How To Increase Your Wind Farm Payments (Without Major Investments)
 Topic: how to increase wind farm payments |  Read Time: 6 mins |
 Landowner type: All |  Energy: Onshore wind |
31st July 2023Have you been looking for ways to increase your wind farm payments? I’ll run through how to boost your payments without completely overhauling your lease or starting a new project.
Small tweaks can make a big difference – and you might even uncover a few missed payments along the way.
If you have a wind farm on your land and have negotiated an appropriate payment arrangement with your developer – congratulations.
But have you considered whether you’re truly maximising your income?
Although you’ve probably agreed to fair terms with your site operator, there’s a chance that you’re missing key opportunities to increase your earnings over time.
From reviewing current contracts and historic payments to renegotiating an extension, these handy tips are certainly worth exploring.
And if nothing else, you might discover new technology that could enhance your wind farm’s future.
Now let’s dive in.
How to Increase Wind Farm Payments
1. Review your current contract and historic payments to date
One of the first things you should do to increase your wind farm payments is a thorough review of your current contract and historic payments.
Surprisingly, up to 80 per cent of wind farm payments are inaccurate.
This isn’t deliberate of course, but the complex nature of these payments can often lead to serious underpayments for landowners.
Even small errors, such as using the incorrect date to calculate a payment, can result in thousands of pounds in underpayments.
And in many cases, these underpayments aren’t discovered until several years later (if at all).
By carrying out a full review of your current contract with a team of experts, you can pick up any previous underpayments.
Whether you’re an independent or institutional landowner, you should fully review your historic payments to date and check for any inconsistencies.
Not sure how to do this?
If you’re feeling stuck or simply don’t have the correct information to hand, our SiteView360™ is here to help.
With a full historical review of your payments and a comprehensive breakdown of your site’s performance, we’ll check whether your current payments truly reflect your site’s value.
We’ll assess everything from energy prices to new laws and funding changes that might impact your earnings.
If there are any missed payments or discrepancies, we’ll help ensure you receive every penny owed to you.
2. Ensure you have a mid-lease option
Another thing to consider when trying to increase wind farm payments is a mid-lease option.
What is a wind farm mid-lease option?
A wind farm mid-lease option is a clause that allows the tenant and landlord (landowner and site operator) parties to renegotiate the land rent at a certain point in time in line with the current market rent. This allows parties to re-sent the project in line with the market thereby reducing uncertainty. Despite its name, a mid-lease renegotiation can occur at any time during the lease.
The most common mid-lease options seen with wind farm leases are:
- A clause that gives the option to extend the lease duration.
- A clause that gives the right to conduct a rent review in line with current market rents.
If you choose a mid-lease option, you’ll get the opportunity to carry out a comprehensive rent review as part of the package.
As market royalty rents have typically increased over time, this offers an excellent opportunity to alter land rents and increase your wind farm payments.
By reassessing your lease, you’ll also be able to keep your payments in line with current trends in wind farm extensions, ensuring you don’t lose out.
I often suggest using the SiteScan™ tool to review your payment terms and ensure they align with what other wind farms across the country are receiving.
Compare your rent with hundreds of wind farms across the UK
Get the best possible lease with help from the UK’s top solicitors
100% of landowners we work with increase their rent negotiation offers
3. Maximise your lease extension benefits
A wind farm lease extension offers the perfect opportunity to review your rents to make sure they reflect current market conditions.
By planning ahead and negotiating terms early before your lease ends, you can have a formal agreement in place that accounts for important changes to the market, including increased rents, projected and current inflation rates, and improved terms that should increase your wind farm payments over time.
Over the years, I’ve seen how some lease terms can unintentionally become financial black holes.
So, my top piece of advice to landowners is to get ALL lease terms checked by a qualified group of experts before signing.
This will ensure that your lease is fully modernised, aligned with current practices and designed to benefit you as much as possible.
If you’re unhappy with your current payment arrangement – It’s time to reassess.
4. Take a more active role in monitoring your project payments
If you’re using your land for multiple income streams (such as farming alongside a wind farm), it can be difficult to keep track of everything.
After all, there are only so many hours in a day.
But it’s always a good idea to try and regularly monitor your project payments.
Not only will this give you an excellent overview of your site’s performance, but it should help you catch any payment errors.
If you’re struggling to find the time to monitor your payments, it’s worth hiring a specialist to track your quarterly payments. This should give you a glimpse into your actual income versus what you should be earning, allowing you to address any discrepancies early on.
Our proven SiteAdvisor™ service provides full site management, including tracking legislative changes, monitoring payments and operations and managing contract renewals.
We’ll also keep you updated with regular project insights and provide a year-end, account-ready report – so you always have a clear overview of your earnings.
Final Thoughts
As you can see, there are plenty of ways to increase wind farm payments without investing in any fancy equipment or making large financial commitments.
If you keep on top of your payments, ensure appropriate lease terms and approach extensions with strong negotiation tools, you’ll certainly reap the benefits.
In my experience, the main driver behind increased wind farm payments is identifying and fixing underpayments.
Landowners are generally shocked to discover how poorly worded lease terms or unnoticed underpayments have significantly impacted their earnings.
By keeping tabs on your income and comparing your payments to similar sites across the UK, you’ll never be left in the dark.
And who knows? You may even end up with a hefty sum in your pocket.
FAQs
Over the years, I’ve been asked by a number of landowner clients about different ways to maximise their wind farm payments.
Here are some of the questions I have been asked (with the answers, of course).
How are wind farms paid?
There are many different payment arrangements available for most projects, but landowners are typically paid based on the performance and output of the turbines on their land.
Many landowners choose a mixed rent approach: a fixed rent and percentage royalty that increases as the site becomes more successful.
How can we increase the efficiency of wind energy?
The main way to increase the efficiency of wind energy is to repower a project and replace older and less efficient turbines with more modern, efficient and taller ones.
It’s been said that doubling the diameter of turbine blades can increase the power available by a multiple of 4.
If a landowner has the opportunity to repower with modern turbines featuring larger blades, efficiency will only increase further.
How much money does a wind farm make?
It’s impossible to say for certain as each wind farm is different, but a single 400-foot turbine can earn a landowner up to £67,000 a year.
If you choose to invest in a larger-scale project, the returns can be upwards of £85,000, depending on wind speed, location and demand.
These figures are completely dependent on the lease agreement the landowner has in place and the payment structure negotiated with the project developer.
How much does it cost to build a wind farm in the UK?
I’ve delved more deeply into this in a separate article, but the overall cost of starting a wind farm isn’t cheap.
It’s said that buying and installing a commercial turbine can cost around £7,000 for a 1.5 kw turbine and up to £345,000 for a 100 kw turbine. So, costs increase significantly with the size of the turbine installed.
So, size does matter when it comes to cost.
How many wind turbines can be put on an acre of land?
Typically, you’ll need 25 to 40 acres for a typical turbine. But you’ll obviously need more space for larger ones.
There You Have It: The Ultimate Guide to Help You Increase Your Wind Farm Payments
If you have any further questions about your current lease or are trying to figure out the best way to track your payments, get in touch. The Lumify team will be more than happy to lend a helping hand.
