We have been approached by a company considering placing a large wind farm in the area. The lease that was initially offered was very long (150 years, when the initial term and all possible renewals were considered). We objected to this length, and they came back with a shorter lease, but one that I still feel is too long (80 years, with all renewals considered). What is a typical term? In searching the internet, most seem to be in the range of 30-50 years total.

The length of the lease will also typically affect the rate of return you, as a land owner, will be offered by the developer. The longer the lease the higher the rate (usually). That also depends on whether you're being offered a royalty based on gross kWh production, a flat fee structure, or a 'signing bonus'. You also have to remember that the developer is investing significant monies in any wind farm project, so they are looking for the highest rate of return as well, thus the trend for longer leases.

That is a pretty long period for a lease. We've been hearing about more and more leases proposing very long lease terms lately, and it's not something we like to hear.

Given the amount of change in the renewable energy industry in the last 30, and even 10 or 5, years, there's no way you can predict if an agreement will still be a good idea 150 or even 80 years in the future. Furthermore, extremely long leases are sure to impact generations of landowners to come, which may be your children and grandchildren (and even great grandchildren).

We've got a set of resources talking about things to look for in a lease, including best practices for length on our web site.

In the best practices piece, it talks about an ideal length being 30 years, because that's the typical life of a project.

In reality, however, the trend is for leases to be longer and longer.

One final piece of advice I have for you is that you should hire a lawyer who has experience in wind energy agreements. No matter if you're looking at 150, 80, or 30 years, it's too long a time to have your land locked up in a less-than-ideal agreement so you want an experienced professional to help watch out for your best interests. (You can find a short list of wind lawyers on our web site too).

Marin