How to Get a Great Deal For Your Wind Farm Lease Extension

So, the wind turbines on your land have been operational for several years, and now you’ve been approached by your site developer to extend the life of the wind farm.

What do you do next?

You may not be the same person who negotiated the lease terms when the wind farm first became operational.

But, there’s no need to worry.

This article will get you up to speed on the latest developments in the industry and how to best navigate your wind farm renegotiations.

If you’re ready to enter the renegotiation process with confidence and leave the table with the best possible outcome, then keep reading.

What’s the Difference Between Re-Powering a Wind Farm and Extending a Project’s Life?

Before I dive into how to negotiate a great deal for your wind farm extension, it’s important to understand the difference between a full re-powering and a life extension of a wind farm.

A life extension

A wind farm life extension involves continuing the operation of a wind farm in its current form (e.g. with the same type, size and layout of wind turbines) for a longer period of time.

This is usually done by simply extending the wind farm’s planning permission.

Repowering

The re-powering¹ of a wind farm typically involves changing the layout, quantity, size and/or model of wind turbines used.

This is usually done to increase the efficiency and amount of energy produced by the project.

For the purposes of this blog, I’ll be focusing on negotiating the lease agreement for a wind farm that is either being extended or repowered.

The Process Of Renegotiating Your Wind Farm Extension

You may have been approached by your site developer to consider an extension as your lease is coming to an end.

Or perhaps this is something you are considering yourself.

If it’s the latter, then you’re in a good position.

Why? Because this gives you the maximum amount of time to plan ahead and secure the best possible deal during negotiations.

Step 1: Preparation

Have you opted out of the Landlord and Tenant Act?

Before you do anything else, you’ll need to figure out whether you’ve opted out of the Landlord and Tenant Act.

If you haven’t, you’ll have fewer options when it comes to deciding what to do with the project.

If you’re interested in learning more about this particular act, I’ve written a comprehensive guide that explains everything you need to know.

Do you know your site developer’s long-term plans for the wind farm?

This is a crucial question to ask during the negotiation process. Understanding your site developer’s long-term intentions can directly impact how you approach renegotiations.

I’m seeing an increasing trend of site operators replacing existing wind farms with fewer, larger turbines that use more advanced technology.

As a result, a wind farm that once had turbines spread across six different landowners may only require three landowners going forward, with fewer turbines on their land.

In addition to knowing the developer’s plans for upgrading or replacing turbines, it’s important to understand their long-term investment strategy.

• Do they see it as a long-term investment?
• Do they plan to sell it?
• Are they undecided?

The answer to this will determine your approach to project renegotiations.

If you’re unsure where to start, some basic research and a conversation with your wind farm developer should provide valuable insights.

What are your future plans for the land?

At this point, many landowners find that they have one of three options in mind for the future of their wind farm:

1. Taking over the wind farm
2. Entering a joint-venture
3. Moving to a new developer

Before you head to the negotiation table, you’ll want to figure out which of these three paths you’d like to follow in the coming years.

Do you wish to make changes due to inheritance tax planning?

Inheritance tax planning is always a key consideration when thinking about the future of your wind farm.

If you’d like to transfer the wind farm lease into the name of another family member, a trust, or a limited company, it’s important to consult with your tax accountant or solicitor.

They can provide expert advice and help you choose the best option for long-term planning.f these three endeavours you’d like to follow in the coming years.

Make sure you understand the full revenue potential of your wind farm

It’s crucial that landowners understand the full revenue potential of the wind farm on their land.

Many landowners who are approaching the end of their wind farm leases were early pioneers of the UK’s wind farm projects, and they may feel as though they initially got a bad deal.

This is often due to the fact that land rents have increased significantly over the years.

Now is a great opportunity to build on the knowledge you’ve gained about the financial value of your wind farm to negotiate an increased land rent.

You may be able to shoot for the stars, but the rent you receive should at least be in line with landowners at other wind farms across the UK.

To get this aspect of negotiations right, I highly recommend that landowners take the time to review the current land rents being paid to landowners using tools like SiteScan™ and researching wind farms that are comparable to their own.

If you need some assistance…

I regularly assist landowners by carrying out reviews using our SiteScan™ software.

This checks a landowner’s rent against the rents being paid to hundreds of other landowners across the UK who have wind turbines on their land.

The process gives landowners the crucial information they need to successfully renegotiate improved rental terms with their wind farm developer.

If their rents are in line with current values, it will allow them to feel more confident about the amounts being offered to them.

In other words, it’s a win-win.

Compare your rent with hundreds of wind farms across the UK

Get the best possible lease with help from the UK’s top solicitors

100% of landowners we work with increase their rent negotiation offers

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To find out more, check out our case study, where we helped David, a farmer and wind farm landowner, renegotiate improved rental terms for his wind farm extension.

Do you want to stay with your current wind farm developer?

If you’re coming to the end of your lease, you may also wish to consider whether you want to continue working with your current wind farm developer. These are long-term partnerships, so choosing the right developer is crucial.

I understand – relationships can change over time and it may be time to bring someone new on board.

If you’d like to switch things up, my team at Lumify Energy can help. For starters, we’ll help you obtain references for wind farm developers by using our top-tier reviewing system. But we can also assess them according to things that are most important for your project.

