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Use caution when signing wind lease
The possibility of making a little extra money from wind energy agreements drew 620 farmers to 10 meetings during the last couple months as Michigan State University's (MSU) agricultural economics department sought to sort fact from fiction.
Caution was the theme many farmers took away from the workshops, said Lynn Hamilton, visiting associate professor of agricultural economics at MSU.
"We're certainly not anti-lease agreement," she said, "but we wanted to make sure farmers are aware of some of the legal ramifications of giving up property rights when they sign long-term wind energy lease agreements."
One message Hamilton said she hoped got through was that farmers don't have to agree to the agreement as it is presented.
"Remember that the leases are negotiable," she said. "Wind energy developers are going to present an agreement that makes the most economic sense for them. There are reports of some heavy-handedness going on, but farmers have the right to negotiate, and they should."
Many wind energy developers have backgrounds with oil and gas lease agreements, Hamilton said, so it's wise for farmers to have attorneys with experience in such leases review the contract.
Hamilton also cautioned that long-term leases tie up land for long periods, and it also may take a long time to get significant income from energy sales.
"Also remember that if you sign a lease for 30 years, state and local policy structure could change a lot in that time, so don't rush to sign any agreement," she said.
Farmers interested in small-scale windmills to power farms or households should remember the cost can reach $50,000 for a small wind-energy system, but there may be USDA funding available on a 25-percent cost-share, Hamilton said. And even though the initial investment may be large, she said at least a farmer who builds one knows his fixed costs, and after it's built and paid for, the energy is free.
Still, any project or lease agreement should be entered with eyes wide open, Hamilton said.
"We definitely recommend that an attorney be consulted on any of these projects," she said. "If a developer is not willing to negotiate, you're free to walk away."
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