Why Sell YourWind Royalties?
An exploration of risks associated with owning wind royalties
Request an offer for your wind royalties:
We never spam or give your address away.
Risks Associated with Wind Royalties
The biggest risk is with partial or full repowering. Wind turbines are mechanical and often need to be repowered after 8 - 15 years.
Many wind power agreements do not account for inflation (or cap inflation). The wind royalties will be worth less over time.
Additional nerby wind development may introduce wake effects, reducing the turbine production and potentially cause it to be moved or removed.
Wind agreements usually favor the developer/operator and can often be canceled by the operator at anytime. There may not be a guarantee of future revenue.
Incentives are sometimes tied to new projects, so wind developers often prefer to develop a new "greenfield" rather than extend the term of a current wind farm.
The political climate can encourage or discourage wind development and either can have a negative impact on your wind compensation.
Full or Partial Repowering of Wind Farms
However, the reality is that wind turbines are mechanical and need regular maintenance and part replacement. In just 8 - 15 years, most wind turbines need blades and electronics replaces.
Side note: Check out this Bloomberg article about wind farm graveyards.
Wind turbine technology is rapidly evolving, and costs are dropping. Executives are often faced with the choice of replacing components vs. repowering, both of which are similar in cost.
Partial Repowering
Partial repowering involves replacing key components - usually resulting in longer blades and newer technology installed on the original tower base. The wind farm will usually generate the same power capacity but use fewer turbines (often half as many). The chances of your turbine being removed are fairly high - especially if you only receive royalties on one or two turbines. You could lose your wind royalties entirely.
Full Repowering
The wind farm will be completely dismantled in a full repowering, and replacement turbines will be installed. The new turbines will have a much larger-rated capacity, but the wind farm will probably generate the same wind power amount. Fewer turbines will be installed, and they will be spaced further apart to avoid wind wakes. This is another situation where there is a very real possibility that your turbine or turbines will be reduced or removed entirely.
Something else to consider: If you own wind royalties but not the surface, you may be more likely to lose your wind turbine(s) in a repowering event. Operators prefer the simplicity of dealing with royalty owners who also own the surface.
Wind Royalties & Inflation
Read through your wind agreement, locate the escalation clause (if there is one), and use the inflation calculator to estimate various scenarios.
Wind Wake Effects
Duke University's Environmental Law and Policy Journal has an excellent publication called, Wind Wakes, Wake Effect Impacts, and Wind Leases: Using Solar Access Laws as the Model for Capitalizing on Wind Rights during the Evolution of Wind Policy Standards, that is worth reading.
Contract Terms & Future of Wind Development
Typically, contracts have a primary term of 20-30 years with one or two 10-15 year extensions. Most property owners assume they will receive royalty or participation payments for up to 60 (or more) years. This may not be the case.
Projects are repowered, reducing the number of turbines but keeping power output the same. Other projects will be decommissioned. The wind industry is still new and developing. Technology will change, and new ways of harnessing clean and renewable energy will be developed.
Although wind farms are increasingly favorable, the reality is that we cannot fill our energy needs with wind and solar power. We have to develop a new solution and it will probably be something that does not exist today.
Additionally, building wind turbines requires an enormous amount of fossil, and decommissioning results in a massive amount of waste.
The bottom line is that we don't know what wind energy will look like in 20 - 60 years.
Additional Risk for Those Receiving Participation Payments
Landowners who receive participation payments, but do not host turbines normally have a contract clause stating that the contract can be terminated by the operator at any time.
Wind Royalty Calculator
Wind royalties are generally valued around 7-10 times the annual income. Use the wind royalty calculator to estimate your offer or contact us to get the process started.
The typical landowner, making about $8,000 a year on their hosted wind turbines, would be able to sell their royalties for about $64,000. A landowner with two turbines, making 16K per year would be able to sell for $80,000.
The value of wind royalties depends on multiple factors and some wind royalties are worth upward of 15 times the annual income.
Why Sell Wind Royalties?
Why People Sell Their Wind Royalties (Leases):
I'm getting older. I don't really have 25 years to wait and collect payments. I'd rather have the money now. My kids are going to sell the land when I die anyway.
I am on a fixed income and my home needs work. I choose to sell for a lump sum and live in a totally remodeled house. If I have to look at and hear these darn turbines, I may as well buy sound-resistant windows!
My wind turbines have been producing for a few years now. I don't mind them really, but I'm thinking about selling my land. I'll get more money by selling the wind royalties separately.
I sold my wind royalties in order to buy more land and expand my farm. I now own three times as much land. And guess what? Another company is fixing to put a turbine on my new land!