consideration.
How to Lease Land for a Wind Farm
When property owners contemplate leasing land for a wind farm, they must consider various factors. One such factor is the evaluation of the potential advantages and disadvantages of wind leasing- they should keep this in mind as they weigh the option of exploring land lease agreements with wind energy developers.
Historically, property owners have received wind lease offers through unsolicited contact from wind energy developers. If you're interested in determining your land's value for a wind farm or exploring wind lease offers, you can list your property for free on LandGate's online marketplace. Wind energy developers utilize our data to plan new projects and find land to lease through the marketplace. Listing your property is completely free, and there is no obligation to accept any potential offers that are received through your listing. To begin, generate your free report on our map: