Energy leases are a common way for Texas property owners to generate passive income. Many property owners may have mineral leases in place, granting others oil and gas extraction rights at their properties.
They may also want to consider negotiating lease terms for renewable energy production on their property. Many of the same parcels that feature potential oil and gas reserves also have excellent solar exposure and enough wind to make turbine installation profitable. It is theoretically possible to negotiate a renewable energy lease for oil or solar energy production at a property while simultaneously protecting mineral lease rights and avoiding conflict.
What do those who already have mineral leases in place need to know about negotiating leases for renewable energy production as well?
Consider the possibility of interference
Frequently, one of the biggest concerns about the overlap between mineral leases and renewable energy releases is the possibility of machinery or other improvements erected on the property interfering with renewable energy production.
Extraction facilities can create shade that impacts solar energy production and possibly also wind movement across the property. Particularly when renewing mineral leases, imposing limitations on extraction near renewable energy production sites may be necessary.
Assess the status of mineral rights
In some cases, mineral rights are technically separate from land ownership and access rights. If there have already been legal steps to sever mineral rights from land ownership rights, there could be complications in the future.
The party that holds mineral rights may technically have more legal leverage than the landowner regarding the use of the property for renewable energy production. Many times, the mineral estate is the dominant estate on the property, which can impact both the private use of the property by the landowner and the rights of any companies signing wind or solar leases on the property.
To effectively protect the owner’s rights and avoid violations of a mineral lease, it is often necessary to review existing leases carefully, negotiate new terms at the time of renewal and customize wind or solar leases to avoid violating the rights of the mineral estate. Most people can’t manage that process on their own behalf.
Professionals who understand mineral rights and renewable energy leases can help property owners protect themselves in complex situations. Real property owners trying to diversify energy production and sources of revenue may need to take advantage of skilled legal guidance as they prepare to generate renewable energy on their land, and that’s okay.