Tricky, sneaky lil' wind energy companies
However, as you can imagine, no wind energy agreement out there operates on a year-to-year basis. The shortest duration stated in a wind energy contract he has ever reviewed is 40 years. The longest duration was perpetual. Yep, thats right, it went forever so long as electricity was being produced by the turbines.
So, a landowner signing an agreement with terms paying $7,500 per year per megawatt with a duration of 70 years will be paid $7,500 per megawatt in 2010 and each and every year thereafter up to the year 2080. Why on Earth would anyone agree to be paid the same amount each year all the way up to the year 2080? I doubt $7,500 buys much in 2080.
For this reason alone, Mr. Schwarz thinks signing a wind energy agreement for fixed payments over a long period of time would be worthy of Forest Gump’s famous line - "Stupid is as stupid does."
Anyone looking to enter into a long-term wind energy agreement should insist upon the payments being tied to the Consumer Price Index (CPI) or other inflationary index. Thus, as the spending power of the payment diminishes over time, the payments increase. If the company balks at such, he strongly suggests you RUN, not walk, away from the agreement.
The moral of the story is that when presented with a wind energy lease agreements, our hope is that farmers and landowners are not lured into signing an agreement based off of what the payments will be paid to you in the short-term. Consider what the payments will be decades down the road. Else, farmers and landowners may find themselves having a wind turbine on their farm that only generates enough income to buy a loaf of bread in the distant future. Yikes! So if you know of any landowners or farmers out there being approached by wind energy companies to build turbines - forward them to my blog so they can get a look at what the wind companies will probably NEVER explain clearly enough! And for anyone else out there - always remember to read the fine print, ask questions and if necessary consult legal advice!