1. Wind Turbine Lease Education Program Ron Haugen Project Director North Dakota State University Extension Service 6/11/2015 Extension Risk Management Education National Conference St. Louis, Missouri April 12, 2011

2. Grants Provided by North Central Risk Management Education Center GRANTS: Wind Turbine Lease Education Program Wind Turbine Lease Provisions and North Dakota Regulations Education 2

3. Background Wind power potential Questions about leases 3

4. 4 2007 Installed Wind Power – 16,818 MW3,500+ under construction

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6. United States Annual Average Wind Power Potential 6

7. Wind Energy Potential 7 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

8. North Dakota Wind Farms ProposedExisting

9. WHY GROWTH IN WIND ENERGY? Renewable power Environmentally friendly – A 1 megawatt turbine in a “good” wind area will: 2.6 million kilowatt-hours electricity per year Serve about 300 average households Eliminates 5 million pounds of greenhouse gasses(CO 2 ) – Equivalent of 16 carloads of coal Helps the local economy – Property taxes – Lease agreement revenue – Employment It can be a very good economic investment 9

10. Need for Lease Education No Standardized contracts Questions about leases Are wind companies taking advantage of land owners? 10

11. Landowner Options Lease your land to a wind project – Local project – External developer Be a partner in a community wind project Own a residential/farm size turbine for your own power 11

12. Wind Energy Leases and Easements Most common way that landowners are participating in wind energy development – No cash outlay – Low financial risk Few standards: range from good to bad to ugly. Compensation varies widely based on: – turbine size – wind resource – price of energy – knowledge level of landowner – and many other factors. Long term commitments – usually last 20 to 40 years. Best results when landowners make informed decisions. Consult an attorney before signing. 12

13. Wind Energy Agreements Never agree to confidentiality agreements Have your insurance agent review the agreement Will any USDA land use restrictions be violated (FSA mortgage, CRP etc.)? – Consider clause requiring developer to indemnify landowner for any lost government payments or for imposition of any penalties Decommissioning Rules 13

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16. RISKS Financial risk Legal risk Liability

17. Contract should specify the project developer and any company to which the contract may be assigned in the future are responsible for any financial obligations you may incur as a result of: noise pollution visual pollution vandalism access roads construction period ice shedding blade drop/throw shadow flicker fire stray voltage electromagnetic fields lightening strikes communications microwave towers radar stations TV and radio signals emergency radio signals bird kill water/air pollution Liability Issues 17

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19. Much of the wind development has been established using a “Divide and Conquer” strategy Company representative contacts individual landowner Drops off a contract Requires decision to sign within a short time frame Expects landowner to commit to a 20 to 50 year agreement Contracts include a confidentiality agreement

20. Landowners organize into a business entity Market their resource as a package Landowners are compensated with or without a tower Hire an experienced attorney to work for the group The Correct Approach 20

21. Before you sign on the dotted line… How much of my land will be tied up and for how long? How much will I be paid and how will I receive payments? Are the proposed payments adequate now and will they be adequate in the future? Have all the liability issues been considered? How will a wind project impact my other land uses? Have I considered all contract specifications? Have I considered all of my other options and is this the best one for me? 21

22. North Dakota Laws Code of Conduct for Wind Energy Leases Wind Turbine Sales Tax Exemption, Income tax Credits and Property Tax Credits Wind Rights Legislation Tower Siting Regulations 22

23. Grant Administration Collaborated with the North Dakota Department of Commerce – They helped with meeting locations at proposed wind farm areas Had several meetings in conjunction with the North Dakota Public Service Commission – A commissioner was in attendance or called in a several meetings Project team had planned on fewer larger meetings with experts, but did more smaller meetings with ourselves as presenters 23

24. Number of meetings and attendees 25 meetings at 20 locations 1023 attendees 24

25. Wind Turbine Lease Education Meetings 2008-2011 25 North Dakota

26. Make-up of attendees About 20% have signed a lease About 40% have been approached about a wind turbine lease Majority were land owners 26

27. Grant is ongoing Need for more educational meetings Will do an impact study 27

28. Take Away Points Need for further wind turbine lease education Keep abreast of state and local laws and regulations Need for ‘small wind’ analysis and education Need for community and cooperative wind farm education Education needs to be current with the dynamic issues of wind energy 28

29. 29 Thank you, Any Questions? Ron Haugen Project Director 701-231-8103 ronald.haugen@ndsu.edu Credits: Lynn Hamilton, Michigan State University & Cal Poly Dwight Aakre, NDSU Extension Service Cole Gustafson, NDSU Agribusiness Ron Beneda, NDSU Extension Service, Cavalier Co. American Wind Energy Association