How to Make Money from Land While Hosting Wind Turbines
|Topic: New wind farm projects||Read Time: 12 mins|
| Landowner type:|
Independent landowners | Institutional landowners
|Energy: Onshore wind|
Are you trying to figure out how to make money from land you own? Join us as we uncover how you can diversify your income by hosting turbines on your land (among other ventures!).
We’ve worked with landowners throughout the UK, from Scotland all the way to Devon. Over the years, we’ve noticed a few interesting ways that some of our landowner clients have diversified their income. And it’s not just about making money from your land itself by leasing it out, but it’s about making additional income from having turbines on your land.
Now, the process of getting wind turbines on your land can be a very long and drawn-out process with much uncertainty. But large-scale wind turbines have become more commonplace in the UK as the government attempts to reach net-zero limits.
At Lumify Energy, we have several years of experience to draw from. We use this to give landowners new to the idea of hosting turbines on their land, providing other methods through which they could benefit financially.
You might be wondering why we are bringing this topic up now. Well, it’s because many of the savviest landowners who’ve taken advantage of these additional income streams have had to be quite strategic and plan ahead. This is especially true when it comes to the wording of their contracts (more about that later).
We believe that by outlining these different methods now, you can put things in place to give yourself incredible future opportunities. So, if you’ve decided to take the first step and have functioning wind turbines on your land, you’ll want to stick with us.
It’s an amazing choice that should provide you with years of reliable rental income with a well-negotiated payment arrangement. But if you’re looking for more (but don’t know where to start), that’s where we come in. From channelling on-property wind energy through new projects to leasing remaining land, we’ll run through your best options.
The Best Ways to Make Money from Land While Hosting Wind Turbines
If you’re interested in receiving supplements and grants for educating school children (and looking after the environment), then you’re in luck.
As the average wind farm still offers decent space for farming and activities, some landowners host community projects on their property.
With the increased interest and awareness of the environment and renewable energy, it is becoming a more common addition to the syllabus. And with schools becoming conscious of hands-on learning, this idea could become a major source of potential income for landowners.
It’s also worth mentioning that certain organisations like The Education People run dedicated day visits to established environmental sites. These organisations give local primary school children hands-on experience with various environmental sites around the country. They’re often based around river exploration and sites of historical importance. But overall, a day of “outdoor learning” and discovering how the world works is the goal!
It’s important to remember that your wind farm would need to be vetted before it could become an outdoor learning site. But providing you can select a plot of land that’s far away enough from the view of your turbines, it could be a viable way of making money.
And it’s not just ecological exploration that schools are interested in (AKA: finding critters and local flora on your land). You could earn income from these organisations by directly showing children how wind energy works. Not only can they see and understand these turbines up close, but you can also introduce a new generation to the magic of renewables.
What about Countryside Stewardship Grants?
You may have heard of the Countryside Stewardship grants (CS) that were introduced to enhance a farm’s overall profitability.
According to Breedr, it’s:
These grants can be as much as £60,000 depending on the land in question, making it an excellent income earner for the right sites.
The eligibility criteria are relatively strict, but searching for options and supplements has been made quite simple via GOV.UK.
There are currently three separate grants under the Countryside Stewardship that include:
- Standalone capital grants.
- A Woodland Support grant that aims to restock and improve woodland areas.
- An Implementation Plan and Feasibility Study grant that provides funding for complex agreements and projects.
Who is eligible for Countryside Stewardship?
The Countryside Stewardship grants are suitable for any farmers, woodland owners, foresters, and land managers. Although it’s highly competitive, many landowners may be eligible on the grounds of “enhancing education.” And that’s where our previous section on school and education centres comes in!
This criterion is only offered at the highest tier of application, so it’s worth doing your research before applying. It’s also important to note that the Countryside Stewardship grants are taxed as revenue. So, you’ll need to account for this at the end of the tax year.
You may be looking to hold out until new environmental land management schemes are rolled out in 2024. But the grants specifically mention that you may apply and switch over when the time is right.
Lease the Space for Other Renewable Energy Projects
One of the most complementary ways to make money from land you own is by leasing additional space for other renewable energy projects.
And with the UK aiming to generate 100% of its energy from renewables by 2050, every little certainly helps! Many sites can support multiple projects, which is important to consider if you want to maximise your income. As realistically, you’ll make more money from land you own if you can host two projects at once!
Now, as we mentioned previously, making money from land often depends on its size and location. For example, if you’re in a coastal region with high wind speeds but minimal sunlight, you may not be best placed to host solar panels. It’s also entirely possible that you’ve been approached by developers to place more wind projects on your land.
