Skip to content

Farmers' advocate cautions RVC landowners on signing lease agreements with renewable energy companies

“It’s entirely a voluntary process to have the power plant located on your land,” Allen explained. “All of the protections you think you may have (as a landowner), you don’t have them. So whatever you negotiate in those lease agreements is what your compensation variables are going to be.”
Three land redesignations were approved by Rocky View County council at its April 24 meeting.
RVC Public Presentations Committee heard from the Farmers’ and Property Rights Advocate Office of Alberta at their April 19 meeting.

Members of the Public Presentations Committee of Rocky View County (RVC) attempted to come to grips with landowners’ rights and responsibilities, and the role of the local municipal government when it comes to the development of renewable energy projects on productive farmland during the committee’s April 19 meeting.

Darcy Allen, an energy, utilities and policy specialist with the Farmers’ and Property Rights Advocate Office of Alberta (FAO), said the significant increase in solar and wind power generators in Alberta in recent years has brought market prices down to a point where renewable energy generation is an extremely competitive option for potential developers.

“Renewable energy projects are now close to, or have reached parity with, the marginal cost of efficient natural gas plants,” Allen said, citing recent reports compiled by the Alberta government. “So this suggests building renewables may now be cheaper than operating existing fossil fuel plants.”

This competitive price has brought many new green-tech industry players into Alberta to try to develop new solar and wind farms, explained Allen, and has driven a demand for broad swathes of previously productive farmland to accommodate large renewable energy installations.

Some proposed solar and wind farms cover thousands of acres, boasting millions of solar panels or dozens of massively oversized wind turbines.

However, Allen cautioned that farmers and other property owners who enter into long-term lease agreements with these types of renewable energy projects, (most stretching over 40 years), are not protected by the Surface Rights Act like landowners who have traditional oil and gas production on their lands.

“It’s entirely a voluntary process to have the power plant located on your land,” he explained. “All of the protections you think you may have (as a landowner), you don’t have them. So whatever you negotiate in those lease agreements is what your compensation variables are going to be.”

A landowner who makes a lease agreement with a renewable energy company will also not have any access to government protections such as the Orphan Wells Fund or any rights to arbitration through bodies like Land and Property Rights Tribunal if the company defaults on payments or fails to live up to the conditions agreed to within the lease.

“There is no remedy for insolvency if that company decides they are unwilling to pay, or are unable to pay,” Allen said. “There is no mechanism to go to a (government) tribunal to get recovery of compensation through the government.”

And the landowner may also be on the hook for any unpaid municipal taxes if the renewable energy company defaults on payment, Allen added.

“If that company becomes insolvent, you are on the hook for any of the decommissioning, remediation and reclamation should that (corporate) entity become a non-viable company,” he told committee members. 

“It’s the same thing for municipal tax defaults. We haven’t seen it yet (in an actual case), but if the developer is not paying their annual compensation to the landowner, chances are they are not paying their municipal taxes either … We believe the municipality has the ability to go to the landowner to satisfy those tax defaults.”

The key message, Allen told the committee, is that if a farmer or landowner chooses to enter into a lease with a renewable energy company, it is really incumbent on them to ensure they are protected in the agreements.

“Every developer has different agreements,” Allen explained. “They are vast and broad in scope and nature in verbiage …  In our opinion, seek legal advice to go through these agreements because they are very complex. They need, most times, that legalese interpretation to actually flesh out whether it’s good, bad or ugly.” 

After the presentation, Division 5 Coun. Greg Boehlke asked Allen what powers municipalities might have in regulating solar and wind power projects locally, considering municipal decisions are often overruled by the Alberta Utilities Commission (AUC) anyway.

Allen said the only thing municipal governments can do is attempt to advocate for policy changes at a higher level within the Alberta government itself. He reminded committee members the AUC is bound by higher order provincial legislation, and if any changes are to come, they must come down from that higher level.

“I know there has been a lot of frustration I have heard from municipalities,” Allen conceded, after reminding committee members the FAO does not have a position one way or the other on renewable energy projects being set up on previously productive farmlands. He said they are only focused on ensuring landowners know their rights before entering into renewable energy agreements. 

“(Municipalities) believe they have little to no care, control or influence over the land use question with respect to that (farmland) part of the conflict,” Allen noted. “My advice is participate, participate, participate. Make those concerns known to the regulator so when they are making their decisions, they are taking that into consideration as part of their adjudication.

“If you are ratepayer, let your local government know your concerns, your issues, your views, and let your elected officials know your views, because that is where that conversation is going to take place with cumulative (legislative) effects.”

Upon that advice, the Public Presentation Committee then voted to receive Allen’s report for information.


Tim Kalinowski

About the Author: Tim Kalinowski

Read more



Comments

push icon
Be the first to read breaking stories. Enable push notifications on your device. Disable anytime.
No thanks