Windy Land Owner Seminar

1
Windy Land Owner Seminar

• Landowner Tips
• What to consider when offered a Contract or need
  some Consultation

2

• Wind Energy Developers in Texas

Cielo Wind Power FPL Energy AES National Wind
Power Shell Wind Energy Horizon Wind
Energy Airtricity/RGI John Deere Wind
Energy DKRW Babcock Brown a Catamount Energy
Corp
Duke Energy Iberdrola Renewables Padoma RES
Americas Eurus Caithness E.On Climate and
Renewables Invenergy WindKraft Nord/Enel
NA Edison Mission Group
3
Wind Capacity is what really drives the
industry. Wind capacity of 35 means that the
output of the turbines averages 35 of its
potential, year round. Developers are looking
for a minimum of 30 capacity, a decent wind
regime. Windier is better as it increases the
capacity.
4

• Wind energy, at this time, is a very hushed
  industry and developers dont want landowners to
  share information with other landowners in the
  area. This makes it difficult for you to get
  information and compare to see if an offer is
  typical or not.

5

• Remember that everything MUST be in the
  contract.
• If it is not written down. It NEVER happened!

6

• Monitoring Leases
• Monitoring wind towers range from 500-1,500 per
  year value to the landowner
• plus
• crop damage compensation and weed control
  expenses. You basically lose some of the land to
  protect the tower.

7

• May want to put in agreement that landowner has
  access to wind data collected during the option
  period of the agreement.
• Its the data that is useful to the land owner if
  the developer decides not to pursue the project.

8

• Leases
• Fee During Development Phase
• 2 -- 5 per acre per year
• Separate contract for each piece of property.
  Check property description and number of acres.

9

• Includes
• Dollars per rod for damages to property for both
  transmissions lines, ditching and road
  construction.
• 16.50 per rod on pasture land
• 20.00 per rod on cultivated dry land

10

• Define gross revenue, is it going to be
• per acre
• per megawatt
• of royalty
• (guaranteed minimum)
• There is a plus and minus to every option

11

• Define royalty payments which may include
• Sales
• Production credits
• Energy credits
• Pollution credits

12

• Escalating royalty payments
• 4 for 1st xxx years 15 per acre 3,000 per mw
• 5 for next xxx years 20 per acre 3,500 per
  mw
• 8 for next xxx years 30 per acre 7,000 per
  mw
• When you do this, when does the escalating start.

13

• Define how landowner will access the power
  purchase agreement and energy production data to
  verify gross revenue.
• Who calibrates the meters, how often?
• Its all accounting and bean counting now.

14

• When a percentage of revenue is offered as
  compensation, audit rights should be clearly
  defined.
• Outline necessary steps to exercise audit rights.

15

• Make sure there is a guaranteed minimum, an
  income floor, so that revenue continues if the
  turbines are not turning.

16

• Lease renewable after 25-50 years
• May be renegotiated at that time for current
  market rates.

17

• Make sure the contract addresses issues such as
• Bankruptcy and liens placed on the land, if this
  unforeseen situation should occur, you as
  landowner should not be in the middle of a dog
  fight over the turbines.

18

• Include a bond restoration for the property at
  the conclusion of the agreement so that the
  landowner has a lien against the salvage value of
  the equipment. The bond would kick in when the
  value of the equipment is less than the estimated
  cost to remove the wind turbines. This may never
  happen as the scrap value is going to be high,
  its like an above ground mine for you land owners.

19

• No exclusive use.
• Make sure to keep the current income stream
  active or be compensated for its loss
• motorcycle riding, hunting, and grazing.

20

• Offices, Substations, Lay down areas
• Maintenance Operation buildings
• Make sure the landowner is compensated for
  property loss.

21

• Make sure that the development company considers
  the largest megawatt turbines available.
• Ask what kind and size turbines they plan
  purchased.

22

• Consider if there is additional revenue benefits
  in the future...say 15 years from now there is
  another type of pollution or energy credit
• include it in the gross revenue definition so
  you the landowner can receive that benefit as
  well.

23

• Consider a force majeure clause so if a tornado
  or other act of God comes and tears up the
  turbines, or the connection points, the operator
  is still obligated to pay you a minimum contract
  rate.

24

• Before development beginstake photos of land.
  This records the history of the site, determines
  existing placement of fences/roads/land use and
  is a memory record for you before the landscape
  changes.

25

• Road Construction Development Stage
• Purchase caliche and water from the landowner or
  within county. As long as it is suitable /
  acceptable quality for the purpose. It is added
  income to the local community and starts building
  good neighbors.

26

• Read
• Read !
• Re - read !!!
• your contract.