This week on Farm Business we look into the opportunity for farmers to make money off wind energy. Could this be a real opportunity for farmers to make a few bob?
Wind energy has become increasingly popular in recent years, with a stronger emphasis being placed on climate change. The use % of energy created by wind energy went from 0% in 1990 up to 22.8% in 2011 in Ireland. This means it is now the country’s second largest source of energy generation.
Many farmers across the country have availed of getting wind turbines built on their farms in lease agreements with developers, But are they really worth it? Could this be an option for farmers looking to make the most out of their land?
There are quite a few restrictions to those looking to venture into wind energy. Farmers need to be careful as once they have signed a contract their hands are pretty much tied.
Most deals are agreed for a minimum of 5 years with some often extended to 10 years. The entirety of the property may be subject to the option of a turbine being built anywhere once the agreement is signed. Once you sign the deal the developer can dismiss previous plans and decide to build anywhere on site, subject to planning.
Once the deal is signed the farmer is very limited in his future options. A farmer cannot lease, gift or mortgage their land without permission of the developer. This can leave many farmers stuck, especially in times of bad health where they have to sign it over to a family member.
The developer also usually has the option to sell the agreement to an outside party. This can occur before any turbine is even built.
Farmers though can still receive compensation for loss of ag reliefs. This doesn’t cover variations of said reliefs and the introduction of new reliefs. Should the structure change then a farmer could lose out on this compensation.
Should a community, group or organisation bring action against any farmer for the building of these turbines, they are not covered by their contract. This means that any farmer handed down a fine in court over the turbines, that they are responsible for paying it.
What it’s worth to farmers:
This is where it all gets interesting. Prices obviously depend on turbine size and the quantity of turbines on your farm.
These turbines can be worth up to as much as €18,000 to any farmer per year per turbine. This income though is fully taxable as a rental income and cannot benefit from agricultural reliefs. Any customer who has completed an SEI approved wind turbine installation course can purchase their turbines at trade price.
For a light commercial farm it is estimated that farms could save themselves up to €1,500 per year, while a turbine would cost roughly €15,980 for a 3kw turbine. A Light industrial farm could meanwhile save up to €2,500 with the average price per 5kw turbine being €19,950. Finally Farms with 20kw turbines could be in line to save almost €10,000, with costs from €67,000 for farmers who carry the development out themselves.
Each installation must be priced separately as no two sites are the same, access and ground conditions vary greatly from one part of the country to another.
Wind farms offer farmers a great alternative source of income, especially for marginal lands which are not of much use. But they should also be careful before entering into any deals.