Iowa Farmer Today
03-31-07
Good leases are key to wind projects
By Mindy Ward, Missouri Farmer Today
ROCK PORT, Mo. -- The land rush is on in Northwest Missouri.
Companies are wielding big-money contracts to lock up land for 20 years. They
are not looking to harvest what grows on it, but to harness what blows above it.
Wildcatting, once thought of only in the context of oil, is the buzzword in the windenergy industry.
“There is usually a front company that is out prospecting,” says Roger
McEowen, Iowa State University professor of ag law. “They are trying to lock
down an agreement for wind mining.”
Demand for this alternative energy source continues to grow across the country.
The U.S. wind power generating capacity increased by 27 percent in 2006 and is
expected to increase another 26 percent in 2007, the AWEA market forecast
reports.
Steve Joesting, a fourth-generation farmer in Atchinson County, Mo., had a
number of companies approach him about leasing his ground.
“I visited with everybody and I really wasn’t happy with the leases presented.
They were pretty complex.”
As a lawyer, McEowen studied wind-lease agreements and contracts from
states, such as Kansas and Iowa, for the past seven years. However, the latest
wind agreements coming across his desk have taken a turn for the worse.
McEowen’s biggest concern is in the area of securing land, particularly the
language of legal descriptions. He cautions farmers some companies are
demanding rights to more landowner property than what they really need.
“What you need to do is think small and negotiate big for money,” says
McEowen.
“If you start big, you don’t have anything left to negotiate with, and you have
already given them every thing they could ever want and more.”
After looking over contracts, Joesting agreed to sign on with the Missouri
company, Wind Capital Group. Led by Tom Carnahan, the son of the late-
Missouri Gov. Mel Carnahan, the company has three projects slated for the state,
and one is on line.
“We met one afternoon and rode together to the place where the project sites
were going to be,” Joesting recalls of his time with Carnahan. That day, he also
met the project designer and representatives of the project’s financier, John
Deere Credit.
Knowing who is behind the project was important to Joesting.
McEowen said it should be important to all landowners when negotiating a wind
energy contract.
Landowners should take time and read the contract to see what other company
names appear on the document. It is the parent company that determines how
quickly a project moves forward.
“I think landowners should look for those with short options,” Carnahan says.
This type of option, generally up to six months, only ties up the land for a short
time.
“That allows you to see how serious they are about proceeding with the project.”
Carnahan, who grew up on a cattle farm outside of Rolla, put up the first wind
farm in Missouri in 2006. Today, 27 wind turbines produce 56.7 megawatts of
electricity for 34,000 homes.
His second venture is the Cow Branch Energy Center in Atchinson County near
the Iowa-Missouri border. Groundwork has started on this project, which includes
land from the Joesting farm.
Joesting’s lease agreement allows him to farm up to the 15-foot base of a wind
turbine,while granting an access road to the turbine.Wind Capital pays Joesting
about $5,000 per year for two turbines.
“We are at the higher end of the lease range because Atchinson County has the
highest wind producing potential in the state,” he says.
The project is estimated to produce 50.4 megawatts of wind energy for 30,000
homes.
Carnahan says knowing the reputation of the firm is important before signing a
document.
“Ask what other projects they have done, and where they are located,” Carnahan
advises.
He also recommends land-owners talk with other landowners from the
developer’s previous project.
Joesting is pleased with his arrangement.
“It has been a positive situation for us so far,” he says.
By the end of this summer, he hopes to be harvesting two crops from his field —
corn and wind.