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    Making Millions from Wind Farms
25/03/08

Mark Newton, head of the Fisher German wind farm department, recently spoke at a Blenheim Palace conference about making money from wind farms. Mark pointed out that most landowners are not aware that they can make further millions out of a wind farm project if they are prepared to deal with the planning application themselves.

wind farm

The traditional route most landowners follow is to allow the wind farm company to take all the risk, deal with the planning application and the costs involved which can be in the region of £200,000 for the planning application and a further £200,000 if the application goes to appeal. Currently, in England, the success rate for wind farm planning applications is approximately one in two sites being approved.

Most landowners are not prepared to risk £400,000 and prefer to follow the usual route of having an option agreement and then granting a 25 year lease to the wind farm company. In addition the wind farm company are often well versed in dealing with wind farm controversy something the landowner may not be comfortable with.

When addressing the audience at Blenheim, Mark mentioned that if landowners were prepared to spend up to £400,000 on a planning application and appeal and if successful, the landowner could then sell the planning permission to a wind farm company who would pay in the region of £200,000 - £300,000 per MW. For one of the best sites in Scotland with the highest wind speeds, the capital value can be up to £500,000 per MW.

If the average turbine for example is 2MW, the landowner could sell the planning permission for an average price of £400,000 - £600,000 per turbine. This means the landowner would not only recoup the £400,000 planning costs on the first turbine but any further turbines planned could produce the landowner serious money.

As by way of an example and assuming the average size of the wind farm project is approximately 10MW, i.e. five turbines, then this particular project will have a total sale value of between £4 million to £6 million. For an initial outlay of £400,000 the return on investment of being able to pocket several million pounds profit is a very attractive one indeed. The landowner could then carry on farming the remaining land as the wind farm will only be taking up about 1% to 2% of the land area. Understandably, many are not prepared to pay the initial outlay and take the risk, however, the rewards can be high and landowners should be aware of their options.

Furthermore, if the landowner wishes to then take on the building of the project, costs are £1 million to £1.3 million per MW so for a 10MW wind farm the total costs are approximately £10 million to £13 million, with a projected return of 10% to 20% to the owner depending on the wind speeds. Encouragingly, banks are still lending money for good wind farm projects.

If you are approached by a wind farm company and you want independent advice, contact Mark Newton at Fisher German, email mark.newton@fishergerman.co.uk, telephone 01858 411215

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