Transcript McLean-Contracts

Wind Contracts
A Farmer's Perspective
Colette McLean
Essex County
Wind Contracts
Ontario Federation of Agriculture
www.ofa.on.ca/policyissues
2 ½ Dozen suggestions for Wind Power leases
for Farmers
Other sources
www.windaction.org
www.wind-watch.org
Wind Contracts
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2 components:
Option agreement
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Usually for 5 years
Payment usually of min. $1000 per year
Once signed, grower is bound to the contract
Developer can pull out at any time
Land Lease agreement
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Usually for 20 years, automatically renewed for
additional 20. (some are up to 50 years)
Revenues are based on % of sales, avg over all
turbines in project area
Wind Contracts
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Option agreement
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5 years can be considered a long time
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Does not guarantee a turbine
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But can subject you to no setbacks to lot lines
Can subject you to other developments
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inhibits other developments
(transmission lines, roadways, switching stations and
transformer stations)
Once expired, not in any way obliged to
continue (Port Burwell)
Wind Contracts
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Land Lease agreement
 Lease not an Easement
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Easements are difficult to discharge
only on land the turbine will be located
Term of 20 yrs is due to Planning Act
 may want more time & notice when renewal is due
Revenues depend on SOA or PPA
 (usually 2-3% or a straight outright payment/yr
 $5,000 to $12,000/yr
 Revenues during construction
Wind Contracts
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OTHER PITFALLS
First Rights of Refusal on sale of land or on
development or granting future rights
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(eg. gas, gravel, your own renewables)
Postponement of mortgage
Construction Liens
Maintenance & Location of Roadways
Renegotiations of terms
Arbitration for damages
Indemnification for damages to turbine,
worker safety, neighbours rights
Wind Contracts
PITFALLS (Continued)
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Property values – landowner & neighbour
Effect on Financing??
Effect on landowners insurance??
Does developer have licenses(OEB), contracts(OPA),
or rights of connection (Ont. Hydro) etc?
 Wind Development has dominated all transmission
capability in Ontario, no more room
Is developer selling to a subsidiary?
Is developer getting carbon credits?
Will developer use your property for other activities
(storage, fuelling (spills))?
Wind Contracts
PITFALLS (continued)
 Removal costs - responsibility?
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Bankruptcy – right to terminate
Legal fees – developers cost
Equipment removal
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Include all wiring, all of the foundation
scrap value is limited, $30/tonne
est.cost in Europe $1.3 million
time should be stipulated
Appearance of turbine
Stipulate times for maintenance work
How will disrupted lands be refurbished
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(tiles, imported soil, loss of crops)
Wind Contracts
PITFALLS (continued)
 May limit future construction (new barns etc)
 Non Disclosure Agreements (Ripley)
 Contracts are with off-shore developers
 Change over of lease – notification
MAKE SURE EVERYTHING IS IN THE
CONTRACT, developers tend to flip these
projects for a profit, no guarantees that next
developer will honour any agreements unless in
writing.
Other Concerns for Landowners
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Stray voltage (Ripley, Goderich)
Noise levels could be noted in contract
 Manitoba, 65 db's
Noise assessments do not include transformer noise
& weather effects (Shears)
Flicker (30 mins/day to max. 30 hrs/yr)-not regulated
Potential Ground water issues
Roadway accessibility, responsibility, maintenance
Interference with Satellite, internet
Lighting issues
Spills
Tree or obstruction removal
Other Concerns for Landowners
SETBACKS
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Setbacks are often reduced for landowners
(250 metres)
Other Concerns for Landowners
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Setbacks from lot lines - 50 metres.
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Vesta manual suggests a 400 m radius safety
zone when turbine is in operation.
GE recommends a 1.5 x turbine hgt + radius for
ice throw
Need to maintain farmer's normal activity
Lightning strikes, Fires, collapses
Other Concerns for Landowners
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Land must be rezoned to Light Industrial
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Developer needs to pay the tax difference
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Tax needs to go through landowner's invoicing
- company then reimburses
Taxes are capped @ $40,000/MW
Rated as business income (avg. income tax
rate 30%)
Other Concerns for Landowners
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DO NOT GIVE UP YOUR RIGHTS
Wind developers can often times appropriate
your development rights for a long time as
well as extend their rights as tenants. (eg.
sell excavated soil, use your water sources)
Who will control the land in the next 10, 20,
30 years – foreign corporations?? What will
be the long term affect on rural Ontario?
Many development are on prime agricultural
lands with specialty crop capabilities.
Planning for Wind
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Provincial Policy Statement stipulates that
Ontario's long-term prosperity, environmental
health and social well-being depend on
wisely managing change and promoting
efficient land use and development patterns.
Efficient land use and development patterns
support strong, liveable and healthy
communities, protect the environment and
public health and safety, and facilitate
economic growth.