Farmers and landowners should be aware that changes in the way green electricity will be funded mean there is currently strong demand for wind farm sites. The current system, that beefs up the income from onshore wind farm sites by up to 50%, is due to be changed in 2010 or soon after to favour offshore wind farms as they are considered more acceptable to the public rather than on shore ones.
“Wind farm companies are going hell for leather to find onshore sites and agree terms with landowners during 2007,” notes head of Fisher German’s renewables team Mark Newton. “It’s a lengthy planning process to get a site approved which normally takes three to five years, and they need to get a project agreed and built before the system changes. Otherwise the site will not be as profitable for the landowner and the wind farm company.”
The proposed changes will affect Renewable Obligation Certificates (ROCs). These are obligations on energy companies to source an increasing proportion of energy from renewable sources (currently 5.5%). This effectively boosts income for all wind farms by approximately up to 50%.
“But the Government proposes that onshore wind farms no longer need the support, and part of the ROC payments are proposed to be diverted to bolster offshore wind farms which are less controversial,” explains Mr Newton. A “Grandfathering” scheme will exempt sites that are already up and running by 2010 or shortly thereafter, protecting the additional ROC payments. “That means investor interest in onshore sites is currently at an all-time high.”
The mad rush for wind sites puts landowners in a strong bargaining position as prices being agreed are increasing all the time due to fierce competition for the few good sites that have not been tied up and the continuing high price of energy. Mr Newton strongly advises farmers and landowners to seek experienced professional advice if they have been approached or believe they have a site that may be suitable.
“Beware of site-baggers,” he warns. “These are disreputable companies – often one-man bands – who try and get farmers signed up on very unfavourable terms. They then sell on the option to larger wind farm companies at a substantial profit.”
Fisher German is one of the leading firms representing landowners and is the only firm recognised by the NFU in England and Wales. They are currently dealing with wind farm sites in England, Wales, Scotland, Ireland and Poland. “We will initially assess all approaches you have free of charge and normally a reputable wind farm company will pay a contribution or all professional costs explains Mr Newton.
“We know the sector and the right companies to deal with and have managed to negotiate some really attractive deals for landowners, substantially increasing the terms originally being offered. It is important any future projects are signed this year, so that they can hope to get planning permission and build the wind farms before part of the onshore ROC payments go and they are less profitable for the wind farm companies and the landowners.”
Once the ROC payments change, renewables investment is likely to switch more to offshore sites. Currently, an onshore wind farm costs about £1million per mega watt (MW), while the offshore cost is about £1.3 – 1.6million per MW. This is because offshore sites need to be built in water, into sand, with substantial piling and concrete bases. The grid connection is also expensive as extra cabling is needed to bring the power ashore. An onshore wind turbine is typically 2.0 – 2.5 MW and offshore turbines built to date are 3.6 MW and they could be substantially bigger for new projects. Power companies have also been put off building offshore wind farms as their maintenance is much higher due to the corrosive effect of sea water and physically getting to the structure.
If you have been approached by a wind farm company then our renewable energy team can advise you and your professional costs are normally paid by any reputable wind farm companies. For further information contact our renewable energy team: Mark Newton on 01858 411215, George Simpson on 01785 273 995 and Stephen Rice on 01295 226 297.
