Wind turbine leases: more than easy cash

Some Ontario landowners may be approached to sign lease agreements to host wind turbines on their property. The cash is attractive but there are plenty of risks too.

A wind turbine lease agreement is a complex document: best to get independent help before signing [Shutterstock image]

May 9, 2022

With the Ontario government looking to procure 1,000 megawatts of new electricity generation, it is possible some proposals could be for wind power—already there are reports of wind power companies prospecting for leases for wind turbine hosts in parts of the province.

But lawyers say: be careful.

A wind power lease is a complex document. There are plenty of risks and liabilities in the agreements, and landowners are well advised to seek independent legal advice before they agree to the arrangements.

In a paper titled “Legal Issues for Landowners to Consider in Negotiating Wind Energy Easements,” lawyer Roger A. McEowen says “Before entering into an agreement, a landowner should have the agreement carefully evaluated to determine of the financial benefits of the agreement truly outweigh the associated risk.”

And Ontario lawyer, the late Garth Manning QC, wrote in The Law Times that “Rural landowners who are approached to permit a wind turbine or turbines or associated equipment on their acreage badly need sophisticated legal advice on these complex legal agreements. What happens too often, however, is that landowners simply tick the box in the documents presented to them that says they waive independent legal advice.”

Clearly, that is a mistake, given all the risks.

Wind Concerns Ontario has prepared an information sheet for landowners in the hopes of ensuring that Ontario residents being approached by wind power developers will get the advice they need, and act while fully informed of all the repercussions of signing a lease.

“One of our community group leaders told us that some landowners had not realized that the wind turbine income might not be treated as farm income and as such put them in an entirely different tax situation,” says Wind Concerns Ontario president Jane Wilson. “We have heard of other leaseholders who had to get legal help to get out of contracts once they realized the full extent of the agreement. We hope that doesn’t happen again.”

The information document covers liabilities, for example.

If you sign a wind turbine contract that does not specify who holds responsibility, i.e., the wind power operator, you could be liable for:

  • Damages to nearby property if the flow of surface water is changed, or from ice throw from the blades
  • Stray voltage (of particular concern for dairy operations)
  • Fire
  • Adverse health impacts on nearby property owners and nuisance suits related to noise, vibration, effect on water wells.

The fact sheet also suggest questions for landowners to ensure they have answered, such as:

It is important that the wind power lease contract specifies how much land will actually be used, and how long will the land be affected.  Access roads may cut across existing fields affecting tile drainage.

How will you be paid? Annually? Or is your payment connected to how much power is actually generated (a big concern in low wind Ontario)?   How much additional municipal taxes will you pay?  Is it  considered farm income or simply taxable income?

Does the agreement affect your future plans for the farm? Are you restricted in any way as to what you can do (e.g., manure spreading or pesticide use, tree planting, hunting) or what you can complain about?

Wind power leases are long-term: how will it affect your heirs?  What happens if you need to sell?

Is the wind power operator entitled to sell or transfer any land rights negotiated in your lease, e.g., water?

The Wind Concerns Ontario document concludes with the question, Is it worth it?

“It’s easy to focus on the money,” says Jane Wilson, “but there are many other considerations. Wind turbines produce noise emissions, vibration and also have flashing lights, which may disturb people on neighbouring properties. The huge towers change the landscape, industrializing communities. Not everyone will be happy with you or your family. That’s worth a lot.”

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