The Courier Legal Advice Line
Wind Turbine Agreements
Wind Turbine Agreements
Notwithstanding the warning shots south of the border about the future of subsidised
renewable energy, the Scottish Government’s ambitious renewable energy targets and the
benefit of feed in tariffs means having a wind turbine on your land may still be an attractive
prospect to land managers, be that landowners or tenants. Wind turbine developers often
promise to complete the whole project in return for a profit share.
The types of agreement involved.
The land manager may be asked to sign option agreements, giving a developer the
exclusive right to carry out exploratory work and apply for planning permission for the
turbine. The developer will then have the option to lease the turbine site. If the land
manager is not the owner of the land concerned, the landowner’s consent will be required.
This can be a complex area for agricultural tenants.
Joint venture agreements between land managers and developers are increasingly common.
Here, the land manager has more involvement, including sharing initial costs, exposure to
risk and future profits. A written shareholder’s agreement should regulate how business
decisions will be reached.
Option agreements, leases and shareholders’ agreements can be complex. In particular,
care should be taken as to the extent of land tied into any agreement. Legal advice should
be sought at the earliest opportunity.
What rights should the land manager have?
The land manager should be entitled to use any parts of the leased area not occupied by the
turbine or associated equipment, typically for agricultural or sporting use. Surprisingly, this is
often overlooked in written agreements.
Who is responsible for the turbine?
The lease will provide that the developer retains ownership of the turbine and other
equipment and will maintain them in a safe condition. Provision should be made in relation
to prevention of damage to the land, pollution and compliance with statute. There should be
suitable insurance and indemnities in place to cover any claims against the land manager as
a result of the developer’s operations.
What other rights will the developer typically have?
The developer will usually have the right to use surrounding land for cables, electricity substations and roads and to grant these rights to others. The developer will seek to oblige the
landowner to enter in to future supplementary agreements in this respect. Always ensure
you have the right to grant these rights.
What happens when the lease comes to an end?
At the end of the project, the turbine should be removed and the land should be reinstated
to its former state. A carefully drafted agreement will ensure that the developer is
responsible for this even after the lease has ended. A developer with no income at the end
of a project may not be able to fund this work, leaving the land manager with a liability.
Many agreements also provide for restoration bonds which allow access to a fund should the
developer fail to carry out this work.
What will this cost?
Any agreement should state that the developer will cover all costs including legal and
professional costs in connection with the agreement and any future supplementary
agreements.
What else should the land manager consider?
The land manager will also be required to have adequate insurance in place. His existing
cover should be checked. The developer’s occupation may affect grants and entitlements to
which the land manager is entitled and this should also be checked. If the land manager has
granted a security over the land, his lender’s consent will be required. Any future owner of
the land will be required to accept the lease so it must not contain any unusual conditions
which may affect a sale. You should also consider capital tax issues before finalising any
agreement.
Debbie Dewar, Senior Solicitor
Land & Rural Business
[email protected]
01738 621212
Thorntons is a trading name of Thorntons Law LLP