As the demand for clean and sustainable energy continues to rise, renewable project developers are looking for more land to install wind and solar projects. For developers looking to use privately owned land for renewable energy projects where the minerals are severed and located in an area of existing oil and gas exploration/production, accommodation agreements serve as an essential tool for outlining the specifics of land use and fostering collaboration with surface, mineral and leasehold owners (“Owners”). In this article, we will delve into the intricacies of accommodation agreements, explore their significance, and shed light on what both mineral owners and lessees and project developers should consider when drafting one.
What are accommodation agreements?
Accommodation agreements, also known as “non-interference agreements”, are legally binding contracts that define the terms and conditions under which the Owners grant access to their property for the development and operation of a company’s projects. Accommodation agreements are often used when the developer is not able to secure Surface Rights Waivers from the Owners. These agreements establish a framework for the coexistence of land use between the project developer and the Owners, and they typically address issues such as land access, compensation, project maintenance, and the rights and responsibilities of both parties. By formally laying out the rights and obligations of both Owners and project developers, accommodation agreements contribute to the smooth integration of renewable projects into existing landscapes, fostering a mutually beneficial relationship.
Why are accommodation agreements necessary for renewable projects?
Accommodation agreements are particularly crucial for renewable projects because renewable energy is a newer energy source, and the location of a renewable energy project may be in an area of active oil and gas exploration, production, or mining. In addition, renewable energy projects cover far more land than a typical oil and gas well. Vast expanses are required for the installation of solar panels, wind turbines, or other clean energy projects, and more infrastructure is required to capture renewable energy, store it, and transport it. These needs are complex and need to be spelled out ahead of time to ensure that the interests of both parties are protected throughout the project's lifecycle.
A well-drafted accommodation agreement ultimately facilitates the smooth integration of renewable projects into existing landscapes. By clearly defining the terms of access and land use, they help minimize potential conflicts between project developers and Owners, enabling a sustainable approach to energy development.
What do Owners need to consider when drafting an accommodation agreement?
For Owners, entering into an accommodation agreement involves careful consideration of various factors. They must evaluate the financial compensation offered by the project developer. Compensation can take various forms, such as upfront bonus, construction and production payments, or annual rental payments. To ensure Owner’s mineral interest can be developed, the accommodation agreement needs to provide locations for drill sites and associated infrastructure. A comprehensive accommodation agreement should address farming, hunting activities, visual and noise associated with wind power to establish clear guidelines for mitigating any adverse effects.
Finally, Owners should pay attention to the duration of the agreement. Renewable projects often have long life cycles, and Owners should ensure that the agreement's term aligns with their own long-term plans for the property.
What do project developers need to include in their accommodation agreements?
Project developers, on the other hand, need to approach accommodation agreements with transparency and a commitment to building positive relationships with Owners. Providing a clear outline of the project's scope, timeline, and potential impacts can go a long way in gaining the Owners’ trust.
Developers should also consider the regulatory landscape when drafting accommodation agreements. Local zoning laws, environmental regulations, and permitting requirements can significantly impact the project's feasibility, and these can vary widely by state or county. A thorough understanding of these factors and their integration into the agreement can help avoid legal complications down the line.
In addition, developers should be mindful of evolving technologies and industry standards. As renewable energy practices continue to advance, accommodation agreements should be flexible enough to account for changes in technology or project design. Including provisions for periodic reviews and updates can ensure that the agreement remains relevant and equitable over time.
Negotiation of these agreements by a skilled negotiator is the key to achieving the project’s commercial objectives.
Negotiation is at the center of what Cinco has done for the past 30+ years for oil & gas, wind, solar, battery storage, geothermal, carbon capture and storage, rights-of-ways and other agreements involving Owner’s property rights. We have local experts that are familiar with the community and understand the value and use of Owner’s land the project will be located on. Armed with this information, we negotiate the best deal for the developer while meeting the needs of the Owners.
For more information on accommodation agreements or for answers to questions on the land acquisition and development process, contact us.
About CINCO
Cinco supports companies across the US with land and title issues related to oil and gas, renewable energy development, energy storage projects, legal matters, insurance underwriting and more.
This is part of our introductory series on renewable energy, covering geothermal, solar, wind, and battery storage.
For more information on accommodation agreements or for answers to questions on the land acquisition and development process, contact us.
