Wind Farms Offer Potential Extra Income For Some Farmers

(article from May 2006 Country Focus)

If there’s such a thing as “wind farm fever” it may be spreading in southwestern PA.

With four wind farms now in operation on private land and estimates of hundreds more wind turbines someday being erected in the state, many farmers are eyeing them as an easy source of steady income.

Farmers are being approached by power companies and the possibility of wind farms are being talked about across kitchen tables and at county Farm Bureau meetings in Bedford, Blair, Cambria, Clearfield, Fayette and Somerset counties, reports PFB Regional Organization Director Joe Diamond.

The Rendell Administration is taking steps to make Pennsylvania a wind energy leader. Gamesa Corp., the worlds second largest wind energy company, put its U.S. headquarters in Philadelphia and is placing four manufacturing centers in Pennsylvania. Gov. Rendell has also recently announced a grant program to make small wind energy systems available to local governments and has unveiled a model ordinance to help local governments decide on sites for wind farms. (see adjacent story).

Farm Bureau has been supportive of developing alternative energy sources and has been working to get Congress to extend tax credits for the development of wind energy. With the U.S. Department of Energy’s goal of producing 5% of the nation’s electricity through wind energy by 2020, farmers and rural landowners nationwide could see $1.2 billion in addition income from wind energy in the next 15 years.

Robert Will of Somerset, whose dairy farm along the Pennsylvania Turnpike was the site in 2002 of one of the first wind farms in the state, is also very much in support of wind energy.

Will, 68, collects royalties amounting to $3,500 to $4,000 per wind turbine per year on four wind turbines located on his farm. He also collects payments on two cellular telephone towers on his property. “It supplements our income,” Will said. Making a living on a dairy farm milking 70 cows has gotten more difficult, Will said.

Will reports no problems with the power company that operates the wind turbines. His lease is based on an increasing percentage of the wind turbine’s electricity production. He had to grant a right of way for a road to the wind turbines so they could be inspected weekly and serviced, but he’s not complaining about that. The road the company put in was an improvement over what he had before. They also keep it plowed in winter. The windmills are sited on reclaimed strip mine land that was being used for haymaking and require about ¼ acre of land each. “I’ve never seen a dead bird or bat,” he said in response to environmental concerns. And while there is some sound coming from the wind turbines, it’s not obtrusive, nor any louder than what he hears from the Turnpike. He occasionally conducts tours for visitors to see the exotic animals he keeps on the farm and when he takes them up to see the wind turbines the comment he invariably hears is, “Is that all the noise they make?”

While wind turbines seem like a foolproof way to earn extra income on the farm, there are some things to consider before signing an agreement.

Gary Heim, PFB Legal Service Plan attorney provided the following pointers:
Make sure the lease agreement covers any possible increase in your real estate taxes. Heim notes that cellular towers have been subjected to real estate taxes. If that happens to wind turbines, make sure the tax bill is covered by the electric company.
• Make sure royalty payments increase with inflation. This can be done automatically by basing royalties on actual prices for production or by making periodic adjustments in payments.
• Make sure there are financial assurances to cover the cost of decommissioning and removing a wind turbine no longer in use. This can be done by requiring a reserve or bonding. Right now wind turbines have an operational life of about 25 years although technological advances may extend that.
• If you will be receiving free electricity as part of the agreement, find out if that covers just your present operation or the addition of more buildings and electrical usages to your operation.
• Also make sure having a wind turbine on your property will not put you in violation of any farmland preservation program you may be enrolled in or make you liable for Clean and Green tax rollbacks if you’re enrolled in that program. You’ll want to check locally on how your Clean and Green status could be affected since the operation of the program seems to vary from county to county. If concerned, make responsibility for payment of tax rollbacks by the company part of the lease agreement.
Heim said he has no expertise or background on what is the right amount to expect from a wind farm lease. A range of from $3,000 to $5,000 per wind turbine per year, or even higher, has been mentioned. The PFB Legal Service Plan is available to Farm Bureau members. For details, call MSC Business Services at (717) 731-3517.

“Farmers here in Ohio think it’s a good deal,” reports Dale Arnold, Director of Energy Services with Ohio Farm Bureau. The state has one wind farm in operation at Bowling Green and 15 other possible sites are currently being tested.

Arnold offers one additional suggestion for farmers considering a wind farm. “Make sure you have input into deciding where the wind turbine maintenance road goes,” he said, so you can keep it off high compacted soils or land where conservation practices, such as tiling, have been installed. If conservation work is damaged make sure you have provisions in the lease to have it restored to its original condition.

Arnold reports that wind companies have been very cooperative and open in meeting with farmers and communities in Ohio to discuss what’s involved in wind energy projects. They discuss leasing issues, tax benefits to the community and environmental concerns. Arnold has found the companies to be environmentally conscious and well prepared to do business. “I tell our farmers that when a wind turbine company approaches them, that’s not a cold call,” he said. “By then, they’ve already done about a year’s worth of research.”

Measuring of the area’s wind resource, with a 100-foot “met” tower usually lasts 12 to 18 months. Then, if there’s sufficient wind, turbine siting factors come into play.

They’re generally looking for an open area of at least 300 acres, Arnold said. Proximity to high voltage transmission lines is a plus. In addition, companies try to site the wind turbines away from tree lines and forests, at least 1,000 feet away from dwellings and 300 feet from property lines.