And If you’re on a flat section of land that happens to be suitable for both wind and solar? Well, you may want to diversify even further. Like wind farms, solar farms require development and a serious upfront investment (to purchase and install the panels). However, unless you’re planning to go it alone as a landowner-developer, you won’t be responsible for these costs.
On the plus side, it’s thought that most solar farms pay off their initial costs within 5 to 10 years. To make things even more appealing, these projects tend to have minimal maintenance costs.
So, how much money could I make from leasing my land for a solar project?
Solar farm rents currently sit at around £750 per acre. So, the potential income from leasing your land is significant. But if you’re already set up with the grid (thanks to your existing wind farm!), adding another project may be easier. This is especially true if you set up a new project with the same developer. It can also work better if the project is the same energy type, so bear this in mind first!
Another major thing to consider is that solar leases typically run for around 30-50 years. This is significantly longer than the 20-25 years cited for the average wind farm. So, by leasing your land to a solar project, you’ll receive guaranteed rental income for decades.
And if you use a few simple negotiation tools, you’ll keep your income index linked too! Just remember that you’ll need to carefully assess the amount of land you have if you’re planning to house solar panels.
These farms need a lot of land and need to be kept safe from environmental stressors.
Data centres for landowners
If you’re new to the AI and technology-hosting world, you might be wondering what data centres actually are. These centres essentially store applications, data, and servers for a company to centralise their IT operations. They usually store a company’s most valuable assets, so they’re incredibly important.
In terms of the servers themselves, these are computers or programs that manage access to this centralised data via a network. And with all this network access, the electricity and energy needs can be gargantuan. On average, a server uses between 1,800 to 1,900 kWh every year.
And when it comes to professional-grade servers with an incredible number of users? Well, the land required to host and store the servers rises tenfold. If these data centres can be moved away from populated cities into rural areas, it could even boost housing development in hotspots like London. With an impressive 175-hectare 600W site planned for Havering, it’s clear that moving centres out of cities is already gaining popularity.
To give you some context, the rise of large data centres on farmland has been well-documented in the Netherlands. Microsoft runs two enormous data centres in Hollands Kroon, and these developments are typically built on arable properties.
Now, these hyper scalers (AKA: these enormous companies!) are being discouraged from leasing farmland by the Dutch government. But this concept could still gain traction in the UK, and this is supported by an enormous requirement for data storage across Europe. Savill’s predicts that the European data centre power capacity will be 9,000 MW by 2025.
And to meet those demands, the pipeline of available data centres would have to increase by 2.5 times!
So, what does this mean for landowners?
This changing landscape won’t be to everyone’s taste. But for small and medium-sized businesses, renting viable storage space for these servers on a local property can be huge.
It’s certainly a net benefit that removing these servers from the business’s primary premises frees up space for office workers. Plus, leasing land creates income for landowners. It’s also interesting to note that Scotland’s rural land market has been significantly changing shape over the years.
According to the Scottish Land Commission, non-farming buyers (including investors) have purchased over 40% of farms in the UK.
Although we can’t say what this land will eventually be used for, storage is a possibility. As servers are so energy-intensive, being able to house them in an area that’s already producing energy is invaluable. Not only will this boost the business’s overall profit by reducing costs, but landowners will reap the rental income! So, it’s a win-win.
We’re not saying that getting into dairy farming will make you rich overnight. But for those who are current dairy farmers, hosting wind turbines (and reaping the rewards from them) could save a significant amount of money.
By providing an income buffer and letting farmers repurpose produced energy for their projects, the high energy costs and the low price of milk won’t feel quite so detrimental.
If the numbers stack up, having a renewable energy project on your land could make dairy farming a lot more profitable. Existing dairy farmers will be well aware that dairy farming and processing are incredibly expensive. And with energy prices majorly ticking upward, everything from cattle feed to machinery costs has soared.
For context, the UK dairy industry has been facing mass farm closures based on processors’ price cuts. This was already a significant problem as early as 2016 where 1 in 10 farms had closed within the previous 3 years. But as of 2020, there has been a 67% reduction in the number of functional dairy farms since 1995.
This is a particularly pressing issue for smaller dairy farms that usually have tighter profit margins than larger ones. The overall consensus is that milk prices would need to rise significantly for farmers to break even. This is partially down to a cut in income paid from dairy processors, but farmers also need to contend with higher input prices.
And a lot of that is down to feed prices and energy shocks.
Feed prices are a major cause of concern for farmers, as they had risen from £214/tonne before the Ukraine War to £310/tonne. And with less cash to invest back into their operations, smaller farms are simply having to close down.
So, what does this mean for making money from my land?
Well, this is where we’ll turn to an interesting case study that involves both a dairy farm and wind turbines. Go figure!
