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TIPS FOR LANDOWNERS CONSIDERING LEASING LANDS FOR WIND OR SOLAR DEVELOPMENT PowerPoint PPT Presentation


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TIPS FOR LANDOWNERS CONSIDERING LEASING LANDS FOR WIND OR SOLAR DEVELOPMENT. Jim Jones Power Generation Business Lead April 12, 2013. COMPENSATION. Payments. Generally two payment schemes within a single lease agreement One for the Development Term and one for the Operational Phase

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TIPS FOR LANDOWNERS CONSIDERING LEASING LANDS FOR WIND OR SOLAR DEVELOPMENT

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Tips for landowners considering leasing lands for wind or solar development

TIPS FOR LANDOWNERS CONSIDERING LEASING LANDS FOR WIND OR SOLAR DEVELOPMENT

Jim Jones

Power Generation Business Lead

April 12, 2013


Tips for landowners considering leasing lands for wind or solar development

COMPENSATION


Payments

Payments

  • Generally two payment schemes within a single lease agreement

  • One for the Development Term and one for the Operational Phase

  • Development Term payment is typically a smaller retainer


Disbursements

Disbursements

  • Single lump sum

  • Fixed annual sum

  • Fixed bi-annual sum

  • Share of the revenue from project operation


Payment rates

Payment Rates

  • Based on when you receive payment; up front vs. deferred

  • Number of acres on the leased parcels and/or

  • Number of turbines, feet of transmission/collection lines, and/or length of road placed on your property


Additional factors

Additional Factors

  • Level of potential wind production

  • Price of energy

  • Geographic location

  • Land Characteristics


Tips for landowners considering leasing lands for wind or solar development

THINGS TO LOOK FOR IN A LEASE AGREEMENT


Key terms

Key Terms

  • Landowners should not have to pay anything to be in a lease unless they have equity in the project

  • Landowners may be locked into exclusivity for an agreed period of time; can’t enter into another potentially competing lease

  • Default, cure, & termination rights for both parties should be clear in the contract

  • Transition of ownership


Key terms cont

Key Terms (cont.)

  • Landowner should assume no financial responsibility for the project itself

  • Landowner input into the development plan

  • Contract will generally have a limited term of viability

  • Access and land use terms


Tips for landowners considering leasing lands for wind or solar development

THINGS TO CONSIDER BEFORE ENTERING INTO A LEASE AGREEMENT


Personal considerations

Personal Considerations

  • Understand the fine print!!!

  • Contract should be viewed as a long-term relationship that will last for decades.

  • Each payment scheme has its pros and cons.

  • Are your stipulations clearly documented.

  • Do you feel you are part of the development process.

  • Understand how and where the facility will be sited.


Personal considerations cont

Personal Considerations (cont.)

  • Understand the payments and how they stack up to payments in the region.

  • How does the rate of return compare to the risk you are assuming?

  • Understand your insurance and tax liabilities associated with the increased value and potential land use change.

  • Does the Developer have adequate liability insurance and are you liable for anything associated with the facility?


Personal considerations cont1

Personal Considerations (cont.)

  • Understand tax payments associated with lease payments.

  • Understand that the public may scrutinize the proposed project.

  • Contract terms may require confidentiality.

  • Under the timeframe of the proposed project.

  • Is this a real project or is the Developer just trying to tie up the property?


Tips for landowners considering leasing lands for wind or solar development

TIPS FOR NEGOTIATION


Negotiation tips

Negotiation Tips

  • Your agreement is an integral part of the potential success of the proposed project.

  • Don’t make unreasonable requests; conversely, there are plenty of reasonable requests.

  • Ensure that progress is being made.

  • Understand how the proposed project will fit in with your current and anticipated land use.

  • Make timely decisions.

  • Get help.


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