Barn scene with turbines
Landscape in Lake Benton area

Wind Rights to Private Land

Land wind rights is an unfamiliar subject for most Minnesotans; in addition to offering opportunities, it raises questions and concerns. The following will help landowners address some of those concerns. Because circumstances vary with individual property owners, this synopsis cannot answer every question related to wind rights. It can, however, advise landowners on questions to ask and offer cautionary notes and general recommendations.

The first and perhaps most important advice is to view the sale of wind rights as you would view the sale of any valuable asset you own. In most cases this means that your first step should be to consult an attorney who is well versed in property rights law.

Questions to ask:

What is a fair price?

Price is the first consideration in any sale. Just as you need to know the "going rate" for any property you have for sale, you should determine the going rate for wind rights. Proceed as you would if you were selling your land. Talk to other landowners and developers about their experiences with wind rights.

One way to assess a property’s wind resource value is to install a recording anemometer, which will measure the wind speed, power and direction. A developer might approach a landowner to request permission for this research procedure. Data should be recorded for at least one year. There are many factors involved with wind assessment, including topography of the land, placement and height of the anemometer or wind turbine and seasonal fluctuations.

Other organizations and agencies can also assist with providing their wind data and analysis. The Minnesota Department of Commerce has been monitoring wind resources in the state since 1984, and publishes data biannually. The only accurate way to determine wind resources, however, is to monitor a specific site over a period of time.

Lump sum or royalties?

The contracts for wind rights offered by utilities and developers in Minnesota generally provide for two types of payments:

1. a flat payment, paid either as a lump sum when the contract is signed or in installments, over a period of time, and 2. a minimum flat payment coupled with a percentage of the revenue from the electricity generated.

Which type of payment is preferable depends on many variables. The flat payment is less risky for the landowner, but royalties can offer potentially greater rewards.

Again, it is probably best to contact an attorney who specializes in property rights to help make this decision. You may also want to contact an accountant or financial planner to determine how your financial and tax status may be affected.

Other questions to be considered are:

What will be my tax liabilities under a lump sum payment versus payments over time?

If I plan to sell my land someday, will the presence of wind turbines increase or decrease its value? Would royalty payments pass to the future owner and therefore increase the value of the property?

If I sell to a wind developer who later passes the wind rights to my land to a utility or other developer, perhaps through the action of eminent domain, will I continue to receive payment (either flat payments or royalties)?

This raises the question: Is it better to sell to a developer or a utility?

If you have more than one offer, it is usually better to sell to whichever buyer offers you the best price or terms. However, as in any transaction, you should make sure the group or organization with which you are dealing with is reputable. Check its reliability and track record by talking to neighbors or others in your community who may have dealt with the same organization. Also check with local authorities such as city councils, planning commissions or county boards who may have dealt with the organization.

What should be included in a wind rights contract?

In addition to stipulations regarding amount and terms of payment and to whom these obligations would pass if the wind rights ownership changes, here are some other points that you may want to have spelled out in the contract:

Any restrictions regarding activities or structures on land surrounding the wind turbines; include very specific terms of location of the turbines, structures, and access roads and the total acreage involved.

Financial liability for any damage done to property or persons as a result of construction, maintenance or electric generation activities. Responsibility for removing wind generation equipment, structures and other fixtures from the property following termination of the wind rights agreement.

If I don’t want wind turbines on my land, can I be forced to cede wind rights under the state’s eminent domain law?

Under state law, public utilities may have the right of eminent domain to site power plants and transmission lines associated with wind-generated electricity. Although all previous eminent domain cases have involved traditional types of power plants, the law may also apply to wind generation facilities. As of Spring, 2001, the state’s largest utility, Xcel Energy, had already fully contracted for its required amount of renewable energy sources.

If faced with the possibility of eminent domain proceeding, your first step should be to hire an attorney who specializes in property rights law and eminent domain matters.
Source: Minnesota Department of Commerce.