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Renewable energy

Forgotten Costs of Hosting Renewable Projects: A Warning to Landholders

Strategic Insights

— 1 min read

Landholders in Queensland's rural and regional areas are being warned about the potential financial risks of hosting renewable energy projects on their land. Senior legal advisor Leanne O'Neill from AJ and Co Lawyers has cautioned that the costs of dispute resolution can be as high as $500,000, and landowners need to seek advice at the right time to avoid these costs. As Queensland pushes towards its goal of sourcing 80% of its energy from renewables by 2032, O'Neill has outlined the forgotten costs of hosting renewable projects, including the risk of signing "option" agreements that may never lead to actual development.

Key Takeaways:

  • Landowners who enter into wind project agreements without seeking legal advice may tie up their land for years without financial return, with up to 89% of wind farms not going ahead.
  • Wind projects may not be able to connect to the power grid, which is a trigger for landowners to start getting paid, and landowners may be stuck with costly infrastructure and no support to remove it.
  • Unregulated agreements are a huge issue, and landowners may be consenting to the creation of an interest in their land, potentially leading to significant risks.
  • "Neighbour payments" could lead landowners to sign away their rights to speak out publicly or legally challenge the project, with a confidentiality clause that prevents them from saying anything adverse.
  • Wind farm payments are taxed as ordinary income, reducing the actual amount landowners receive, and landowners should demand that legal and accounting fees be covered by the proponent.
  • Compensation terms should include escalation clauses to adjust payments over the 20-25 year life of a typical wind farm lease, to keep up with market value.

Statistics:

  • Up to 89% of wind farms do not go ahead.
  • It can cost landowners $350,000 to $500,000 to raise an objection to a project.
  • Decommissioning a wind turbine costs more money than any financial return landowners may receive over the life of the project.
  • It can cost landowners $750,000 or more to decommission a wind turbine.

Sources:

  • "Leading lawyer warns of forgotten costs of renewable energy projects" by Ben Harden,
  • "Property Rights Australia conference" on June 7,

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