How To Increase Your Wind Farm Payments (Without Major Investments)
|Topic: wind farm payments
|Read Time: 6 mins
| Landowner type:
Independent landowners | Institutional landowners
|Energy: Onshore wind
Have you been trying to figure out how to increase wind farm payments without completely rejigging your lease or starting a new project? Well, keep reading for small tweaks that will help you make the most of your wind farm (and possibly uncover a few missed payments along the way).
So, you have a wind farm on your land and have successfully figured out an appropriate payment arrangement with your developer.
Congratulations! But have you wondered how you can increase wind farm payments to truly reap the benefits of having renewable energy projects on your land?
Although you’ve probably agreed to fair terms with your site operator, there’s a chance that you’re missing valuable nuggets of information that could increase your takings over time. From reviewing your current contracts and historic payments to the power of renegotiating an extension, these handy (and easy) tips are certainly worth trying.
And if nothing else, you might learn something useful about embracing new technology that can significantly improve your wind farm’s future. Now let’s dive in.
How to Increase Wind Farm Payments
Review your current contract and historic payments to date
One of the first things you should do to increase wind farm payments is a thorough review of your current contract and historic payments.
In our experience, we’d found that up to 80% 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.
For example, the incorrect date used to calculate a payment can cause an underpayment worth thousands of pounds to a landowner.
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 group of experts, you can pick up any previous underpayments.
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!
Not only will we give you a complete historical review of your payments, but we’ll offer a comprehensive breakdown of your site’s performance to check that your current payments are appropriate for your site. Covering everything from energy prices to new laws and funding changes that might impact you, our innovative Lumigraph™ platform will run a full site assessment.
With the right corrections, we’ll ensure that you receive all the income owed to you.
Do 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)/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. A mid-lease can occur at any time during the lease and not necessarily at the mid-point as the name might suggest.
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.
- We often suggest using our SiteScan™ tool to review your payment terms and ensure they’re in line with what other wind farms around the country are receiving.
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
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 the market royalty rents have typically increased over time, this offers an excellent opportunity to alter land rents and increase wind farm payments. By reassessing your lease, you’ll also be able to keep payments in line with current trends in wind farm extensions and avoid losing out.
Is your wind farm lease being extended?
When a wind farm lease is extended, it offers the perfect opportunity for rents to be reviewed against the current market. 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. This includes increased rents, projected and current inflation rates, and improved terms that should help increase wind farm payments over time.
In our many years on the job, we’ve seen that some lease terms can unknowingly prove to be a financial black hole. So, our greatest 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 modernized, in line with current practices, and designed to benefit you as much as possible.
And if you’re unhappy with your current payment arrangement? Reassess it!
Take a more active role in monitoring your project payments
If you’re using your land for more than one venture to make multiple different streams of income (like farming), then you may struggle to keep every single plate spinning. 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. To make sure you’re being paid everything you’re owed based on the energy produced on your site, our tried and tested SiteAdvisor™.
This service offers end-to-end management of your site, providing everything from tracked legislation changes to payment and site operations checks and contract renewals. Plus, we’ll always keep you in the loop with regular project-running updates and a year-end account-ready report.
As you can see, there are several ways to increase wind farm payments without any fancy equipment or large investments.
If you keep on top of your payments, ensure appropriate lease terms, and walk into any extension process with top-notch negotiation tools, you’ll certainly reap the benefits.
In our experience, the main driver behind increased wind farm payments is fixing and weeding out underpayments. Landowners are generally amazed at how many people have poorly worded leases or underpayments that have significantly impacted what they should have received.
By keeping tabs on your incomings 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.
Over the years, we have been asked by a number of our landowner clients about different ways to maximise their wind farm payments. Here are some of the questions we have been asked (and their answers, of course).
How are wind farms paid?
Landowners are typically paid based on the performance and output of the turbines on their land. This isn’t always the case as there are different payment arrangements available for most projects. But 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 more modern turbines with larger blades, the 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 agreed upon between them and their project developer.
How much does it cost to build a wind farm in the UK?
We’ve delved more deeply into this point 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 1.5kw turbine and up to £345,000 for a 100kw turbine. This cost increases significantly with the size of the turbine. So, size does matter when it comes to cost.
How many wind turbines can be put on an acre of land?
If you’re planning to rent your land for wind turbines, you may be interested to know how many wind turbines can be put on an acre of land. Typically, you’ll need 25-40 acres for a typical turbine. But you’ll obviously need more space for larger ones.
There you have it: The ultimate guide that should help you increase 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.