Wind Farm Impact Assessment Home Page

Agreements

Introduction

Negotiated agreements are a mitigation strategy. Both host agreements and benefit sharing agreements will include clauses to accept specified or non-specified impacts, effectively excluding all associated landowners from assessment in the Department's determination and thus lessening the perceived impacts of the wind farm.

Host agreements make the wind farm possible. Benefit sharing agreements make the wind farm more likely to be approved.Host Agreements

Host Agreements

Terms of the Agreement

A wind farm usually consists of one or more host properties willing to have wind turbines located on their land and are usually larger properties. The proponent and the property owner negotiate a contract and once that contract is signed, they become an associated property. Other properties may also sign contracts for access or right of way.

These agreements are usually shrouded in secrecy, but it is not unusual for a host to be offered $15,000 or more for each turbine per annum, and payment usually begins once the wind farm is operational, but payment can begin earlier depending upon negotiations.

There are many pitfalls for hosts in signing a wind farm contract. It is strongly recommended that they seek appropriate legal advice. Contracts are best handled by a solicitor experienced in contracts of this nature and in particular with wind farms. Wind farm contracts may be best handled by a corporate lawyer. Hosts should not rush to sign but should carefully negotiate contracts and ensure their interests are protected.

Issues such as decommissioning are particularly fraught, as the responsibility falls on the host property if the owner of the wind farm defaults some 25 years down the track. The cost to decommission may be greater than any income the host had earned during the operation of the wind farm.

The contracts may contain gag clauses, and usually stipulate that the host agrees to a higher noise rating than the EPA or the Department allows for residents. Access, construction, caveats on the sale of the property accompanied by some evidence that properties with wind turbines can lose value in the market place, restrictions on land use and so forth must all be carefully considered.

Modifications to the project in the future and inbuilt micro-siting of wind turbines will impact host properties in ways that cannot be predicted.

A growing number of wind farms are being approved, but are not being built. This creates uncertainty and leaves hosts in limbo, without an income, and with binding contracts restricting what they can do with their land. A host may not be able to subdivide land or sell portions without the new owner’s agreement to host turbines. For this reason, it would be wise if the contract stipulated a start payment date.

Wind farm contracts usually have a sunset clause - a period of time after which, if the wind farm has not been built, the host can withdraw from their contract.

It is often possible for a host to withdraw from their contract at any time prior to construction of the wind farm commencing. Some wind farm companies have allowed this, and there are also legal options that can be pursued if the request to withdraw is denied.

Community Engagement With Hosts

In the earliest stages of the scoping phase, the community should approach potential host properties and make their concerns known. These concerns may be sufficient to deter some landowners from signing an agreement.

Providing advice and keeping channels of communication open between host properties and other residents is important. Remember, residents who sign a wind farm hosting agreement are making a legal business decision with the inducement of large sums of money.

The general perception that wind farms are good for the environment, and create jobs and wealth in the local area makes it easy to dismiss those who oppose a wind farm development as radical or somehow mistaken about the impacts. It is often said that wind turbines do not make any noise, are not harmful to health, nor have a negative impact on property values and therefore those opposing a wind farm are mistaken, selfish scaremongers.

Jupiter Case Study

Jupiter was lucky in having solicitors amongst those objecting to the wind farm. They were able to provide valuable commentary on contracts, which the community passed on to potential hosts, and host properties. A number of landowners reconsidered their involvement and withdrew their intention to host turbines.

Members of RAJWT queried the legal status of decommissioning and uncovered the issue of host liability, which was then passed on to the hosts through the CCC.

It is understood that some hosts signed agreements on the understanding that the wind turbines did not make any noise. This is clearly not the case and indicates the necessity for hosts to do their own research before signing a contract.

Unfortunately, the community was divided, and communication between hosting properties and impacted properties was minimal.

Benefit Sharing Agreements

Benefit Sharing Agreements

In NSW wind farm developers usually provide payments to communities with wind farms through community enhancement funds and direct payments to landowners with turbines on their land. Payments up to $15,000 per turbine per annum are received by hosts, and payments up to $3,000 per turbine per annum to regional councils for community projects are a tempting inducement to accept a wind farm.

Benefit sharing agreements of approximately $2,000 per annum per landowner are frequently offered to impacted non-associated landowners. The amount varies depending upon the degree of impact, type of impact (visual or noise or both) and available funds. Benefit sharing has two main purposes. The first is to allow an affected community to share in the profits of the wind farm. The second is the use of such agreements for the mitigation of impacts, and is particularly useful when impacts are high and other forms of mitigation are not effective.

Signing such an agreement is voluntary. Conditions of consent may prohibit the construction of particular turbines unless there is an agreement with impacted landowners. Under those conditions, signing a benefit sharing agreement is also voluntary.

Payments commence when the wind farm is operational and are made for the life of the wind farm. These payments are CPI indexed. This varies from a host property agreement, where payment can start at the point of construction or earlier, depending on the terms of the contract.

To put this into perspective, a wind farm with 75 turbines operating for 25 years with 10 impacted landowners who sign benefit sharing agreements would pay in total:

Hosts

$28,125,000

Regional councils

$5,500,000

Impacted Landowners

$500,000

Non-associated landowners have the least to gain financially and often have the most to lose in terms of lifestyle and amenity.

Residents should be aware that funds offered in benefit sharing agreements are usually not adequate to compensate for the real impact of the wind farm.

Benefit Sharing and the 2016 Wind Energy Framework

In relation to benefit sharing, the 2016 framework talks about minimum standards for negotiated agreements (read benefit sharing) and the importance of impacted non-associated landowners being properly informed.

The main points are:

Points to Note

It is difficult to see how the Guidelines will succeed in providing greater transparency and certainty when:

It would improve transparency if the terms of these agreements were made public.

The Community and Benefit Sharing Agreements

It is important to ensure that landowners understand what they are signing and the significance of signing such an agreement.

The more residents who sign a benefit sharing agreement, the more likely a wind farm with high impact on residents will be passed by the Department.

The Contract

Anyone considering signing such a contract should seek expert legal advice. Such contracts normally fall under corporate law. The benefit sharing agreements are based on a specific impact(s). What impacts are agreed to should be outlined in detail in the contract itself. Agreed impacts should be specifically stated and quantifiable. Residents are frequently asked to agree to such contracts after the proponent's EIS is published and therefore before the Department’s assessment of the EIS is published. Consequently, the property owner is understanding the impacts based on the proponent’s version only.

Increasingly, property owners are being approached to sign benefit sharing agreements prior to the completion of the proponent's EIS and even during the scoping phase when the project does not even exist.  And so at best these agreements are based upon the proponent's estimated impacts and at worst based upon nothing at all.  This goes against the spirit of the Wind Energy Guidelines which say that landowners should be appropriately informed about impacts.

However the expected noise levels at all receiver locations including host properties should be assessed to ensure that affected persons are appropriately informed about impacts.

Deadlines for signing such an agreement are often imposed, and this puts pressure on property owners. Such deadlines are questionable, as the Department and the IPC will frequently place conditions of consent that involve negotiated agreements with property owners. A landowner is in a better position to negotiate a benefit sharing agreement following the Department’s assessment.

The Department has stated that benefit sharing agreements can be entered into at any time of the process.

Once a property owner signs a benefit sharing agreement, the Department consider them as an associated property, and removes them from their assessment of impact. This means that a resident who signs a benefit sharing agreement before the Department has published their own assessment and the independent peer review assessments, has no other assessment to refer to except for the proponent's to ensure the impacts are as stated.  Past history shows that the proponent's version of impacts is often understated compared to the Department's assessments.

Benefit sharing contracts should include:

Financial compensation should be negotiated carefully. Hosts and regional councils have a per turbine payment. One can assume that the number of turbines impacting a resident would increase the payment offered, as well as the degree of impact. The EIS often focuses on the closest turbine rather than cumulative impact of all turbines within the impact zone. This may be misleading.

 A benefit sharing contract should also include recourse for the landowner if the wind farm proposal is modified in any way, as this potentially changes the degree of impact. Where the degree of impact increases, the impact may be considered unacceptable and it should be possible to void the contract. Where impact increases but is still within an acceptable level, payments should increase.

It seems some benefit sharing agreements:

Signing a benefit sharing agreement is voluntary. A landowner should not feel pressured to sign such an agreement.

Jupiter Case Study

The proponent proposed a community enhancement fund of $2,500 per constructed turbine (adjusted for CPI) paid annually to the relevant Councils.

The proponent also proposed a benefit sharing program open to all landowners with a residence or approved dwelling within 3 km of a proposed wind turbine. The proponent imposed a deadline, and 10 landowners entered into agreements to accept the visual impacts of the wind farm based upon the visual impact assessment in the RTS, before the final layout and design was known and before the Department's assessment was made public.

These 10 residences were deemed ‘associated’ with the project and therefore excluded them from their assessment. By doing so the rights of the landowners to be fairly assessed were waived, so abrogating their rights to protection and monitoring during construction and operation and effectively penalising them for being prudent.

The Department identified these properties on a map, effectively naming them, but did not disclose the nature of the agreements.

The Department’s assessment rejected the impact ratings for residences provided for the revised layout in the RTS and said that the assessment generally underestimated the visual impacts of the project.

This means that the 10 landowners entered into agreements based on underestimated visual impacts and possibly with a less than fair financial consideration.

The Department recommended refusal of the wind farm because it was not in the public interest being in an unsuitable location with unacceptable visual impacts.

The proponent withdrew the application in March 2018.

Community Enhancement Funds

This is money put aside by a wind farm proponent to be spent within the local council area. The amount varies. The decision on how it is to be spent varies. A common complaint is that such money is not spent on the community most impacted by the wind farm.

Payment to Regional Councils

A wind farm proponent will negotiate an agreement with regional councils for a yearly sum of money to be paid, usually based on an amount per turbine.

Special Payments to Groups

A wind farm proponent will often offer special payments to community groups.

Wind Energy Guideline: Attachment B – Negotiated agreements advice sheet for wind energy projects

The planning system allows proponents and landowners to enter into negotiated agreements to manage exceedances of the relevant assessment criteria as well as decommissioning and removal of turbines at the cessation of operation.

 Agreements can:

Proponents must ensure that landowners are properly informed of the implications of entering into such agreements and have a good understanding of the nature and scale of the predicted impacts through the provision of relevant noise and visual impact predictions.

To ensure these agreements are effective, it is also important to ensure that they comply with certain minimum standards. Negotiated agreements must:

Finally, the proponent should bear all reasonable costs, including the landowner’s costs for independent advice, associated with either entering into the agreement or understanding the implications of the agreement.