Financing Wind Power Projects: What Landowners Should Know

If you’re a landowner-developer, you may be looking into financing wind power projects. Whether you’re considering financing it yourself or securing external investments, this guide will cover the options available to you.

If you’ve decided to place a wind project on your land, taking matters into your own hands comes with a range of considerations. This includes how you should go about financing wind power projects.

There are several options for landowners who want to develop a wind project independently.

You can choose to self-finance or work with external parties, like banks, to secure financing.

There’s no single right or wrong approach, but one method may be more suitable depending on your situation.

In this guide, I’ll explore the risks associated with building a wind farm alone and provide insights into banks offering Green loans to landowners looking to expand their options.

What Would Be the Return on Investment for a Wind Turbine?

When financing a wind power project, you’ll want to know whether you’ll eventually see a return on investment (ROI).

Typically, it will take around 12 to 20 years to see an adequate return on investment from a wind farm.

This accounts for the initial turbine costs and average energy production while factoring in ongoing operating costs, which will always be subtracted from any final calculation.

Once the initial investment is fully paid off, ROI figures can improve significantly.

In most cases, the ROI depends on the net income generated by the project and overall capital costs.

While smaller wind farms may recover their initial costs quickly,  larger turbines generally offer higher ROI over time due to their greater income potential.

Ultimately, the financing structure of your project is key to achieving ROI as quickly as possible.

That should be your goal.

What Are the Options for Financing Wind Power Projects?

When it comes to financing wind power projects, small-scale projects are often self-financed, depending on the overall cost.

However, if you don’t have the capital to cover the project upfront, it’s typically easier to secure funding for smaller projects.

This is because it’s generally easier for banks to do their due diligence on slightly simpler (and cheaper) projects.

For larger, commercial-scale projects, external funding is typically required.

Let’s explore the possible options for financing wind power projects as a landowner-developer.

1. Self-financing

If you’re a landowner-developer with sufficient funds, you can look into self-financing.

However, this isn’t common, as many landowners just don’t have enough capital upfront.

As there’s also a lot of risk involved in self-financing, many landowners simply don’t want to go it alone.

But if you have the cash flow to develop a large wind farm and recoup the costs later, self-financing can be highly profitable.

The first step is to assess the potential return on investment for your project.

According to Octopus Energy, the development process can cost around half a million pounds, depending on the size of the project.

Generally, a wind farm costs between £1 million and £1.5 million per megawatt, including construction and development fees.

Self-developing your site could cut a significant amount from this overall estimation, as you won’t need to lease the land.

Unlike landowners who simply lease their land for rental income, landowner-developers shoulder all financial burdens.

In addition to securing planning permission and covering grid costs, you’ll also need to manage construction fees, maintenance, design, foundations and cabling costs.

Although you’ll be taking on all the development costs of a project, going it alone also means reaping the rewards. After you’ve covered the initial investment, of course.

At the beginning of the process, you’ll need at-risk capital to explore the suitability of the site and get planning permission. Past this point, you’ll need enough funds to construct the turbines and keep the project viable.

Wind farm projects typically last 20 to 25 years, so ongoing maintenance is required throughout the lifespan of the wind farm.

What about repowering?

If your project recoups its initial investment, you may wish to consider repowering.

This typically involves replacing older turbines with larger and more powerful ones.

This often frees up sections of land as you need fewer turbines to produce the same energy output.

Though the repowering process comes with its own costs, it’s typically less expensive than the original project.

With more experience as a self-financed landowner, you may want to consider larger-scale projects.

While the upfront cost for larger turbines is significant, larger projects are far more profitable.

What are the benefits of self-financing?

The main benefit of self-financing is that you retain 100 per cent of the financial rewards once the project is operational.

However, you also take on all the risk if the project fails.

Another major benefit to self-financing is that you maintain full control over your land, avoiding the need to deal with tenants.

The only thing you’ll need to consider is that you will likely need to cover extra costs for qualified consultants. This includes surveying, feasibility studies and obtaining planning permission.

Self-financing a project requires significant legal and financial assistance, but if you prefer being hands-on, it can be a rewarding option.

2. Leasing the site post-construction

If you’re a landowner-developer looking to finance a project but not manage it, leasing the site could be a good option.

This involves passing the project to a site operator, who will pay to lease your land.

Typically, projects leased in this way are developed by an external developer.

However, it’s also possible for a landowner to oversee the construction process and secure initial investments before bringing in a site operator to take over.

3. Bank financing

Bank financing is one of the most popular options for landowner-developers, as it eases the initial financial burden.

Plus, the funding comes from a trusted source, reducing the risk during the construction process.

Reliability and communication are crucial when financing wind power projects. Several UK banks currently offer investments for new renewable energy projects, including solar PV, battery storage plants, and of course – wind farm projects.

It’s a good idea to interview several different banks before settling on financing.

To give you a quick overview, here’s a look at what’s available from some well-known high-street banks.

Santander

The Renewable Energy Funding Scheme offered by the Cooperative Bank allows you to borrow money for investing in energy technologies.

This scheme is more suited to projects focused on improving the efficiency of an existing business rather than new developments.