By running a functioning wind farm and a dairy farm, they were able to reduce their energy bills significantly. And that’s because the turbines helped produce electricity that fed into the energy-intensive dairy-producing process.
Our turbine enables us to reduce the high energy bills in what is an energy-intensive industry, as well as reduce our business carbon footprint.Nick Kenyon, Dewlay
It’s one thing that running and housing the turbines provided excellent rental income. But by making use of the energy from the turbines into the cheese production process, Dewlay is killing two birds with one stone!
Things to Consider Before Making Money from Your Land
If you’re trying to make money from land currently hosting wind turbines, you need to consider a few things first. These mostly relate to the legalities of the activities or projects you’re trying to host. But you’ll also need to figure out whether your land is actually suited to running any other projects! And that means considering spare space, safety, and everything in between. It’s also important to remember that you may need to have the capital to build new income streams.
Whether that’s purchasing specialty farming equipment or constructing new buildings, the upfront cost of new ventures can be hefty.
The size of your land (and where it is!)
The size and location of your land will be the first thing you’ll need to look at critically. If you’re already hosting wind turbines on your land, you probably have a decent amount of wind flowing through your property. In the same vein, secluded wind farm sites might be just what school children need to learn about renewables in a relaxed space.
The most important thing you’ll need to consider is whether you have enough spare acreage and whether your planned project will be safe.
When it comes to hosting additional renewable energy projects, space will be critical. As we mentioned previously, wind turbines will usually need to be placed at a good distance from solar projects. This is especially true if you’re hosting a project with two different developers.
What your developer allows
It’s important to mention that many developers simply won’t want additional projects on land they’re leasing. There are often clauses within lease agreements that stipulate what can and cannot be within a certain distance of the project. This is to avoid vandalism and damage to their expensive and valuable wind farm equipment.
Now, it’s unlikely that they’d have a say over an entire plot of land. But almost all developers would discourage projects with a large turnover of guests.
If you have not yet signed a lease agreement, then now would be the time to discuss further plans with your project developer. Especially in the case that you’d like to use some of the energy from the turbine with another project. So, think dairy farming or hosting additional projects.
In these cases, you will need a separate PPA to be in place for the energy to be sold to you, the landowner, directly. This is in addition to the PPA that usually exists between the project developer and the energy offtaker.
Just something to think about.
Before you set up any new project on your land, you need to put your legal ducks in a row. This includes getting any necessary planning permission. It’s worth discussing this with a land agent in advance to make sure you won’t face any hurdles during the planning process.
Setting aside the necessary cash to get a new wind project up and running
If you’re not already aware, you need a lot of equipment to run the average wind farm. And the same concept applies to running virtually any renewable energy project on your land.
Now, you might have decent cash reserves to start an additional income stream. But you’ll need to consider everything from admin costs to temporary loss of other revenue when planning your project. This point typically applies to landowner-developers wanting to make money from land they own by investing in equipment. But it’s always worth talking to a land agent about costs you may incur from talking to expert solicitors for lease agreements or hiring accountants.
It’s worth noting that you’ll typically get reliable payments for any additional renewable energy projects you host on your land from developers. However, other streams can naturally take longer to get going.
For this reason, you might need to investigate financing options, set-up costs, and any fees associated with licensing. We will say that additional projects on your land will eventually become lucrative (well, most of them!).
You should always be getting paid the market rate for any inconvenience caused by a new renewable energy project on your land. To make sure you’re not missing out on any income, you’ll want to check out our SiteScan solution. It’s able to scan the market to check what other landowners are being paid in bonus payments and construction rents.
Compare the rents at hundreds of wind farms across the UK.
Access the best contractual terms written by the UK’s top solicitors to attain your ideal lease
100% of the landowners that we work with increase their rent negotiation offers
The projects you already have on your land
If you already have a project on your land, like a dairy farm, generating energy from turbines could save you a lot. This makes getting a new wind farm on your land a huge plus. It’s also important to consider whether a new project will require the construction of any new buildings.
As these can be quite large, you’ll need to check whether you have adequate room and whether planning permission covers them. This is particularly important when you’re trying to build on green belt land. So, before diving in, landowners will need to assess the viability of a new venture in relation to any existing projects on their land.
Our Final Comments
As you can see, there are a handful of innovative ways to make money from land you own. And you won’t need to shell out thousands of pounds to get started!
Landowners often approach us worrying that their wind turbines will decrease the value of their property. But we’ll always say that wind farms are a net benefit (that won’t affect the rest of your land’s earning potential!). Although wind farms can be major revenue drivers for landowners, there’s little point in letting the remaining land sit idle.
So, whether you’d like to host a second renewable project or simply want to invest in storage – the options are yours for the taking.