How is a Wind Turbine Lease Valued?
Wind power is a rapidly growing source of renewable energy in Australia, which for many farmers, presents an interesting predicament: if approached by a developer to enter into a wind turbine lease, what should you do?
It’s a question that some farmers and other property owners across the nation will have to answer, especially when we consider that Australian wind power grew by an average of 35% between 2006 and 2011 and continues to grow to this day.
Already slated for 2017 is an additional 12,328 megawatts (MW) of wind energy projects, which over the coming years will bring Australia’s total energy output from wind turbines to approximately 16,565 MW.
This means that there will be more opportunities for farmers and other property owners to convert their land into long-term money making assets as developers look for new suitable locations for developing wind farms.
This is important, because as it turns out, some lucky landowners in Australia are receiving hundreds of thousands of dollars in annual rental payments from wind farm developers, and the truly lucky ones, may even be eligible to receive millions.
In this article, we will cover everything there is to know about Australia’s wind power, wind farm leases, and how LDC Infrastructure can help turn an existing lease into a large lump-sum payment to help fund personal endeavors.
What is a Wind Farm Lease?
Like other ground leases, a wind farm lease is an agreement between a property owner and a developer that allows for the construction of turbines and other wind farming structures.
In return, the property owner will receive monthly rental payments from the developer for the entire duration of the wind farm lease (typically 35 years).
Why Wind Farms?
Wind farm development is expanding across Australia because, when installed on agricultural land, wind farms have one of the lowest environmental impacts compared to nearly every form of energy generation.
Additionally, wind farms are typically less expensive and require less space than other competing renewable energy sources like solar farms, and they’re faster too, with some wind farms being brought to operation in as little as 3 months.
These characteristics make energy production from wind farms one of the most cost-effective methods for supplementing power to the grid.
Obtaining a Wind Turbine Lease
While it is possible to contact a developer directly to perform a property evaluation, most wind turbine lease agreements are established by the developer getting in touch with the landowner instead.
The reasons for this are simple: wind farm developers are constantly surveying the landscape for potential wind farm sites, and as a result, these developers have a pretty good idea of where the most ideal locations might be.
Once a developer does get in contact with a property owner, they will most likely request access for a surveyor to come out and take a closer look at the property in question.
Developing a Wind Farm: What are the Qualifications?
When the surveyor arrives, they will be examine the property for certain key qualifying factors.
Of these qualifying factors, those listed below tend to be the most important in determining the potential value of any given wind farm lease.
Location is often the biggest determining factor of whether or not a wind farm can be developed.
First, since the primary source of energy generation in this case is the wind, the site must receive quality air flow throughout the entire year.
Luckily for many property owners near the southern coastline of Australia, the average wind speed is around 8 or even 9 m/s, which makes for some prime real estate when it comes to wind farm development.
Other areas of Australia that have good air flow include the southwest of Western Australia, Western Victoria, Northern Tasmania, and various parts of New South Wales and Queensland where ground elevation helps improve the quality of air flow.
Another aspect related to location is the site’s proximity to grid infrastructure and to population centers where there is a need for energy supplementation.
Since the goal of a wind farm is to provide energy to the grid, if the developer identifies that the upfront infrastructure costs are too substantial, the location may be deemed unsuitable for development.
A typical wind farm project will need approximately 60 acres of land per megawatt; however, only about 3% of this area will be used for the development of actual turbines and supporting infrastructure.
The rest of this acreage is preserved in order to ensure that there are obstructions to the air flow.
Quality of Land
Another aspect that must be taken into account is whether or not the land in question can support the weight of the wind farm turbines.
Wind turbines and their supporting structure can place a tremendous amount of strain on the property, causing both the turbines and the land to become unstable over time.
A geologist will have to make a determination of what kind of soil lies underneath the surface, and if the property meets all of the above-mentioned qualifiers, then a wind farm lease agreement may be proposed.
The Wind Lease Agreement: Things to Keep in Mind
If your property meets all of the above criteria, it is likely that your wind turbine lease will be worth quite a bit of money; however, there are no guarantees when it comes to determining rental fees.
Even if your property is well-suited for the development of a wind farm, it is quite possible that your neighbor also has a property that is equally suited for wind energy production as well, which can ultimately drive down the overall value of a wind turbine lease.
Additionally, property owners must keep in mind that the development of a wind farm comes with certain restrictions, such as being unable to construct new buildings on the property that might negatively impact the flow of air to the turbines or which could interfere with underground power transmission lines.
This can be a major source of frustration if the property owner is not prepared for the long-term commitment that a wind farm requires, so it’s best to examine these items closely during lease negotiations.
What LDC Infrastructure Can Do For You
While the annual payments from a wind turbine lease can be a great source of supplemental income, there are times when it makes more sense to cash in on the total value of the lease all at once.
As Australia’s leading lease and rental rights acquisition company, we provide property owners with large, nearly-instant, lump-sum payments for the entire long-term value of their wind farm lease. This payment can provide property owners with the financial flexibility to retire early, invest in a new business venture, or even purchase additionally property.
Getting a lease buyout transaction from LDC Infrastructure is fast, simple and easy, and only requires that you provide us with an easement, and assign the lease rights to us, not your actual property, so you retain full ownership and the ability to continue accumulating long-term value.
Even if you don’t wish to sell your wind turbine lease, we can still help you evaluate the true value of your lease agreement. If your site meets our standard criteria, we will provide you with a no-obligation analysis and professional valuation.
For more information, please call us at 1300-149-499, or click here to submit your information online so that we may contact you to begin the valuation process.