£26,000 and rising: what wind farms generate for owners

LANDOWNERS can expect much higher rents from wind farm developments in future as demand for sites increase, according to a new report.

Consultants CKD Galbraith say that between 2002 and 2008, rents under new leases increased on average by 200 per cent.

In addition, from 2009 to 2010, rents rose by more than 10 per cent with early indications they will continue to increase this year as demand for available sites grows.

The firm has carried out advisory and consultancy work for private landowners, developers, community groups and statutory national bodies on over 850Mw of wind farms.

According to the report, landlords of pioneering wind farm sites throughout Scotland will soon be undertaking rent reviews on the earliest leases and evidence suggests they can expect significantly higher rental returns for their projects.

In 2002 rents accounted for about 2 per cent of turnover, but by the end of last year 4.5 to 5 per cent was common and offers from developers this year have risen to 6 per cent of turnover.

At 2 per cent, a 2Mw turbine at 35 per cent capacity can bring in 10,000 in annual rent and 5 per cent can earn 26,000.

Mike Reid, who heads up CKD Galbraith's utilities department, said: "The figure increased gradually and then rose quite a bit over the last 12-18 months as there are fewer available sites which has increased demand.

"Its not just about the headline figure, its about choosing a development partner that will deliver a wind farm."

CKD Galbraith said it has already seen existing sites extended to add more turbines to individual locations which can be more acceptable to the public than developing new, greenfield sites and offer fewer planning problems for developers.

Scotland currently has 110 operational wind farms, mostly in Aberdeenshire and Highlands and Islands.

The report says that with, arguably, the best sites already developed, a trend is emerging to suggest that the average size and number of turbines per new site is decreasing.

Currently the Borders, Ayrshire and Perth and Kinross have the highest average Mw output per county.

Although Renfrewshire has the most, this is skewed by the 322Mw Whitelee Wind Farm, which is soon to extend into an even larger site, with a further 75 turbines.

Mr Reid added: "With the introduction of the Feed in Tariff (FiT), medium-scale (250Kw-1Mw) wind developments are becoming more prevalent, meaning more electricity can be produced from fewer turbines.

"If property owners are considering any renewable projects, it is important to ensure that time scales for planning and grid connection are accounted for, since these can cause delays.

"Also, time is of the essence since FiT rates are due for review from 2013 and the viability of a project may well be affected should payments reduce," Mr Reid added.