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Increased oil prices leading to Higher Wind farm rents

31/10/2005

"The large increase in oil prices this year has fed through to greatly increased rentals now being offered to landowners for wind farms.  These can be up to two to three times the figures that were being offered 12 months ago," says Mark Newton, head of Fisher German's renewable energy team.

Owners are normally approached by wind farm companies who ask them to sign up for a 12 month exclusivity period, while they carry out investigations as the viability of the site.  This exclusivity letter normally sets out the commercial terms.  If the wind farm company then wishes to proceed with the site they then typically enter into a five-year option agreement, if they obtain planning permission during this period, then they enter into a 25 year lease.

What a lot of farmers are not aware of is that the commercial terms that were originally proposed some time ago can then be renegotiated when the terms of the Option Agreement and lease are negotiated.  Mark Newton says that on the best sites, landowners are now going to be receiving over £500,000 per annum for only a medium sized wind farm. During the latter part of the lease and for large sites the figures can be in excess of £1 million per annum, whereas they were originally being offered substantially lower figures.

Mark Newton says, "I see a large number of cases where owners try and agree terms themselves, and the wind farm companies get away with incredibly low payments."  There are also people who claim to be a wind farm company, to get farmers to sign up to uncommercial terms, and then try and sell these rights on to proper wind farm companies for a large profit.  It is critical that you obtain independent professional advice from specialist wind farm surveyors and these costs are normally paid for by the wind farm company.  If you are approached then contact Mark Newton, partner and head of Fisher German's renewable energy team.(01858) 411246.

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