What farmers should know before signing on the dotted line
By Diego Flammini
Wind farms have become a popular way of generating useable energy without emitting greenhouse gas emissions or relying on water.
Between 2008 and 2018, more wind energy projects were built in Canada than any other source of electricity generation. The country is home to 299 wind farms between British Columbia, Atlantic Canada, and the Yukon and Northwest Territories, the Canadian Wind Energy Association says.
Several wind turbines across the country are in farmers’ fields, meaning landowners and wind energy companies have agreed to terms on leases.
Construction of one turbine needs about 155 acres of land and could disrupt operations, so farmers may want to take the time to do some research before signing a contract with an energy company.
First, farmers should understand that these agreements don’t have much room for negotiation, said Samuel Teichroew, a lawyer with Smith Newufeld Jodoin LLP in Steinbach, Man.
“Typically, it’s the company’s standard agreement and the farmer can take it or not,” he told Farms.com. “There’s a form and a rate, and that’s what the company offers.”
One of the first people a farmer may want to contact is his or her bank or credit union account manager.
“Whoever the farmer has financing through has a right or a charge against the land,” he told Farms.com. “Someone else coming in could affect the value of the land, but not very substantially.”
Some farmers have run into the issue of an energy company not fulfilling its end of the lease agreement.
That situation can cause challenges if the producer wants to sell the land, Teichroew said.
“It becomes an issue when the farmer goes to transfer the land to someone else, and there will be a registration by an energy company that the farmer will have to try and discharge,” he said. “That can create additional costs and headaches when it comes time to sell the land.”
Producers should also know that wind energy leases are long-term agreements.
“These are pretty much permanent installations and there will be a significant amount of pre-construction on the land,” Ian Nokes, a researcher with the Ontario Federation of Agriculture, told Farms.com. “Farmers need to make sure there’s items in the contract that deal with (turbine) disassembly and land impacts.”
In terms of a field location, producers should identify areas where the land isn’t producing as much as other areas.
“We want to protect as much farmland as possible, so we recommend producers entering into these agreements try to insist the installations are on marginal land and not prime agricultural land,” Nokes said.
Aside from the intricacies of the lease agreement, farmers may want to consult fellow growers.
Asking questions now can reduce the chances of issues in the future, Nokes said.
“We’d like people to be aware and speak to their neighbours and make sure everything is copacetic before entering these agreements,” he said. “Sometimes, there can be something called ‘wind envy’ where a person entering an agreement has a good contract and is getting some good income, then suddenly their neighbours don’t like the appearance of the windmill.”