Who Owns the Wind? An Emerging Public Policy Issue

Who Owns the Wind? An Emerging Public Policy Issue

As wind energy continues its major expansion in the U.S., the allocation and definition of property rights related to wind could rival the historical "water wars" of the West. Defining the legal boundaries of wind rights and how they will be allocated is emerging as a major policy issue for state legislatures and regulators.

In determining the allocation of wind rights, it is important to recognize that the land on which a turbine is located does not produce the wind, so any effort to establish a legal wind right to the surface estate needs to be considered thoroughly by all stakeholders. Currently wind project payments to landowners for wind leases are primarily for use of the surface estate, not for the wind itself. However, claims to uninterrupted flow of this natural resource could constrain development of this important resource and slow efforts to achieve national energy security.

Although wind is considered "free," the task of defining rights to the energy in those flowing air molecules is only now coming on the radar screen of risk managers (and trial attorneys). State legislatures will have to act soon to define wind rights, or inefficient litigation will provide that definition through the courts. If that happens, the legal risks of litigation over property boundary wind rights will seriously inhibit the ability of wind developers to build wind projects in many areas.

Separately, "viewshed" and noise concerns will also need to be addressed, as these issues are often used to oppose wind projects. The potential severance of wind rights from the surface estate can also raise future hurdles for wind development as landowners are impacted by a wind installation, while others receive the benefit.

The main issue arises from the fact that the large wind turbines produce a downwind effect (wake) on the airflow as it passes the turbine blades. This downwind effect reduces the amount of energy that could be extracted by nearby downwind turbines. The original level of energy in the wind stream is not fully reconstituted until some distance downwind from the turbine. When this downwind effect crosses property boundaries, the determination of who has priority rights to the energy in that airflow becomes an issue. Thus far, it has been simply assumed that obtaining a regulatory permit and investment of significant expenditures somehow vests such rights in a wind project. However, the uncertainty of that tenuous principle invites almost certain litigation.

In addition to the reduction in available energy to nearby turbines, the downwind effect of additional turbulence in the airstream can produce additional stresses on nearby wind turbines. Where turbines have insufficient spacing, turbine manufacturers dictate operating limits to mitigate the stresses caused by the turbulence. In turn, that reduces production.

Both energy loss and turbulence diminish rapidly with distance, but as a general rule of thumb, wind developers typically try to space wind turbines apart by a distance of at least five to 10 times the diameter of the turbine rotor, in the direction of the predominant winds. From an engineering and economic perspective, this downstream effect is considered to be reduced to an acceptable level at that spacing. Crosswind spacing in the non-predominant wind direction can be closer, but even then spacing should be three rotor diameters or more. For example, a common size wind turbine of 1.5 megawatts can be expected to have a 70- to 77-meter rotor diameter (230 to 252 feet) or even larger. Selecting even the minimum five-rotor-diameter spacing prevents the installation of any other turbine within a distance of 385 meters (1,260 feet) from the turbine.

Unfortunately, this need for spacing between wind turbines does not address property boundaries. As a result, property rights to the flowing airstream and allocation of those rights to different property owners becomes a contentious issue.

In some regulatory arenas, five-rotor-diameter-spacing has been established as a required setback distance from property lines. Such a setback requirement makes it difficult to develop wind projects in areas that do not involve extremely large landowner and contiguous holdings. This constraint is almost universal in most areas of the country since property holdings are often in quarter-sections or smaller.

The illustration below shows the constraints established with a setback of five rotor diameters. Such a setback limits the location of a turbine to the center of a quarter-section. As can be seen from Figure 1 below, the only allowable space on a quarter-section of land would be a small square 120 feet by 120 feet. It is also very likely that such a small location could be a poor wind site or unbuildable. Essentially, such a setback requirement limits wind projects to only large landholders, with smaller landowners unable to erect even a single turbine on their property.

Figure 1: 5 Five-rotor-diameter setback requirements

Even a minimal setback, such as the "fall distance" of a turbine will sterilize major swaths of land from developing its wind resource. For instance a setback of the "fall distance" from property lines within an area is divided into quarter-sections, will sterilize more than 50 percent of that area preventing wind development.

Since it is critical to locate turbines in the best possible location to optimize their production, wind developers need as much flexibility as possible to properly site turbines. This need to site turbines in optimal locations is driven by the physics of wind energy.

The available energy in wind is a function of the cube of the wind speed, which means that doubling the wind speed will increase the amount of available energy by eight times (2 x 2 x 2 = 8). In practical terms, the wind speed is affected by topography, not property boundaries. Moving a turbine just a few hundred feet can cause a significant change in average annual wind speed. For example, a mere 1 mph change in the average annual wind speed can change the production of a wind turbine by 15 percent. Such a supposedly minor difference in wind speed can spell the difference between success and failure for a wind project.

The downwind impact of a large wind turbine also raises the issue of equity among landowners if an adjacent landowner is inhibited from economically erecting a turbine when a neighbor has already erected a large turbine. In such an instance, the existing turbine, if located near the property line can affect the economic viability of another wind turbine nearby the opposite side of the property line.

This equity issue is complicated by the importance of wind turbine placement and the adjacent property may or may not have a viable turbine location within the zone of influence from the initial turbine. For instance, the adjacent property may contain a valley, a wetland or an even higher hill. The valley or wetland would preclude a viable turbine, while a higher hill may be an even better location.

State legislatures or Congress will need to provide some form of legal certainty to allow developers to make the large investments needed to develop our national wind resources. Just as wildlife is considered a public resource, and is regulated by the state, the use of wind also needs to be allocated with regulatory certainty. Presently neither wind nor wildlife is "owned" by property surface estate, but in the case of wind rights, there is substantial uncertainty of that principle.

For regulatory allocation of natural resources, two possible models are suggested. Each has been successfully used in similar natural resource contexts. The first model is based on the allocation of water rights, primarily in western states, where water is a scarce resource and needed to be allocated on some basis. The second model is the unitization of oil fields.

The first model, which might best be termed "First in Time; First in Right" allocates the resource based on the order in which users demonstrate beneficial use of the resource. The second model, "Unitization", has been successfully used in the oil industry. In this model, an area of influence caused by the development of an oil field is determined and that area is unitized. In a unitized oil field, the resource owners in that region submit their resources to a common development and receive the benefits and output in a share proportional to the portion of the resource they submitted.

Part II of this article will explore the pros and cons of the regulatory and unitization models.