Community Renewable Energy

Site Control

If preliminary evaluation indicates that the proposed site has a substantial wind resource, and no other obvious obstacles to site development are apparent, project coordinators should take steps to secure control of the site. Establishing site control ensures the exclusive rights to develop a wind project at the proposed site. There are a few different options for controlling the land on which the project is to be built and securing unfettered access to the wind resource. Regardless of how site control is established—whether by ownership or through a land-lease agreement—project coordinators must separately negotiate the ownership of the wind project itself (see Financing & Ownership models).

Property Ownership

If the landowner of the proposed wind site is already involved, or is interested in becoming involved in developing the wind project, the only necessary action for securing site control is to execute an agreement with the landowner that gives exclusive permission to pursue building the project on the land.

A less common—and likely less desirable—way to establish control of the site is to purchase the property. This is likely to be an expensive approach, and involves several challenges and risks. First, the existing property owner may not be interested in selling. Second, the land is presumably of value to a wind developer only if a project can successfully be developed on it. Should the project fail for any reason, at any stage of development or operation, the wind developer would be left owning the property but no wind project. For these reasons, and because the goal of site control can be just as easily accomplished without owning the project property, it is more common for wind developers to lease the land they need for the project.

Land Lease

The objective of leasing land for wind development is twofold: to secure the right to build turbines, roads, and other project facilities where necessary; and to ensure that no other development on or near the project site will affect the wind project’s productivity or ability to interconnect. This makes wind development a good fit for land used to raise crops or livestock. Agricultural activities can continue right up to the base of each turbine or to the edge of each road, and will pose no threat to the project’s operation. The Owner or Project Coordinator typically pays the property owner for the right to build on only those small portions of land actually needed for project infrastructure, with additional compensation for the right to the property’s unimpeded wind resource. The wind project does not own or lease any more land than is necessary, and the farmer or rancher gets to continue using the majority of the land for agricultural production as before.

Land-Lease Agreements
A land-lease agreement is a contract in which the wind project owner agrees to make payments to the landowners on whose land the turbines or project infrastructure will be sited. In exchange, the landowner allows the use of designated portions of the land for wind turbines, roads, and associated infrastructure. The terms of this agreement should be carefully considered by all parties, ideally with professional legal advice, as it is a long-term contract with important financial and land-use implications. For very good summaries of the various topics to consider in land-lease agreements, see the Windustry organization’s guide, “Wind Energy Easements: Legal Issues” and the “Landowner’s Guide to Wind Energy in the Upper Midwest” (available from the Izaak Walton League of America).

Of particular importance for project economics are the lease payment terms. The wind project owner may pay each landowner for the wind rights to their land on a per-acre or per-turbine basis. This payment may be a one-time, up-front payment; a recurring payment (e.g. annual) of a fixed amount; a recurring payment that depends on the amount or value of the power generated by each turbine; or some other type. There are pros and cons of each payment structure for each party to the agreement, as described in the Windustry guide.

When to Establish Site Control

The Project Coordinator must demonstrate exclusive rights to develop the wind project site in order to secure permits and financing. It will likely be desirable to establish control of the site as early as possible in the development process. However, there is a balance between securing the site too soon or too late. In “locking up” the site too soon, there is a risk of paying for control of a site that turns out to be unsuitable for wind development. Waiting too long, though, increases the risk of investing significant time and money into project development only to lose the right to build at the site to a competing developer—or to a simple change of heart by the landowner.

In order to protect any investment made in project development, it is prudent to execute a pre-development option agreement in the early phases of site assessment. As soon as the landowners of a potentially good wind site are identified, executing such an agreement with them secures the exclusive right to obtain or negotiate a longer-term wind lease. It is especially important to have the exclusive rights to a lease agreement at a set cost if the developer is making significant pre-development investments in wind data monitoring, wildlife studies, etc.

An option agreement usually expires if the developer does not begin active project development within a reasonable timeframe (1–5 years). This allows the landowner to pursue wind development on his or her property with another developer in the future, if the original developer decides not to pursue a project. If pre-development studies indicate the project will likely succeed, the developer and landowner should then execute a long-term wind lease governing the site control relationship for the construction and operations phase of the project.