The wind farm industry has been booming over the last few years and now with T. Boone Pickens pushing it is growing even faster. As a landowner, there are many aspects to consider prior to entering a lease for wind production. Wind leases vary and have substantial differences from mineral leases.
Some of the more important considerations that should be addressed in a wind lease are – horizontal severance clauses, vertical severance clauses, and surface rights.
Landowners need to negotiate both vertical and horizontal severance clauses to prevent one tower from capturing the entire premise from the surface to the heavens. This would be similar to a depth clause and a Freestone Rider in a mineral lease. Since wind does not blow equally at all elevations and generally wind has a greater velocity at higher altitudes, landowners need to make sure that the lease prevents loss of future wind production royalties by restricting the area both horizontally and vertically for each wind tower much in the same way mineral leases provide for each oil well.
In wind leases, there is no automatic right to use the surface, whereas; in mineral leases the lessee has the automatic right to use as much of the surface as necessary for exploration and production. Landowners need to make sure to address whether they will want to restrict certain activity or impose monetary penalties for certain activities. Some activities that landowners may want to limit or impose penalties for are tower sites, construction sites, roads, transmission lines, guy wires, substations, buildings, loss of use of surface, and loss of revenues.
Landowners will also want to consider indemnification clauses, time is of the essence clauses, and property tax consequences. Consulting with an attorney who is familiar with wind lease is highly recommended as all leases require different clauses and will need to address issues specific to each property and lessee.