It’s important to keep this in mind when considering whether this option is right for your project.

They currently offer:

• Up to 100 per cent funding for renewable energy projects to boost the sustainability of your business.
• The Bank of England Base Rate plus an agreed interest margin (this is worth investigating beforehand).
• Loans from £25,000 to £250,000, depending on the scale of your project.
• Arrangement fees at 1 per cent of the total loan.
• 70 per cent of the market value in funding, depending on the sector.

It’s worth noting that the amounts offered here likely won’t be enough to cover large-capacity projects.

The maximum cap of £250,000 could be used alongside other funding to construct a wind farm.

But in terms of financing wind power projects in full, it’s probably not going to be enough.

Clydesdale Bank

If you’re looking for project-based lending solutions for a wind power project, Clydesdale Bank is another option.

Their specialist team of four is based in Scotland, but they operate across the UK.

Clydesdale Bank works with a wide range of clients, including SME developers, landowners, farmers and private equity firms.

They currently offer:

• Development and operational stage finance.
• Execution and portfolio management.

HSBC

If you’re financing wind power projects with high initial investments, HSBC is another bank to look at.

They offer the Green SME Fund, which is designed to make sustainable solutions more accessible for businesses.

They currently offer:

• 1 per cent cashback on the loan value (for loans of £25,000 and below, a Representative 7.1 per cent APR applies).
• Loans to SMEs with a group annual turnover of up to £25 million. The maximum loan value is up to £25 million but can be as low as £1,000.
• 90 per cent of the loan proceeds must be applied in alignment with one of the categories in the Green SME Fund Eligibility Guide.

Although you’ll need to jump through the Eligibility Guide’s hoops, the potential maximum loans here are worth investigating.

Barclays

Barclays offers a Green Loan to farmers thinking of diversifying their income and selling surplus energy back to the grid.

They currently offer:

• A dedicated team of Energy Relationship Directors to help guide you on your renewable energy journey.
• Loans to help finance eligible green projects.
• Agricultural finance to help farmers through challenging markets, sustain their businesses and grow.

Triodos Bank

Triodos is known for providing finance for renewable energy and environmental sector projects.

Thus far, they’ve financed 610 small and large-scale energy projects in the solar, hydro and wind sectors.

They currently offer:

• Project and structured finance with loan sizes of up to £20 million.
• Construction finance, operating finance and re-financing.
• Long-term senior debt facilities with terms of up to 18 years.
• Sterling fixed and variable interest-rate facilities.
• Assistance with raising capital.

If you’re interested in seeing a successful wind farm that Triodos has already financed, you can check it out here!

NFU

Triodos is known for providing finance for renewable energy and environmental sector projects.

Thus far, they’ve financed 610 small and large-scale energy projects in the solar, hydro and wind sectors.

They currently offer:

• Technical experts to identify appropriate solutions for your circumstances.
• Accredited installers to prepare a no-cost proposal.
• Help with securing finance and insurance.
• Ongoing support throughout the investment and construction process to keep everything running smoothly.

If you need it, they can even assess the feasibility of your land and make a formal grid application on your behalf. For landowner-developers worried about balancing too many plates, this can be incredibly beneficial.

And if you want to go with a developer, NFU can even help you run a competitive process to narrow options down.

Natwest

Natwest is another bank that offers dedicated Green loans to support sustainable businesses in the UK.

They currently offer:

• Borrowing options from £25,000 with fixed and variable interest rates.
• Repayment terms from three months up to 25 years.
• Capital repayment holidays.

A note on bank financing

While bank financing is incredibly useful for securing immediate investment, you’ll need to consider interest.

Virtually no bank will offer financing without some kind of interest to ensure they achieve a return on their investment.

So, before proceeding, it’s important to consider how interest repayments will impact your overall financial plan.

4. Financing from external investors

With green projects becoming all the rage as the world works towards net zero, you may attract decent interest from personal investors.

High-net-worth individuals with assets totalling at least $1 million are a good starting point for one-on-one investments.

Additionally, crowdfunding and angel investors looking for a minority stake in the project can provide alternative funding sources.

While all of these options involve splitting a share of the profits, they can help cover those initial upfront costs.

Risks Associated with Financing Wind Power Projects

Uncertainty in the early stages

One of the main risks when financing wind power projects is uncertainty. This can include the risk of not getting planning permission, paying for option agreements and even failing to procure equipment.

If a project is delayed, and you, as a landowner-developer, are forced to invest more money, the scope of the project could change significantly.

It’s worth noting that the Labour government’s removal of the de facto ban on onshore wind in July 2024 is a huge step forward for planning permission.

This may remove an element of uncertainty for developers pursuing new projects.

However, balancing all the requirements for a new wind farm can still feel extremely overwhelming, even for the most experienced landowners and developers.

Construction risks

A project may run over budget or behind schedule during the construction stage.

If this happens, you’ll need to allocate more money to cover costs, including paying teams and possibly defaulting on off-take contracts.

These issues can arise from supply chain disruptions, delays in laying foundations or virtually any number of unforeseen challenges during the construction process.

Technology risks

The technology you’re using and rely on must be up to scratch.

