Are Wind Farms Worth It? Costs and Benefits

Are you a landowner? Have you been asking yourself, “Are wind farms worth it?” Join us as we uncover everything you need to know about the costs and benefits of having wind turbines on your land!

If you’re a landowner in rural parts of the UK, you may have seen a few of your neighbours placing wind turbines on their land.  But have you ever stopped to ask yourself, “Are wind farms worth it?” Could I benefit from them? Am I missing out?

Well, we’re here to give you the ultimate lowdown on the benefits of wind turbines (and the drawbacks!) that’ll help you decide. Covering everything from potential rental income to how turbines might impact your land, this is your one-stop shop.

The Benefits of Wind Turbines

They provide a domestic source of energy that enables economic growth

One of the wider benefits of wind power generation is that it’s a clean and reliable source of domestic energy. So, it means that we don’t need to rely on external sources to power the country! Although it’s not always cheaper than other sources (because electricity in the UK is typically fixed to the price of gas), it’s certainly cleaner.

If you weren’t already aware, turbines work by using mechanical power from the wind to spin a generator. The generator then converts this into a source of renewable electricity that involves no fossil fuels.

Just so you’re in the know, approximately 26.8% of the UK’s electricity generation coming from wind in 2022. As net-zero limits are still on the to-do list for the government, it’s expected that wind power will become even more prevalent around the country.

In our book, that makes it a good idea to hop on the wind farm bandwagon as soon as possible. After all, obtaining planning permission can be a long road if you don’t start early. With the average road from planning permission to commissioning being around 5.4 years, waiting around isn’t the best idea.

Throw in the fact that more than £6 billion was turned over from wind energy in 2019 alone, and it’s clear that it’s certainly economically beneficial for landowners.

They allow landowners to lease their land and earn additional income (diversification)

If you’re asking yourself the question, “Are wind farms worth it?” as a landowner, you’re probably thinking about income. And that’s completely justified. Luckily for you, one of the main advantages of harnessing wind energy comes with selling the wind that is produced on your land to the grid.

Although landowners won’t typically need to deal with this themselves (unless they’re landowner-developers) site operators will rent your land and take care of building and managing the wind farm for you. Most landowners opt for renting their land to wind farm developers and do not shoulder the main cost of setting up and running the wind farm.

With this rented land comes income in the form of a pre-agreed payment arrangement. There are several different types of payment arrangements available to landowners, and it’s worth carefully considering them before diving in.

You may receive a percentage of the wind farm’s profits or a fixed sum regardless of the site’s performance over its lifetime. And that’s just for leasing your additional land to house a renewable energy project. In our book, income diversification is never a bad idea – and starting a wind farm on your land is one of the best ways to do it.

Once the initial investment is paid off, wind farms can generate significant profits.

What do things look like as a landowner-developer?

We won’t say that the initial wind farm construction process is a short or cheap one for landowners who want to go it alone.

Landowner-developers will be expected to secure funding and build the project themselves. If you do decide to build a project yourself, the initial investment can be hefty, with the average commercial 3.5MW costing upwards of £3.13 million to build. But those same turbines can make anything from £2,790,000 to £7,100,000 per year!

You’ll also need to consider how much it costs to run a wind farm (including maintenance costs) in the average calculation.

If you’re willing and able to shoulder the costs and secure appropriate finance, you could be on your way to making major profit from your land.

So overall, it’s easy to answer the question “Are wind farms worth it?” with a resounding YES – eventually.

What if I’m a landowner who’s working with a site operator-developed project?

If you’re planning to work with a developer and don’t want to build your own project, things will look slightly different.

For a start, you won’t need to finance your own project and will instead work with a developer who’s responsible for funding and building the wind farm.

Now, it goes without saying that you’ll get your rent until the initial investment from the turbines is recouped. But it’s always worth working a mid-lease option into your lease. This way, you’ll have the chance to renegotiate your rent closer to current market rates. Plus, your site operator may be able to offer you more rent for your land once a developer has made their initial investment back.

This isn’t guaranteed, but you may be able to up the ante price-wise when your initial wind farm lease is ending.

Realistically, it’s more viable for the developer and site operator to stick with what’s working after 25 years. The result? More rental income for you!

Most of the liability for a wind farm lies with a developer for site-developer projects

To hammer home the point we just made, landowners have virtually no liability for the success of a project on their land. If they’re working with a developer and not going it alone, of course!

To hammer home the point we just made, landowners have virtually no liability for the success of a project on their land. If they’re working with a developer and not going it alone, of course!

The onus for building, maintaining, and decommissioning a project typically lies with a developer. Not only does that take considerable weight off an average landowner’s shoulders, but you have very little to lose risk-wise.

We won’t say that it’s 100% risk-free (no venture is!). But The Guardian has said that landowners can expect a hefty sum “risk-free” for each large turbine that’s placed on their land. It’s an extreme example, but the Earl of Moray is said to make an eye-watering £2 million a year from a 49-turbine farm in Perthshire.  And the Earl of Seafield? He gets around £120,000 a year in rental income alone from his Banffshire estate.

Now, we’ll preface this by saying that these are extremely large sites. But isn’t even a fraction of that potential passive gross income from the project worth taking a chance on? When you throw in the fact that many leases have inflation-linked income increases built in, it’s a no-brainer!

The Disadvantages of Wind Turbines

They won’t be the right fit for every site

We’ll go into this in more detail when we talk about the type of land required for wind turbines. But in short, we’ll say that not every plot of free land will be suitable for a full-scale renewable energy project.

And when you’re asking, “Are wind farms worth it?” consider whether you’ll get enough power through your site to make it viable. For example, Scotland’s higher altitudes make it a naturally excellent spot for wind farms due to higher wind speeds.

It’s also worth mentioning that sites in the north of England where there’s a greater rural landscape will suit wind farms better. This isn’t to say that southern sites are out of the question, but you’re less likely to have a suitable land mass! And that’s largely because huge buildings and denser populations create buffers for wind.

Oh, and if you’re in an Area of Outstanding Natural Beauty? You’ll find it very difficult to secure planning permission for a site here.

They can be viewed by some as a relative eyesore

This isn’t necessarily a disadvantage that you’ll personally be bothered by, but some people find wind farms to be an eyesore.

Some even say that wind turbines decrease property values (though we’ve proven this to be untrue!). We say that this isn’t a huge issue as it won’t affect your income. And hey, three-quarters of Britons back more wind farms being built onshore!

But if you’re worried about upsetting your neighbours or don’t particularly like the look of turbines yourself? Well, you’ll need to weigh up the pros of increased rental income with the sight of those turbines!

They can impact your percentage of arable land

Although there are lots of advantages of wind power generation, another drawback for landowners involves the use of arable land. And by that, we mean that you might lose a percentage of viable farmland to your new wind turbines.

The average wind turbine requires about 2 to 40 acres per megawatt of capacity. So, if you’re working with several 3.5MW commercial turbines. We’d say that a 20-acre wind farm will probably require about 240 acres of land (including safe distance measurements).

But according to Renewables First, wind farms have a negligible impact on arable land. This means you can still operate your day-to-day business without your turbines ruining soil or getting in the way.

What’s the Average ROI for a Wind Turbine?

Now that we’ve run through the main benefits and drawbacks of having turbines on your land, let’s discuss Return on Investment (ROI).

The ROI on a wind farm isn’t an exact science, as it depends on the initial investment and number of turbines you have. But according to Octopus Energy, the ROI can be around 7.5-8% at the ready-to-build stage.

Once the turbines are fully operational and the initial investment is paid back, this can increase.

We also thought we’d mention that turbine income is usually linked to inflation (if it’s safely in your contract!). This means that your fixed rent and ROI will increase with the CPI and give you a more reliable revenue stream over time.

If we theorise that you’ll export 100% of the electricity from your site to the grid, the ROI can be around 37%. That’s for wind speeds of around 5 m/s, just so you’re aware. If the site uses 100% of the energy produced, this rises to 64% (though this tends to be a less common situation).

For landowner-developed projects, the most important thing to remember is that projects will take time to produce a decent ROI. It’s not an instant thing! But as the average wind farm has a life of 25 years (or more if you repower and extend), the potential ROI is excellent.

Is wind energy getting too cheap for me to benefit from?

This sounds like a strange problem to have, but there are some fears that the cost of wind energy is getting too low.

For example, Siemens expressed worries in 2023 that the cost of wind energy was sinking below what would be profitable. But because the UK currently operates its energy market according to the price of gas, landowners and developers are reaping the rewards.

So, although wind energy is cheaper to produce than alternative methods, we pay the same price for all forms. That means wind farms will receive the net price of GAS for their units of electricity instead of what their energy cost to produce. This may change over time, but now is certainly a good time to be getting into the UK renewable energy market.

To Summarise: What Are the Advantages of Harnessing Wind Energy?

We’ve harped on the costs and advantages of harnessing wind energy. But we thought we’d round things off with a comment on why it’s so beneficial to have turbines on your land. The main thing that’s relevant for landowners is the income factor – in short, you’ll get rental income for doing very little!

Aside from that, though, we always think that a major benefit is contributing significantly to the country’s renewable energy landscape.

With net-zero limits looming, leasing your land can benefit both your pocketbook and the planet. And as the process carries very little risk for landowners, it’s worth fielding a developer’s calls and hearing them out. After all, you’ve got basically nothing to lose. 

If you’re even remotely worried about how you’ll receive your rental payments, it’s worth looking more closely at payment arrangements.

There are several different payment structures available to landowners, including fixed rent and hybrid options that offer a share of the project’s overall takings. The option you choose will depend on your appetite for risk, and we’re happy to guide you if you’re struggling to pin down the best option.

So, what are you waiting for? It’s time to start your renewable energy journey with that first step!

FAQs

How much electricity does a wind turbine produce?

The average 2-3MW turbine can produce around 6 million kilowatt hours (kWh) of electricity each year. That’s enough to fully power around 1,500 households annually!

How is wind energy efficient?

Wind energy is incredibly efficient as it’s abundant, can’t be exhausted, and releases no pollutants. Overall, wind turbines are around 35 – 45% efficient throughout the year and rises to around 50% during peak wind periods. It’s worth mentioning that landfill gas and hydroelectric power are generally more reliable and efficient as wind is intermittent. But wind is still an excellent source of clean energy!

Do I need permission for a wind turbine in the UK?

Yes, the installation of any wind turbine requires planning permission.  That’s why it’s important to apply for permission as early as possible as approval can take several years. This has been an issue since David Cameron put in strict planning rules for new turbines in 2015.

How long do wind turbines last?

The average wind turbine lasts around 20-25 years. It may need to be fixed or parts replaced during this period.

There you have it: the ultimate guide that answers the question, “Are wind farms worth it?”

If you have any other questions about starting a wind farm, just reach out to our friendly team of expert onshore wind farm consultants. We’ll talk you through your options and start you off on the right foot.

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