Wind and Solar – An Emerging Area of Law

At AWS Legal, we are noticing an increase in requests for advice on renewable energy projects. Energy companies are increasingly approaching our rural sector clients, with wind farm proposals in Southland and South Otago, and solar projects in Central Otago.

We expect this will continue to increase, based on recent developments. The Government has announced a Fast Track Approvals Bill for major projects it has identified as having regional or national signficance. Almost 15% of these projects are renewable energy projects, with 8 being located in the South Island. These projects have been identified as being crucial to assisting with the stated goals of electrifying New Zealand’s economy, improving energy security, and reaching New Zealand’s legislated goal of net-zero carbon emissions by 2050.

With farmers facing a raft of challenging factors at the moment, these proposals may be a useful and lucrative additional income stream. However, farmers do need to be mindful that these deals are long-term, for example, wind farms can be for upwards of 90 years. It is therefore important to consider factors that may arise throughout the life of the transaction and have clarity on these in the document before signing up any deal.

	Some factors you will need to consider:
ONE \| tahi	Is a wind or solar farm complementary to your existing and planned future uses of your property? For example, forestry can have a major impact on wind generation and so there will likely be restrictions on your ability to plant forestry on your property, even a reasonable distance away from wind turbines.
TWO \| rua	Is the option fee and royalty being offered at current market rates?
THREE \| toru	What rights do you have to be compensated for disruption to your business while construction is occurring? What are you required to do during construction – is it your responsibility to remove stock from the area or will the wind or solar company provide fencing to exclude the stock?
FOUR \| whā	When do you start getting paid a royalty? Is it CPI adjusted from the date of signing?
FIVE \| rima	What are the reinstatement obligations at the end of the wind or solar farm?
SIX \| ono	Often the projects span more than one property. You don’t want to be penalised for being co-operative and signing on early, only to find out your neighbour held out, and for their efforts received a better deal than you. See us for a clause you can use to protect yourself from this situation.

There are many other factors to consider and usually no ability to negotiate once the deal is signed up. Most wind and solar companies require you to agree not just the investigation licence but the royalty agreement and easement/lease at the outset.

At AWS Legal, we have lawyers with specialist expertise in wind and solar farms, who can discuss what protections you will need in any wind or solar deal. See our Energy page for more information or our experts that can assist you.