Elringtons has the experience and special expertise to assist property owners and developers alike.
Wind farms have the ability to produce clean energy, generate jobs and income and have minimal environmental impacts when appropriately located. They can also generate income for the owners of the land upon which they are constructed.
In 2017, Australia’s wind farms produced 33.8 per cent of the country’s clean energy and supplied 5.7 per cent of Australia’s overall electricity. For the first time ever, 2017 saw wind contribute an almost identical amount of Australian electricity as hydro energy..
Elringtons has assisted property owners both alone and for the purposes of group representation in the following significant wind farm developments:
- Boco Rock
- Yass Valley
- Crudine Ridge
- Rye Park
What is involved for landowners?
The landowner will enter into a license agreement initially giving an intended developer the right of access for relatively short periods to enable undertaking of site feasibility studies. This may involve the erection of test masts for the purpose of assessing wind flows. Such licenses are characteristically short in duration but nevertheless ought to be the subject of appropriate payment terms and may contain an exclusive dealing clause at the behest of the developer.
Following the expiry of a period of license the landowner may grant an option for a lease for the construction and operation of the wind farm.
The option will be for a relatively short period – 1 to 3 years – whilst the developer secures development consent and a financing pathway for the project. The option will be granted for an appropriate consideration. During the option period, the developer may call (at its election) upon the landowner to enter a lease which will be for a long term – 25 years or more – and generally with a further option to extend that lease for an equivalent term.
Before the parties enter the option to grant the lease, the whole of the commercial terms for both the option period and term of intended lease must be negotiated and settled as between the parties.
The option so granted is a valuable right in the hands of the developer and conversely a significant burden upon the land title of the proprietor. Commercial terms favourable to the land owner for both the grant of option and for the lease term must be commensurate with the nature of the rights granted.
For each landowner, the effect of intended development must be carefully scrutinised and negotiated and the lease terms appropriately crafted. The circumstances of every landowner will be different.
Characteristically, wind farm leases are now in the nature of a premises grant with premises (being wind towers) defined by registered plan and the plan will create easements for access and services as ancillary to and serving the grant of premises leases for wind towers proper. Most wind farms will necessarily include the need for grant of diverse grants of easement including those that relate to transmission line connection and operation of substations. It may be necessary for limited freeholds to be acquired by the developer on a subdivision basis.
There are many other things to consider before entering into an Lease agreement for a Wind Farm with an energy development company for example:
- Duration of the Contract
- Renewable period
Tower removal responsibilities and specifications
- Placement of access roads
- Responsibility for roads, fences and gates
- Remuneration and payment structures
Restrictions on the sale and/or futuredevelopment of land
- Energy credits
- and more
Entering into an agreement with a wind energy company for the construction of a wind farm can be highly advantageous, which is why it is imperative that the terms of the agreement be carefully drafted. Once signed, all parties involved have given written approval of the provisions of that contract and are legally bound to fulfil the terms of the contract.
Rewards & Risks
The rewards can be considered to be very lucrative especially for farmers dealing with uncertain climate and markets. However, the documents you sign today can have effects on your land which last a lifetime, or more, so great care is required.
Therefore, if you don’t like something about a contract, negotiate a change before signing. The difficult part is knowing to what degree the various components of the contract can be changed that is why it is extremely important to seek competent legal advice before signing.
For more information or to make an appointment please contact: