Charlie Robinson said he scoffed when he got the call in 2008 about a wind project on his farm in Greeley, Iowa.
“He said they wanted to develop a wind farm, and I said, ‘Yeah, right.’ ”
About a week later, the first measurement tower went up in his fields for RPM Access LLC’s Elk Wind Farm.
Iowa’s booming wind farm industry first needs farmers. RPM Access in West Des Moines and other development companies seek landowners willing to enter into long-term contract agreements — often 30 years or more — with 500-foot-tall turbines as tenants.
Kevin Lehs, head of RPMA’s land development team, explained the land agreement payment process as a series of steps.
“It starts out with the land acquisition,” he said. “When farmers decide they want to participate, they get a one-time fee for that option.”
Lehs said the company’s option on the land holds for seven years, during which the farmer receives an annual stipend and the wind company tests the land for future wind projects and scouts for partnerships with power companies.
Once a buyer for the wind energy is located, the option on farmland turns into an easement, and the project kicks off, he said. Farmers receive a one-time payment for signing the easement agreement and a one-time payment for construction, as well as future payments for the compaction and crop loss that result.
Farmers and those living adjacent to turbines receive “wind non-obstruction fees,” which Lehs said cover disturbance from the shadow flicker and noise of turbines, as well as ensuring neighbors don’t build anything to impair wind flow.
Farmers who actually host turbines are paid per megawatt, which means the bigger and more powerful the turbine is, the higher the compensation. RPMA’s Elk project originally planned to use 1.65-megawatt turbines but upgraded to 2.5-megawatt models, so farmers’ payments were raised, Lehs said.
Payments will vary depending on location and several other factors, he explained.
“There’s only so much money that’s available,” he said. “Cost of energy and cost of land, that’s how we come up with what we are able to offer to landowners. We’ll look at what other developers are paying, too.”
Robinson and Bob Holtz, who grow corn and soybeans in Delaware County, kept their contracts’ worth confidential, but said for the most part, compensation has outweighed concerns.
Holtz said he worried about damage to his tiling system, and there were times when this year’s turbine construction turned into a muddy, frustrating mess. Harvest involved more frequent turning around on shortened rows, and Robinson said a 1.7 million-pound crane damaged the road near his home.
But construction on the 17 turbines was temporary.
“The first tower seemed like it took forever,” Robinson said, adding they would build one a day or, on average, one every two days.
Holtz estimated about 25 farmers are involved at the Elk Wind site, which includes those with turbines on their land and those near towers who have “wind rights.”
“They give you so much a year for each tower and then wind rights. Wind is blowing across your ground. They don’t want you to build a great big something to stop the wind, so they pay you money for not doing that,” Robinson explained.
For example, Holtz said he is compensated for 1.2 turbines — the one tower on his land and 20 percent on wind rights for the nearest tower. Each turbine takes up six-tenths of an acre, plus access roads and cable lines.
Holtz said for farmers facing tough financial times, these turbines “are the best thing that could happen to them.”
Eldon McAfee, an attorney with Beving, Swanson and Forrest PC in Des Moines, said the wind-energy agreements can be viewed as extra cash for farmers.
“Many farmers look on this as found money: ‘The wind blows; it’s been blowing over my ground for years. Whatever money I get out of this is more than I had before’,” he said.
McAfee said with such a long agreement, it’s important for farmers to know exactly what they’re getting into.
“I’ll give the lawyer’s admonition: You’ve got to read the specific agreement that you have,” he said.
McAfee said the wind-energy agreements he reviews are major commitments, and farmers should make sure they are compensated for what the energy company is going to be making off the land.
He suggested the contract should provide some payment based on revenue (royalties) on top of a minimum payment for placement of the turbine. He also said compensation should change over the length of the lease based on inflation and other cost variables.
“It’s fairly standard to have what’s called an escalator clause, adjustment clause or reopener clause,” he said. “Thirty years from now, things are going to look a lot different.“
Wind energy agreements will also likely cover liability, confidentiality and turbine removal.
When negotiating these points, McAfee said there is power in numbers.
“When a wind-energy company comes in, they’re not looking to put one turbine here, they’re looking for critical mass,” he said. “It takes several land owners, so there’s power in joining together to form these agreements.”
As more wind projects start up in Iowa — second in the nation for wind generation, according to a 2010 American Wind Energy Association tally — more farmers will become involved.
The Johnson County Board of Supervisors recently passed ordinances to make way for a planned 3,000-acre project near Solon in eastern Iowa.
He said one of the advances in technology could be smaller towers that are able to work off a lower wind speed. Sullivan said this could make the agreements even more attractive to farmers.
“I think it will be a tremendous benefit,” he said. “It doesn’t take a lot of acres out of production, you get to farm up to the towers and around them, and you’re compensated with lease agreements.”