Types of Wind Energy Rights
Wind estates, wind royalties, and participation payments
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Wind rights are typically referred to as the "wind estate." No state specifically recognizes wind rights, but many have passed anti-severance statutes.
Landowners who host wind turbines in exchange for semi-annual compensation - normally a minimum payment or percentage of energy sold..
Landowners who live near turbines but don't host them are sometimes paid for "participating" in the wind project or wind farm.
Wind Estate
Many hope the courts will eventually recognize the wind estate similarly to the mineral estate. Unfortunately, recent trends are not promising.
No state currently recognizes the "wind estate." In fact, many states have enacted specific anti-severance statutes. In these states, wind rights are inherently connected to the land and cannot be severed.
Anti-severance legislation benefits the developer, who will never have to deal with fractioned ownership (unlike the oil and gas industry). Simplified title, ownership, and easier payment processing are in the developer's best interest. Wind power organizations and developers have far deeper pockets and greater influence than even the largest ranchers.
The following states have anti-wind-severance statutes:
- Colorado
- Kansas
- Oklahoma
- North Dakota
- South Dakota
- Nebraska
- Montana
- Wyoming
Wind Royalties & Compensation
As a result, each wind agreement, lease, or easement must outline, in great detail, the terms of the contract between landowner and wind project developer. These agreements typically range from 20 - 40 pages and often contain terms that are more favorable to the developer than the landowner.
By signing the contract (sometimes referred to as an agreement, easement, or lease), the landowner agrees to a period of exploration, development, and finally, if the developer chooses to host one or more wind turbines on the property, a production period with optional extensions. In exchange, the developer agrees to compensate the landowner in quarterly, semi-annual, or annual payments (or a combination thereof).
These payments are often referred to as wind royalties. The landowner is often sometimes guaranteed a minimum payment or percentage of the energy sold, whichever is greater. Many contracts have an escalating royalty that increases over the term of the contract.
Contracts often have an option to renew, but many landowners do not realize that most projects need to be repowered between 8 and 15 years. The wind turbine may be decommissioned, automatically ending the contract.
There are many unknowns and risks associated with owning wind royalties, and having a long contract with multiple renewal options is not a guarantee of future revenue.
Wind Royalty Calculator
Wind rights are typically worth 7 - 10 years of annual cash flow, depending on various factors.
Use the wind royalty calculator to estimate your offer range or contact us to request a formal offer. It's an easy process that doesn't take all that long.
The typical landowner, making about $8,000 a year through wind energy compensation payments, would be able to sell their royalties for $64,000 to $80,000. A landowner with ten turbines, making 80,000K per year, would be able to sell for $640,000 - $800,000.
Requesting an offer does not obligate you to sell. We will simply review your documents (wind agreement, easement, lease, etc.) and do some research about what you own. We'll get back to you, usually within a few of days, with a preliminary offer.
How We Value Wind Royalties
Wind farms are typically situated in areas with consistantly high wind speeds, idea terrain, and close proximity to electric transmission lines.
Newer wind turbines are typically rated for a higher capacity and generate more wind power and revenue.
Higher average wind speeds generate more wind energy and therefore more revenue.
Higher producing wind turbines generate more wind power over the life of the wind farm.
Favorable lease terms positively impact the market value of the wind royalties.
Large, experienced wind farm operators are often more financially sound.
Why Sell?
Why People Sell Their Wind Royalties (Leases):
I'm getting older. I don't really have 25 years to wait and collect payments. I'd rather have the money now. My kids are going to sell the land when I die anyway.
I am on a fixed income and my home needs work. I choose to sell for a lump sum and live in a totally remodeled house. If I have to look at and hear these darn turbines, I may as well buy sound-resistant windows!
My wind turbines have been producing for a few years now. I don't mind them really, but I'm thinking about selling my land. I'll get more money by selling the wind royalties separately.
I sold my wind royalties in order to buy more land and expand my farm. I now own three times as much land. And guess what? Another company is fixing to put a turbine on my new land!