Wind Energy Lease Agreement

Among the various storage-related energy projects that could be candidates for co-location with wind power, there could be a typical hydroelectric power plant in conjunction with a storage tank. For what it is worth in at least one known case, Contra Costa Water Dist., 68 Cal. Rptr. 2d 272 (best known for its position on the separability of wind rights), the California Court of Appeals recognized the relative compatibility of wind and hydroelectric generation in the same general area. The Contra Costa Water District Court concluded, inter alia, that it „is satisfied that private wind power generation is fully compatible with the district`s public water uses [reservoir and related uses, including mitigation zones] for occupied land.“ Id. at p. 277. The wind energy land agreement generally grants the developer the automatic right to extend the agreement beyond the initial investigation phases for one or more periods of 30 to 50 years (or more, subject to applicable government legal restrictions). The developer usually agrees to one of the following conditions: (1) pay the landowner a regular minimum payment during the extended period, (2) pay the landowner a payment at the beginning of the extended period, or (3) install a number of wind turbines on the property that produce electricity (or start paying an increased minimum cash flow). The number of wind turbines that the proponent may need to install on the property to trigger the automatic entitlement to an extended term without having to pay a higher minimum payment to maintain the agreement is subject to negotiation between the parties.

In determining the proposed initial and extended term of a wind energy land contract, the proponent must consider any requirements or restrictions imposed by applicable state law. As mentioned earlier, some states, particularly in the Midwest, set strict deadlines that must be met in order to maintain the wind land agreement in force, and depending on the state, development of the project must begin or commercial operation must begin within certain time frames, even though the wind land agreement contains a more flexible provision. .