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Wind Farm Lease Questions

8,552 Views | 78 Replies | Last: 15 days ago by two1993ags
Hub05
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We have been approached for a potential lease for a wind farm on 300ish acres in north central texas. I met with a representative today with the following info:

They are currently offering us $10 an acre for a 6 month window on the exclusive right to negotiate a lease agreement. We were contacted by another company about 1year ago, but never moved towards negotiating anything.

The rep claimed the farm is going to be built, with construction starting next spring. I don't know if this is true or just posturing.

I haven't signed anything and will have a contract lawyer review before I do, but I was wondering if anyone else had any experience/thoughts on the process?
fightingfarmer09
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It's a matter of time before they break or the company goes bankrupt and sells it to an even cheaper outfit that won't maintain them and they break.

After all of that, you are stuck with windmills that don't work and no one to take them down.

-every farmer I know that has them
RikkiTikkaTagem
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So each windmill takes about 50 - 80 acres, and pays out about 4-8k/year, so you're talking about $48,000/year at most and maybe only $16,000/year, so over 20 years, which will probably be the end of life, consider the value of your land with a bunch of monolithic pieces of junk versus without them and see if it makes financial sense. Just an opinion of mine.

Edit: if I'm wrong on numbers, please correct me.
sonnysixkiller
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Hope DeSantis starts shutting some of this $&@/ down when he gets the top job.
Tony Franklins Other Shoe
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fightingfarmer09 said:

It's a matter of time before they break or the company goes bankrupt and sells it to an even cheaper outfit that won't maintain them and they break.

After all of that, you are stuck with windmills that don't work and no one to take them down.

-every farmer I know that has them
Kinda like some really old O&G equipment in some crappy fields. At least you can bulldoze that stuff and return the land.

Person Not Capable of Pregnancy
water turkey
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Who is the company? I can tell you if they are legit or not.
insulator_king
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fightingfarmer09 said:

It's a matter of time before they break or the company goes bankrupt and sells it to an even cheaper outfit that won't maintain them and they break.

After all of that, you are stuck with windmills that don't work and no one to take them down.

-every farmer I know that has them

Don't worry, I'm sure a windmill removal mitigation surcharge will start to be added to every new electric contract in the future.
That'll surely take care of it......
CanyonAg77
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fightingfarmer09 said:

It's a matter of time before they break or the company goes bankrupt and sells it to an even cheaper outfit that won't maintain them and they break.

After all of that, you are stuck with windmills that don't work and no one to take them down.

-every farmer I know that has them

Do you know anywhere that has happened, or are you just quoting the attitude of people you know?

Windmill companies are supposed to set aside funds to be used to reclaim the land at the end of the lifespan.

I understand the skepticism over that assertion
CanyonAg77
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Windmill spacing in our area is supposed to be one every 100 acres. Though the actual footprint is a few hundred square feet
TarponChaser
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CanyonAg77 said:

fightingfarmer09 said:

It's a matter of time before they break or the company goes bankrupt and sells it to an even cheaper outfit that won't maintain them and they break.

After all of that, you are stuck with windmills that don't work and no one to take them down.

-every farmer I know that has them

Do you know anywhere that has happened, or are you just quoting the attitude of people you know?

Windmill companies are supposed to set aside funds to be used to reclaim the land at the end of the lifespan.

I understand the skepticism over that assertion


Yeah, doesn't the RR Commission require a bond for future removal costs?
OnlyForNow
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Typically was than an acre pad site post construction, is all that's left.
water turkey
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If they aren't turning, the company isn't making any money. If it is a reputable company, they will be maintained very meticulously.

If the county doesn't require a decommissioning plan and bond, require decomm language in the lease document.
Todd 02
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Any property owners with wind turbines?
Hub05
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The current company is Enel and the previous company is Nextera.

I have heard the stories (urban legend? per canyons posts) On not working junk yards. So I wad curious if anyone had first hand knowledge.

Thr preliminary lease offer has a minimum payment of 5k per megawatt. So on a 3mW unit, minimum would be 15k. This number is higher than the $4-8k I had heard second hand from people, which increased my skepticism meter.
water turkey
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NextEra is the biggest renewable company in the world. Highly reputable company.

Enel is a large European utility, based in Italy. Enel Green Energy is one of the larger renewable companies in American. Another reputable company.
mwlkr
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Enel was blocked in Mason County from putting in a farm.
AgGrad99
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These wind farms have ruined The West Texas landscape.

Not saying I'd turn away the money if offered, but it's definitely ruined the landscape. I miss the way it used to be.
91AggieLawyer
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water turkey said:

If they aren't turning, the company isn't making any money. If it is a reputable company, they will be maintained very meticulously.

If the county doesn't require a decommissioning plan and bond, require decomm language in the lease document.

The document itself may not do you any good if the company that signed it goes under. Then you'll either have to chase them into bankruptcy court or try and get someone to honor the agreement. Good luck.

