Most of the wind turbines located in the United States are probably located on farm land or near farm land.  DTN – The Progressive Farmer just posted a recent article on “living in the shadow of wind generators”. 

This posting had several points regarding putting wind turbines on your land.  Some of the key thoughts were:

• It may be a good idea to have legal advice, especially if the attorney has experience in this area.  Many of these leases last for over 20 or 30 years and if you do not address both the near-term and far-term issues in the lease, it may be impossible to fix after the lease is signed.  Remember that a good lease will spell out both the good things, such as the rent income to be paid to the farmer, and the bad things, such as how is land maintained during and after construction.
• Make sure to address how construction will be handled.  Most of the roads that are put in for construction are 40′ wide and after construction, they are reduced to about 15′.  How the contractor takes care of that extra 25′ will determine how good the farmland becomes again.  Remember, if there is massive compaction or the roads are not terraced property, this may negatively effect your farm for many years.
• Wind energy does not appear to be a fad.  It is already producing enough power for over 7 million homes.  Most of the issue with wind energy is the total variability of when the wind blows which effects how well the energy is moved through the electric grid.  However, with the low price of natural gas, many wind farms are now combining wind farms with natural gas generators that will kick in when the wind dies.  This can make the wind farms even more efficient.
• If you lease the farm land, you maintain your rights versus giving an easement to the wind farm.  Know your rights on this subject.
• The rent income can in many cases far exceed the income that you can generate off of the farm.  For example, in the article, each wind turbine generates $5,400 of rental income per year with a 1% inflation increase.  If a wind machine takes up 10 acres, that is net rental income of about $540 per acre.  Believe me, most farms in the mid-west would love to net $540 per acre on any crop.  Also, some companies will pay both a fixed annual rental plus a percentage of the energy produced.  Make sure to determine what the correct market rate is for your area.
• Wind companies want to be good neighbors since they know that good public relations and working relationships will allow them to keep operating.
• Wind turbines need maintenance.  If you think once the machine is up and running, you will never see a maintenance worker again, you are wrong.  Most wind farms have some number of full-time employees that manage and maintain the wind turbines and towers.  They will be using these roads on a daily basis.  They will become your neighbors.   Make sure the are good neighbors, not bad ones.

We have several farm clients in Washington and Oregon that either are getting royalty checks from wind turbines or will be getting these checks in the near future.  In many cases, the income from wind turbines is substantially higher than the income from traditional farming.

In many cases, one turbine can generate in excess of $5,000 or royalty income per year and many are higher than this number.

The American Wind Energy Association recently gave their report card on how the industry is meeting its goal of providing 20% of the USA’s electricity by 2030.  Their overall grade was a B.  The major report card subjects were:

Technology – Grade A-

Turbine productivity has increased substantially over the last several years.  There are many towers now that are over 320 tall with the rotor diameters in excess of 300 feet.  These sizes allow the turbines to use the wind better and some of them are producing 3 mega-watts.

Manufacturing – Grade B+

Over 55 new facilities have either come online, were announced or expanded in 2008.  The domestic manufacturing content is approaching 50%, however, with out help from the government on regulations, etc., it may be difficult to exceed this number over the next few years.

Transmission & Integration – Grade C-

This is the biggest bottleneck for reaching the 2030 goal.  It is far easier to produce the power than to get it to the people and industries that can use.  Until this is fixed, there is no way the 2030 goal can be met.

Siting – Grade B

This area continues to improve with education of the public.  However, there is no national process for siting and almost all of the siting process is on the local and regional level.  This may be a good thing, however, to meet the 2030 goal, this may need to be streamlined.

 Some fun wind farm facts:

Texas is the number one state with current power capacity of 7,907 MW (mega-watts).  Number 2 is Iowa, with California, Minnesota, and Washington rounding out the top 5.

During 2008, the wind industry installed 8,500 MW of capacity bringing the total to 25,300 MW.

The top five potential wind states of North Dakota, Texas, Kansas, South Dakota and Montana could produce enough electricity to provide all of the electricity that the US is currently producing.