WINDFARM SOLICITORS CORK, MIDLETON AND DUBLIN
As windfarm solicitors Cork and Dublin, we have a great insight into wind farm agreement and option agreements. Let’s talk about wind farms. You are a landowner or farmer and you receive a very well written letter in the post from a prominent wind farm development company. This company wants to develop a wind farm on your land and it sounds pretty good. A few days after you have received the letter you get a visit from a well-dressed representative from the company. This smart talking rep offers you the sum of €5,000 just to sign an option agreement for five years and you are thinking you have hit the jackpot. He has even said that after you have signed, he will give you €18,0000 for every single wind turbine that is erected on your land. This sounds like a pretty good offer. Let us not stop there! The rep also says that you continue on with your daily farming life without interuption and that the very first payment will be in your bank account within the month. All you have to do is sign the option agreement. What’s not to like? Well, we ask you think first about the old saying, that if something seems to good to be true, it probably is.
Wind Farm Solicitors Cork, Midleton and Dublin
If as an experienced wind farm solicitor, I could give one piece of advice to you now it would be, do NOT sign anything and seek expert advice immediately. You will have seen a lot of media coverage over the past number of years about the social, environmental, health and financial impact of wind farms, but in this article we will be focusing on the legal aspect. At Walsh and Partners Solicitors LLP we are experts in wind farm development and renewable energy contracts. You can trust that we have your very best interests at the core of our business at all times.
Option Agreements and Leases for Windfarms
We have repeated this many times but it is vital that you understand and are aware of the onerousness of option agreements and the impact they can have on you, your family and your livelihood into the future. A signed option agreement allows the developer to acquire your land and enter into a lease for development in the future. If at any time the developer requires your land for their wind farm, they can legally insist that a lease be put in place. Once this development starts, you can have wind turbines on your land from 25 to 35 years. Terms of the lease are also agreed at the time of signing the option agreement so the small print here is really important. The lease cannot be renegotiated at a later date. Once you have signed there is no going back. In most cases we find that the developer will look for an option period of five to ten years and this may not fit with your plans for the future. In cases when the term of the option agreement is longer, there should be a clause that allows you to receive milestone payments. We also advise that a clause be inserted prior to any signing that allows you to state that planning permission needs to be applied for within a certain timeframe.
Just one week ago I spoke with a farmer who had been approached with an option agreement. This agreement would have allowed the developer to develop a large wind farm on his land over a ten year period and would have allowed them to lease his land for a minimum of 35 years. Think about it, that is almost half a century of his land being occupied by developers. Thankfully on this occasion the farmer took my legal advice and declined to sign the option agreement. We are now in progressed negotiations with the developer to insert more favourable terms into the agreement that will ensure the farmer is happy and feeling secure about the terms of the lease.
Windfarm Solicitors Cork and Midleton
Once the option agreement has been signed it can be triggered at any time by the development company simply by applying for planning permission for a number of turbines and getting connected to the national grid. If for any reason the development does not go ahead and the lease and option agreement have not been triggered, the only payment you as a farmer or landowner may receive is the initial payment.
It is up to you in conjunction with a wind farm legal expert to negotiate all terms of the lease. The end goal should be to ensure that you are fairly compensated for any risk you are taking and the onerousness of the terms you have accepted. Your future property rights are incredibly important and need to be negotiated and addressed in detail prior to signing any agreement. Most wind farm development companies have negotiated hundreds if not thousands of leases and you can be assured that they can do this stuff in their sleep. Standard option agreements are drawn up and they will always favour the developer, so it is up to you and your solicitor to ensure you negotiate these terms. Think of the standard option agreement as a starting point and take it from there.
I.F.A. Minimum Terms
The I.F.A. (Irish Farmers Association) have negotiated minimum terms with two major players in the wind farm development market. These are Element Power Limited and Mainstream Renewable Power Limited. The outcomes of these negotiations are listed below:
1. An annual payment of €1,000 during the option period.
2. A minimum yearly lease payment of €18,000 per turbine and €6,000 per MW.
3. Payment of 5% of energy price and green credits after 2015, 3% for years prior to that.
(a) Wind farm development company to take on full replanting obligations.
(b) Landowners to receive full crop rotational value for any forestry that was felled.
(c) Full compensation for grants/premia and any remaining to be paid.
5. Agricultural Schemes: Full payment for any losses incurred in REPS, single farm payments and/or area aid.
6. Fixed payment of €10,000 to €18,000 upon receipt of planning permission and ongoing consultation with regard to roads and location of access.
Wind Farm Solicitors Midleton, Cork and Dublin
Windfarm Solicitors Cork: The above terms have provided landowners and farmers with a strong starting point, however it is vital that you consult with a legal firm that has expertise in this area. To learn more about option agreements and discuss the negotiation of terms prior to signing any documentation, please get in touch with Walsh and Partners Solicitors LLP today. You can call us in Cork on 021 427 0200 or at our Dublin office on 01 291 0300.