I would never sign one of these unless there are funds set aside (that aren't part of my take) to remove the item with the funds being held by a third party. Bonds are fine, but keep in mind that what it costs to take it down today may not come close in a decade or two.
water turkey
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Yeah. Hopefully the county requires a decomm plan and bond. Most require a 5 year update, to account for inflation.
OnlyForNow
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Wasn't blocked. not county level disputes.
Canyon99
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AgGrad99 said:

These wind farms have ruined The West Texas landscape.

Not saying I'd turn away the money if offered, but it's definitely ruined the landscape. I miss the way it used to be.


Agree with the sentiment that the wind farms have ruined the landscape everywhere they have been installed. I had a client suggest that he would turn down an offer to lease his land to preserve it and my response was that he would still be looking at these turbines daily when his neighbors sign leases. He weighed the pros and cons and decided that he would profit from the project as his landscape would never be the same even without turbines installed on his property. Sad that he was put in this position.

And yes, any competent attorney would ensure that the agreement would include language regarding the requirement of a bond for future remediation and removal of the infrastructure. Heck, it is quite easy to get these companies to agree to pay for the landowner to retain counsel for document review and negations.
Hub05
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That is part of our thinking. The wind farm is getting built, so it's either looking at them with nothing or looking at them a tad bit closer for a paycheck.
SunrayAg
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I don't like wind generators, and I certainly don't support the politics of the climate cult.

But I live in the panhandle where they are everywhere with more going in daily.

I have seen exactly 1 that quit working and was beyond repair. They blew the base bolts and dropped it on its side like a big tree, and hauled it off in pieces the next day.

milkman00
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What sucks is when you are on the edge of the oil/gas play and now also looking at the wind farm just a couple miles away. No matter which way you turn, you feel like crap. Same deal with high voltage power lines - either take the line and money, or neighbor takes the money and you still have to see the line.
tk111
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TarponChaser said:

CanyonAg77 said:

fightingfarmer09 said:

It's a matter of time before they break or the company goes bankrupt and sells it to an even cheaper outfit that won't maintain them and they break.

After all of that, you are stuck with windmills that don't work and no one to take them down.

-every farmer I know that has them

Do you know anywhere that has happened, or are you just quoting the attitude of people you know?

Windmill companies are supposed to set aside funds to be used to reclaim the land at the end of the lifespan.

I understand the skepticism over that assertion


Yeah, doesn't the RR Commission require a bond for future removal costs?
Those required bonds are a racket.

If you haven't dealt with the RRC (or any other state O&G authority) on issues involving these bonds before, you don't know that that money disappears and will never be available when the time comes. Period.

We have had quite a number of wells that the state has forced to be P&A'd after the operator has fallen off the face of the earth. The other working interest owners that are still in business have to foot the bill and the state threatens them until they do so. We don't even ask about bond money anymore because the RRC basically just laughs at us every time. We're not talking about ancient wells that pre-date required bonds here either - Some have even been dry holes that were drilled a few years ago and the operator went bankrupt and vanished.

Most wind farms, as far as I know, dont have multiple working interest owners, so when the operating company disappears, there is no one to strong arm into coming around and cleaning up. We had a well to P&A that had one of these dilapidated out of commission wind turbines about 100 yards away for which the land owner described the exact situation described above.


So anything you may have heard about "required funds set aside" or "bonds for future removal" you can just wipe from the discussion.
agcrock2005
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AgGrad99 said:

These wind farms have ruined The West Texas landscape.

Not saying I'd turn away the money if offered, but it's definitely ruined the landscape. I miss the way it used to be.
Agreed. I hunt near Eden and 3 years ago there were 0 windmills and now they're damn near from Brady to Eden now with dozens more going in every trip I take out there it seems. Very sad.
Sims
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Quote:

Windmill companies are supposed to set aside funds to be used to reclaim the land at the end of the lifespan.

LOL
Hold on honey, there are people on the internet that are wrong.
OnlyForNow
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They'll end up going from 283 to San Angelo.
Hub05
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I agree, like it or not the turbines are going to be everywhere. Our area is sandwiched between two farms already built.

Does anyone know how much these leases and turbines negatively effect property values? Do we eventually get to the point where any rural land has an expectation of already having a turbine or lease on it?
OnlyForNow
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No.

Sustainable wind speed is the driving factor in location. The area between 283 and San Angelo has a plateau of sorts, as you travel north toward the Colorado River, that along with the general land formation(s) create better sustained wind speeds in the area - comparably to the area east of 283 or south of Brady.
Beckett12
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Pretty much all of these deals require the remediation cost in the financing. Tax equity will be involved and this will be a requirement. I deal with mostly solar/battery now, and I would take a combined cycle power plant any day to acres over acres of solar arrays. TX is jut so big, and weather is prime, so we are a big target.
Beckett12
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should add, for utility grade...
agcrock2005
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OnlyForNow said:

They'll end up going from 283 to San Angelo.
Hub05
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Does anyone here have recent experience with a lease? Or a suggestion on a lawyer specializing in wind farms?
Canyon99
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Hub05 said:

Does anyone here have recent experience with a lease? Or a suggestion on a lawyer specializing in wind farms?


John Casper with Wetsel, Carmichael, Allen, & Lederle in Lubbock has negotiated a few leases for my clients.
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