Wind turbines are capable of turning vast profits depending on a certain set of criteria.
You don't have to own a commercial turbine to make money from it, if you're a farmer with ample acreage, you can lease land to a Utility Company, who will pay you to install turbines on your land.
If you happen to own both the land and the turbines on it, you will earn an annual revenue, most often based on the amount of electrical energy it produces.
What is a Wind Turbine
A wind turbine is a tall, mechanical structure that uses rotating blades to capture the kinetic energy from the wind.
This energy is passed through a series of mechanisms, including a shaft and a generator, where voltage is added to convert it into electrical energy.
This power is then either used to power individual properties or sold to a Utility Company and transferred via the grid to areas of demand.
How Much Do Residential Wind Turbines Make?
When a minimum wind speed of 7mph is achieved, the generator begins converting energy into electricity for the use of the occupants. Once this converted energy has expired, the system automatically switches over to the Utility provider until more wind power is available.
At times when the wind is consistent and maintains 10mph gusts, the power is supplied solely from the turbine.
It is during these times, when excess power is made, that the grid uses it to power the local community.
You will not be charged for this, totally the opposite, the utility company will purchase the excess power from you.
During these times you won't have any charges and your electricity bill will show as a credit.
It is difficult to estimate how much money a private, small turbine owner can make. However, greatly reduced bills and clean, environmentally friendly energy is a huge incentive to consider the initial large financial outlay.
Most owners find the turbine pays for itself within a few short years.
Leasing Land for Wind Turbines
Another popular way to make a profit from wind energy is by leasing land to utility companies for them to erect turbines.
The landowner has no initial outlay, doesn't have to foot the bill for maintenance and repair costs, and can subsidize their current income.
This appeals to farmers of both arable and livestock, as not only do they have available land, but also, their farming isn't affected.
Payments begin as soon as the initial contracts are signed. The first of which is a fom of retainer where the utility company pays for the lease of the developmental rights of the land for 3-5 years. This provides sufficient time for the construction of the wind turbine.
Payments are calculated per acre.
The landowner (generator) and the utility company (consumer) sign a contract called a Power Purchase Agreement, PPA.
This lays out the system of ongoing, index-linked payments.
- Payments are based on the RATED CAPACITY of the turbines, with a set amount being paid annually depending on the generation capabilities of the wind turbine.
- One flat annual payment per turbine. A mutually agreed payment that rises each year in line with inflation. The amount is irrespective of the amount of electricity generated. This is a good solution in areas where wind flow is more unpredictable and expectations don't meet projections.
- Some contracts offer the landowner a set percentage of the value of all generated electrical power. This is particularly attractive in regions with consistently high wind speeds and large commercial turbines with high megawatt output.
PPA contracts ensure that farmers get paid a fair amount and receive a steady income stream for the length of the contract.
Most are between 20 and 25 years long, so for landowners with several wind turbines on their property, it could prove to be a relatively lucrative affair.
How Much Does a Wind Turbine Owner Make?
Wind turbines are very expensive, with costs rising the bigger and more powerful model you choose.
The purchase cost isn't the only expense; land and ecological surveys, delivery, installation, and connection add to the cost.
Maintenance and repair costs also need to be factored in to initial expenditure. Most turbines require twice-yearly maintenance, with increasing frequency the older the turbine becomes.
Average maintenance costs are approximately 2% of the cost price, bi-annually. Repairs can mount up too; A replacement rotor might cost 20% of the initial wind turbine price.
With so many expenses to account for, it is hard to believe that any profit can be made from wind farming.
However, with Tax Credit incentives available to wind farmers to help cover repair costs, there is a possibility of a substantial return on any investment.
Large commercial wind turbines have rated capacities of 1 – 2.5 megawatts.
Payments from utility companies to farmers are per Megawatt. Therefore, a 2Mw turbine that earns $3250 per Megawatt, entitles the farmer to a $6,500 annual payment, per turbine.
Some wind farms consist of a handful of turbines, whilst others have 150. The largest wind farm is in Northern California and currently houses almost 5000 turbines.
Average Yearly Revenue
Turbine owners receive payment from the energy consumer, whichever utility company buys their generated power.
Depending on the PPA that both parties have agreed upon, the average payment is between $3,000 and $8,000 for each wind turbine.
For the more powerful turbines that exceed 2Mw, the payments increase to $10,000+.
An Owner with just five wind turbines, could mean an annual salary between $15,000 and $40,000.
It is common for wind turbine purchase and installation costs to be recouped within the first 5-15 years of operation. With a life expectancy of 25 years, there is a possibility of at least 10 years of profit, besides repair and maintenance costs.
Wind farmers need to factor these costs into their expenditure, along with the removal and disposal of the wind turbine at the end of its useful life.
Taking all things into consideration, including the location, size, and rated capacity of a wind turbine, there is a possibility of a massive return on any investment.
For land farmers, struggling in difficult and unprecedented times, renting out land to utility companies can subsidize a fluctuating income.
How much money does a wind turbine make depends on many factors, however, profits aside, the green credentials and the ready supply of clean, renewable energy are a huge incentive to invest in wind power.