Wind Energy Developers: Choosing the Right One to Work With

Trying to decide which prospective wind energy developers are worth working with? I’ll walk you through everything you need to consider before signing an option agreement.

If you’re interested in hosting wind turbines on your land, you’ll need to assess potential wind energy developers.

Unless you plan to go it alone as a landowner-developer, of course.

Whether you’ve already been approached or are exploring your options, this guide covers the essentials, from understanding a developer’s role to key factors in choosing the right one.

Let’s get started.

Do I Need a Wind Energy Developer?

You don’t necessarily need to work with a wind energy developer.

Some landowners choose to self-develop wind power projects using their own funds, external investment or bank financing.

This means covering initial startup costs, maintenance, upkeep and any potential early losses.

If you’d rather avoid the risk that comes with financing the project yourself, a developer is your best option.

Most landowners prefer a steady income from hosting turbines without managing the project themselves. With a developer, you’ll receive a pre-agreed payment and have minimal involvement.

Not sure which route to take? Let’s compare the pros and cons of self-developing versus working with a developer.

Most landowners simply want to earn an additional income from having turbines on their land.

If you opt to work with a wind energy developer, you’ll receive a pre-agreed payment arrangement and be largely hands-off.

Not sure what approach you’d like to take? Let’s compare the pros and cons of self-developing vs. working with a developer.

What Does a Wind Farm Developer Do?

A wind farm developer is responsible for designing, building and sometimes running a wind energy project.

They will also seek planning permission, oversee construction and undertake any appropriate marketing.

And in addition, they’ll:

• Carry out feasibility studies
• Deal with option agreements
• Secure transmission to the Grid
• Purchase or lease land
• Install all wind turbines and monitoring equipment
• Secure financing
• Consider the transmission infrastructure carefully to keep the project running smoothly

In some cases, the developer will hand over the actual running of the project to a site operator.

The site operator will be responsible for maintaining the site and keeping it functional.

What Should Landowners Look For in a Wind Farm Developer?

Before signing an option or lease agreement, it’s crucial to research potential developers carefully.

Here are key factors to consider:

Who you’re dealing with

The first thing to consider is who you will be working with. In my experience, avoiding ‘middlemen’ is one of the most important decisions you can make.

There’s not necessarily anything wrong with middlemen, but they typically secure the land before selling it to an unknown developer.

I’ve seen this repeatedly – local-sounding companies are set up, talk a good game and then sell off the contract, leaving you with a developer you’ve never met.

Additionally, middlemen always take their cut, leaving you with less potential income.

If you’re approached directly by the developer, make sure they have a proven track record.

I’ll get to this in more detail later, but it’s essential to research the developer’s ability to finance and run the project.

Everyone needs to start somewhere, but there’s far less risk in dealing with an established developer.

It’s also important to check how much their sites typically earn and see if there are any past disputes on their record.

This will help you understand whether you’re in for a bumpy ride or smooth sailing.

What about larger developers?

Larger corporations are sometimes trickier to contact than smaller developers. However, there are major pros that come with larger names as they have impressive funding and are unlikely to go bankrupt.

For a landowner, this can provide security from the get-go.

The only major downside is that larger developers don’t need to impress landowners unless it’s a flagship project.

As a result, they may offer less favourable energy deals, aiming to quickly repay investors.This doesn’t mean a large developer is a bad choice, but being so far removed from your developer can make for quite an impersonal experience.

How well they’ll operate the site

You won’t be overly involved in the day-to-day operation of a wind power project unless you’re self-developing the site.

However, it’s important to research whether your developer is willing to invest in new turbines and maintenance over the project’s lifetime.

As a landowner, the long-term health of the land will be a central concern. A developer focused solely on maximising income with minimal maintenance may not be the best choice.

That said, you’ll want to maximise returns over the project’s life cycle.

The key is finding wind energy developers willing to maximise performance and income – not prioritising one over the other.

How much they pay

Money is an important factor in the decision-making process. As a landowner, how much you receive should certainly be a consideration.

Many developers offer a generous upfront payment to secure your site (this is also known as an option agreement), which can range from a few thousand to £50,000 and up.

The size of this upfront payment often depends on how much capital the developer can spare.

To secure that payment and create a viable option agreement, you’ll need to invest in solicitors, land agents and finance experts.

After all, you don’t want to sign over your land without understanding all the terms.

Ideally, these costs shouldn’t come out of your own pocket, so a developer willing to front these expenses is usually a positive sign.

Although ‘big names’ in the wind energy development world will come with some security, they can pay under the market rate for purchasing land. Be cautious of operators coming to the table with standard terms that can’t be negotiated.

Inflexibility can often be a sign of things to come, and being in a position of weakness from the outset of your lease won’t bode well.

Overall, if your developer is willing to pay fair market rates (always do your research) and is open to compromise – you’re on to a winner.

P.S.: If you’re struggling to get together information about current market rates across the country, we’ve got you covered. Our Lumify SiteScan™ will compare your site against others around the country to help you get the best rental rates possible.

Their mindset and power dynamic

If you’re not on a profit-focused payment arrangement, ask yourself the following questions before working with a developer:

• Is the developer aggressive or are they willing to be flexible?
• Are they open and transparent? Are they willing to share their running costs with you or are things kept confidential?
• Are they willing to share the success of the project with you or are they cagey about the profits?

This list isn’t exhaustive, but it’s a good starting point for identifying developers who may not be as open to a full, collaborative partnership.

Things to Look Out for Before Settling on Which Wind Energy Developers to Shortlist

Readily available information and references

An open developer with readily available financial information and secure references is invaluable.

While some wind farm developers may keep their cards close to their chest and be reluctant to share financial details, those who are willing to provide references and site plans are a positive sign.

Proof of ability to finance a project

Financing wind power projects can be extremely expensive and may face delays before finally moving ahead.

And for that reason, developers are rarely able to fully self-finance a wind farm.

Given this, it’s important to check a developer’s ability to finance the project.

Many developers will have an established credit history that you can reference.

If you want even more information, ask the developer for proof of previously successful projects and how they were financed.

If a developer comes back with a solid breakdown of their finances (and is open to sharing this), you’re probably in safe hands.

Grid connection agreements

As connecting to the Grid can be a long, arduous and expensive process, a developer who has already made progress on this process can be appealing.

Under Britain’s new two-step application process, developers can kick-start the Grid application process after a landowner has agreed to work with them.

Therefore, choosing a developer with prior experience running a wind farm (especially recently) can be beneficial.

This experience will often shorten the time between getting the turbines up and running and generating revenue from the site.

Whether they have a Power Purchase Agreement in place

If your developer plans to sell energy to the Grid (which is highly likely), they’ll want to get a Power Purchase Agreement (PPA) in place.

If they already have one in place to sell the energy, this can be hugely positive for landowners.

While getting a PPA in place before land is secured is difficult and relatively unusual, having one shows a developer’s commitment to fully developing the site.

If they already have a PPA, the developer is well-prepared to move forward, and as a landowner, you’ll have a clearer forecast of your income.

The PPA will outline how much the developer will receive for the energy sold, allowing you to apply your percentage of rental income and estimate your share.

While you’ll need to estimate the amount of energy produced, the estimate you reach will be relatively accurate.

Steps to Take Before Choosing a Wind Farm Developer

Before I wrap up, I thought I’d run through the steps you should take before choosing a developer.

I’ve already covered warning signs and things to look out for, but here are the six key steps to consider as a landowner:

1. Negotiate any rental payments and reimbursements for land, and understand how you’ll be impacted.
2. Discuss any plans for the land. This should include whether your developer has plans to extend past the 25-year average lifespan of a wind farm.
3. Check your developer’s credentials and whether any planning for new dwellings or sheds you may build could impact your lease agreement with the developer.
4. Choose your developer based on their approachability, credentials and financial viability.
5. Seek legal advice to make sure both your option agreement and final wind farm lease are legally sound.
6. Go ahead with the project and sign a lease.

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How to Maintain a Successful Relationship with Your Developer

Maintaining a successful relationship with your developer and site operator is key to keeping your project running smoothly.

Every landowner-developer pairing will be different, but there are a few major factors to consider that apply to all relationships.

The first thing is that communication and regular feedback are crucial to keeping your relationship healthy. Whether you’re reporting issues on your side or the developer is keeping you informed of major industry changes, communication is key.

A regular feedback loop will make sure all parties are in the know, reducing the need for a dispute at any point.

Aside from communication, a strong and watertight lease that allows room for discussion is invaluable.

Dispute clauses can be an excellent way to quickly resolve issues, but clear wording is equally as important.

The less room you leave for error in your wind farm lease agreement, the better.

Lastly, it’s always important to address any legitimate concerns early, without aggression from either side.

Whether the project is encroaching on your land or maintenance checks are overwhelming, remaining calm and collected can go a long way.

Letting emotions derail the discussion could permanently damage your relationship, so stick to the facts.

Final Thoughts

Choosing the right wind energy developer is arguably the most challenging part of starting a new wind farm.

It can feel like you’re searching in the dark, especially if this is your first experience of a project like this.

Not only will you be working closely with them for years to come, but a sour relationship can seriously impact your day-to-day experience.

By thoroughly researching potential developers and coming to the table with fair rental rates, you’ll be setting yourself up for success.

If you’re a landowner looking for tailored advice on choosing wind energy developers, just get in touch.

The Lumify team is ready and waiting to help you maximise a new project’s potential.

FAQs

Who is the largest wind farm developer in the UK?

The largest wind farm developer in the UK is SSE.

But it’s worth mentioning that they’re more focused on offshore wind than onshore wind.

Is the owner and developer the same thing for a wind farm?

Not always.

The owner of a wind farm project is often the developer who builds the site.

But occasionally, ownership will be shared between developers, site operators and investors.