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Steve Parlett
Director, Morpeth/Thirsk Offices
The north east of England is currently awash
with promoters trying to tie up sites to develop
wind farms.
The sites themselves can vary enormously in
scale from a simple 1.5MW turbine to huge multi
turbine sites of 50MW. The appearance of
turbines is now well known to everyone, being
commonplace in the countryside and in the case
of the largest turbines can be 150m high.
The driving force behind the dash to wind is the
current subsidy system supporting the wind
industry.
Energy suppliers have to provide an element of
their power from renewable sources which is the
Renewals Obligation (R.O.) Under this obligation
each 1MWhour of energy produced is termed a
Renewable Obligation Certificate (R.O.C.)
Government targets in 2003 set the R.O. in
2015/16 at 15.4% of energy produced. In 2005 the
level of renewable energy was approximately 4%,
so there is still a long way to go. Wind farms
still seem to be the developers preferred option
for supplying renewable energy and in 2004
planning applications were approved for a
further 33 projects nationwide.
If energy producers do not produce enough of
their own renewable energy they need to ‘buy in’
energy from other green schemes. Failure to do
so results in heavy penalties which means the
Power Companies have no alternative but to buy
in expensive ‘green energy’. However, the
Government has now hinted that they tend to
favour the |
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establishment of much larger, more productive
and less intrusive schemes such as off-shore
wind farms. Under the proposed system the R.O.C.
subsidies may have banded payments for R.O.C.’s
with smaller unit payments for smaller on-shore
schemes. However, any scheme up and running by
2009 will be unaffected.
In order to establish the long term security for
the high development costs of these sites the
R.O. system will be in place until at least
2027. This has produced the ‘dash for wind’ an
obvious consequence of which is the
proliferation of Agents and Farmers attempting
to tie up options for wind farms with the
intention of developing as many as they can
before 2009.
The sequence of events for any prospective site
is; desk top study, erection of anemometer,
negotiation of option and lease, obtain planning
permission, site construction.
It is absolutely imperative that any
Landowner(s) approached about a wind farm site
secure experienced and impartial professional
advice when negotiating and concluding terms for
both the Option and Lease for a Wind Farm site.
Terms to be considered include:
Option length and incentive payments / Length of
lease / Initial royalty, certain rents and
payment dates / Rent review terms / Planning
permission bonus / Disturbance bonus to build
the site / Re-instatement guarantees /
Restrictions on assignment of lease / Resolution
of disputes / Fee contributions
Landowners should also be aware of the growing
army of entrepreneurial wind farm middle men.
These are small Companies or individuals of
‘wind farm developers’ or ‘specialists’ who are
attempting to sign up landowners on Option
Agreements. These one-man-bands clearly do not
have the financial acumen to develop sites but
can make an attractive living from selling-on
these Options to Energy Producers. Clearly this
is not an avenue we would recommend. |
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