This should give you all the necessary tools you’ll need to make an informed decision during the renegotiation process.

While it’s tempting, I encourage landowners not to make money the sole deciding factor when choosing a wind farm developer.

Changing your wind farm developer is possible, and although it can be time-consuming, it’s often an option that’s often overlooked.

Step 2: Negotiation

Now, you’ll need to consider the following things before negotiating:

• Future plans for the wind farm
• Rents other landowners are receiving

Then, you’ll be ready to start negotiating.

Here are some key questions you should ask during your discussions:

Questions you should ask your site operator

• What are their plans for the wind farm long term?
• How long would they like to extend the lease?
  • Landowners should carefully consider plans for their land and how the lease extension may affect this for the duration proposed.
• Does the wind farm developer plan on taking on more of your land?
  • It’s vital to understand if there will be any significant changes to the areas of land your wind farm will cover.
• Does the developer plan on changing the size, type or layout of turbines in the near future?
  • This is important as this would be a wind farm repowering and may require new planning permission.
• Can you obtain references from previous landowners who’ve worked with your developer?
• Does your developer plan to sell the wind farm in the foreseeable future?
  • If so, you should negotiate additional terms, including a clause that requires the developer to seek your permission before this is done and minimum requirements regarding the financial standing of any replacement developer.
• What are the site developer’s plans at the end of the lease?
  • It’s important that the cost of decommissioning the site does not fall to you and that the land is re-restored to its original condition.
  • Furthermore, you (or an independent expert) should have a final say in whether the site has been properly restored following decommissioning.

Step 3: Heads of Terms and Contract Finalisation

Over time, I’ve reviewed hundreds of lease agreements. I often see leases that need modernising, and many don’t take into account the parties’ future plans for the wind farm.

This is the perfect time to consider if a new type of payment arrangement might work better for you based on your current circumstances. 

Why is this stage important?

This stage is crucial as it will determine your future income. It will also outline the future management of the site and the length of time the wind farm will operate.

A key component of drafting the new lease is to ensure that the wording is very carefully chosen.

As we have seen, even changing just a few words can lead to significant reductions in future rent payments.

For more information, check out our video. Here, I discuss how a lease wording error significantly impacted one landowner’s rental payments.

When negotiating rental payment terms, this is where your initial SiteScan™ research becomes invaluable for getting the best payment terms.

Identifying and presenting your market research findings early can make a big difference in securing the best rental payments.

This is also crucial when negotiating a mid-lease option.

In short, you’ll enter the renegotiation process with a good knowledge of the market.

Things to remember when negotiating heads of terms

I’m seeing a growing trend where developers are asking landowners to extend their leases for up to 40 years.

This makes it even more important for landowners to be well-prepared and informed when negotiating with their wind farm developer.

Additionally, landowners should consider how the wind farm will be managed at the end of its life. It’s incredibly important to outline the decommissioning stage clearly in the lease. Otherwise, landowners could incur significant costs when the wind farm is eventually removed.

I often work closely with our legal team to review leases on behalf of our clients. We make sure that key issues are considered from both a legal and commercial perspective.

Also, I regularly work with clients’ existing solicitors. Together, we ensure that information is relayed accurately and ensure that landowners are in the best position to secure an excellent deal.

When negotiating heads of terms, landowners should understand that wind farm developers incur significant upfront costs. These costs can take 15 (or more) years to recover.

Therefore, I always advise landowners to be reasonable when negotiating rental terms, as this must work for both parties.

Step 4: Planning Permission

At this stage, it may be necessary for a developer to apply to extend the wind farm’s planning permission. This will normally be carried out after the new lease has been signed.

In case you weren’t aware, your chances of obtaining planning permission will depend on whether you’re planning to repower your wind farm or are building a new project.

So, it’s always worth running through your options and settling on a plan of action before moving forward.

The number of new onshore wind farms developers have built has declined in recent years. Developers have favoured other renewable energy projects due to stricter planning regulations.

However, with Labour significantly loosening restrictions in July 2024, it’s hoped that onshore wind will make a strong comeback.

• Only 1.6 per cent of UK councils had designated suitable areas for wind energy development in their latest Neighbourhood Plans
• Only 20.8 per cent had done so in their Local Plans

These restrictions severely limited the potential for new wind projects. However, now, with the removal of local authority approval requirements, I expect a significant increase in wind farm developments.

Planning considerations for lease extensions

• If the wind farm is simply being extended – with no changes to turbine size, type of layout – planning permission should be relatively straightforward.
• If the developer is pursuing full repowering with larger or different turbines, the planning process may be more complex.

While the new planning guidelines should make approvals easier, there could still be pushback regarding the visual impact of taller turbines.

A Few Parting Words

Whether you’re repowering a wind farm or extending a project’s life, this checklist of steps should help you secure an excellent deal.

By working closely with your site operator and creating a detailed action plan, you’ll be well-prepared for negotiations.

The result?

A favourable outcome for all parties – ensuring you maximise the full revenue potential of your wind farm.

 1. From a planning permission perspective, repowering includes extending the life of existing turbines, replacing and/or repositioning of the turbines