Before a wind farm is fully operational, landowner-developers will need to test everything from blades to nacelles.

The entire turbine must work seamlessly, as outlined in the initial feasibility study.

If it doesn’t, you may need to invest more of your funds to address any issues.

For already tight budgets, this can cause serious financial challenges.

Relying on off-takers

There’s a certain revenue risk that comes with creating a project and selling energy to the grid.

If you’re not planning to repurpose the energy for an onsite business (like our clients at Dewlay), you’ll rely on off-takers who have contracts to purchase the energy from the project.

If anything goes wrong with these contracts, you may be left with surplus energy that you’re unable to sell.

This will make achieving an adequate ROI far more difficult.

Maintenance risks and operational risks

Throughout a project’s life, there’s always a chance that something will need repair.

Whether it’s turbine blades, nacelles, transformers or even power lines, ongoing monitoring is essential.

Scheduled and regular maintenance comes with its own set of associated costs.

If you’ve not planned for these, you may find yourself shelling out far more over time than you anticipated.

Tips for Choosing the Right Options for Financing Wind Power Projects

Understand when money will be spent (and how much)

It’s important to note that most of the money required for financing wind power projects will be spent in the construction phase.

This is when you’ll be expected to pay for the construction team, lay cables and build the turbines.

You’ll also need to source the relevant materials for the turbines and any monitoring equipment.

This can be a hefty initial investment (that you’ll hopefully recoup later).

It’s crucial to choose a financing method that lets you manage these costs without negatively impacting your finances.

If you can finance this out-of-pocket, that’s great. However, you may feel more comfortable setting aside your own funds and turning to banks or external investors instead.

This way, you can keep some capital aside for unforeseen issues down the line.

There’s no right or wrong approach, but you’ll want to carefully weigh up interest rates and startup costs to avoid getting stuck financially and ensure that you can reap the rewards from your site in the long run.

Carefully interview any potential external investments

It goes without saying, but you shouldn’t take on any external financial assistance without thorough research.

Investors are unlikely to provide funds without certain conditions, and even banks will impose interest rates that will increase the overall cost of borrowing over time.

This doesn’t need to be detrimental, but you don’t want to sign a legally binding document without fully understanding it.

For this reason, I always recommend running any potential investment contracts or prospects past a specialist solicitor.

Not only can they help you interpret the wording, but they may also help you negotiate better terms.

Understand your responsibilities (and whether you can live with them)

It’s important to understand your responsibilities before financing wind power projects.

If you’re self-developing, the onus is on you to plan, design and deliver the project, including financing it.

On the other hand, landowners working with site operators can take a more passive role.

While you’ll need to sign option agreements and communicate with your site operator, you’ll receive rent payments.

It’s important to note that in a developer-led project, the financial responsibility lies with the developer.

This means you can earn passively from your land without investing your own money.

However, the downside to this arrangement is that you’ll only receive a small percentage of the site’s overall income.

With self-financing, both the risks and rewards are all yours.

So, Are Wind Farms a Good Investment?

All in all, I’ll always stand by wind farms as good investments.

Although the cost of a single turbine can be as much as £3.13 million if you’re going large, the ROI can be enormous.

In fact, single turbines of the same size can generate a whopping £7,100,000 every year!

If you have the capital to invest in financing wind power projects, the potential returns are worth waiting for.

Just remember to choose the right financing option that keeps you secure, confident and settled as the project progresses.

FAQs

Can I get a government grant for a wind turbine?

As of February 2025, the UK government has discontinued national grant schemes for wind farm projects. This includes the Renewables Obligation Scheme, which is set to end in 2027.

However, the government is actively reforming the Contracts for Difference (CfD) scheme to expedite green energy projects, particularly offshore wind farms.

These reforms aim to provide developers with greater certainty to build clean energy. This process supports the UK’s ambition to become a clean energy leader and reduce costs permanently.

Additionally, the UK government has introduced the ‘Clean Industry Bonus’ incentive scheme. The scheme offers £27 million in funding for every gigawatt of capacity from successful offshore wind projects and aims to increase offshore wind capacity from the current 15 GW to 43-50 GW by the end of the decade.

How can I invest in wind farms in the UK?

Although you can invest in a wind farm by starting one yourself, you can also take a backseat by purchasing shares.

You can become a wind energy stocks shareholder or even trade financial derivatives through spread bets.

Trading in financial derivatives, including spread betting, carries a high level of risk and may not be suitable for all investors. You may lose more than your initial investment. It is important to fully understand the risks involved and seek independent advice if necessary before engaging in trading activities.

But there’s also the option to take a more involved position by leasing your land or developing a project!

What is the most expensive form of financing?

Equity capital tends to be the most expensive form of capital as investors typically expect a profit-share approach.

But depending on how high interest rates are with specific banks, these can be comparable!

There You Have It: The Ultimate Guide On Financing Wind Power Projects For Landowners!

If you’re interested in starting a wind farm as a landowner, feel free to get in touch with the team at Lumify Energy.

We completely understand how overwhelming this process can be. Whether you want to scan the market to understand potential ROI or just need a helping hand, we’ve got you.

Want to turn your land into a long-term revenue source?

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