Overview
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Counties and other government entities that allow wind energy development in their communities can receive revenue from such developments through taxation, payments, fees, and other compensation. This overview section defines the various local wind-related revenue structures and provides examples highlighting how local decision makers could use this revenue in their communities.
This guide does not provide recommendations on which wind-related revenue structures are most appropriate for a community. Instead, it collects, categorizes, and characterizes potential economic revenue mechanisms that communities and community members might realize if they allow wind energy developments in their area.
By expanding the overall understanding of local wind-related revenue structures that other communities have received during the planning, construction, and operation of a wind energy project, communities new to this type of development can be better prepared to maximize the local revenue related to wind energy. This section focuses on four revenue-related topics:
The Additional Resources page provides resources for state-specific revenue information.
Timeline
This process timeline illustrates how local governments are impacted by the various stages of wind energy development. Because timing can vary widely depending on location, project type, and other factors, the timeline is meant to illustrate the relative order of events and does not include specific guidance on how long certain steps may take.
Community Considerations
State and local policies and laws can dictate how community decision makers assess and collect revenue from wind energy projects. Communities considering wind-related revenue should note:
Development Fees
Development fees can be assessed or agreed upon by the community and developer prior to wind energy project construction; however, the developer might pay these fees prior to the start of construction (e.g., building permit fees) or during construction activities (e.g., sales tax on equipment purchases). The three most common types of development fee revenue streams are:
1. Sales tax. A transaction-based, consumption tax at the state, county, and/or city level that is charged on an item at the time of purchase. Local material and equipment purchased during project construction can generate additional tax revenue for communities and states that have instituted this tax mechanism.
McLean County, Illinois uses a multi-faceted approach to promote wind energy development while supporting the county tax base. The county provides a tax exemption for major wind turbine components, such as blades, towers, and nacelles; however, the county charges sales tax on ancillary components, including electrical equipment, turbine foundation materials, and turbine replacement parts. Additionally, the county collects application fees during the wind energy project permitting process that support the construction permit review.
Information compiled based on an interview with Philip Dick, planning director of McLean County, conducted by National Renewable Energy Laboratory (NREL) staff Matthew Kotarbinski and Amy Sedlak, August 20, .
2. Use tax. Applied to goods and materials purchased outside the community but consumed in the community where the wind energy project is located, such as when a developer brings wind turbine components or construction materials into a community. Counties could decide to impose or exempt a developer from a use tax.
Lincoln County, Colorado, collects a 2% use tax on materials imported into the county for wind energy development. A use tax generates tax revenue for purchases made outside of the local tax authority's jurisdiction. This use tax was approved by the county and is levied on the wind energy project developer. Lincoln County collected $2.65 million from the developer of the 600-megawatt (MW) Rush Creek Wind Farm during its construction in .
3. Permit or building fees. A one-time fee typically collected during the application phase of the permitting process that can be used to compensate counties for the cost of reviewing and processing applications for the proposed wind energy project to ensure the overall design adheres to characteristics of the area and local standards for land use, zoning, and construction. Project size and location usually dictate whether a state, county, or municipal government is authorized to oversee the permitting of a proposed wind energy project and the collection of associated fees. Permits of this type are related to building, road use, and zoning considerations. The fee assessment is typically outlined as part of a permit or ordinance, as shown in an example from Cheyenne County, Colorado.
The agency with the authority to review and assess development fees is an important consideration for counties. In Oregon, if a proposed wind energy project exceeds 105-MW capacity, the state has jurisdiction over the permitting; if the project capacity is less than 105 MW, the county-level government has siting authority. From a revenue standpoint, this is an important differentiation because the authority that reviews the application or permit might assess a fee to cover the technical review costs incurred by the government. If a county has the expertise to review the applications, the fees might be more impactful at the local level, adding a revenue stream to county budgets to sustain staff and services.
Morrow County, Oregon, charges a fee to review permit applications for wind energy project developments less than 105 MW. In Oregon, fees at the county level are generally much less than state permitting fees to encourage the development of wind energy projects that keep the permitting authority local. It is important, however, that communities charge enough to be able to conduct due diligence regarding the wind energy project during the permitting approval process. In Morrow County, officials had to revisit permitting fees after realizing additional funds were needed to cover personnel review time, so the county added $750 per megawatt to the existing permitting fee.
Information compiled based on an interview with Carla McLane, planning director of Morrow County, conducted by NREL staff Matthew Kotarbinski and Amy Sedlak, July 18, .
Chaves County, New Mexico, is one of three counties that are home to the Oso Grande Wind Project. Chaves County is unique because it is the only county in the region with a building inspector. Because it has a building inspector, the county does not need to rely on the state for building permit approval; therefore, any fees generated from the permitting and application process remain in Chaves County. These fees are paid by the developer to the county and can support county staff to review the permit or other services. In the surrounding counties, the state approves the project and any fees generated from the permit application are allocated to the state.
Information compiled based on an interview with Luis Jaramillo, planning director of Chaves County, conducted by NREL staff Matthew Kotarbinski and Amy Sedlak, June 12, .
The use of these revenue streams is at the discretion of local decision makers. Prior to construction, these payments could fund the county's review of permit applications, prepare the community for an influx of construction workers, or support county services such as emergency medical services. After construction, these payments could support community revitalization projects, a savings fund, or infrastructure improvements such as roads.
Recurring Long-Term Revenue
The recurring long-term payments counties and local governments receive from wind energy projects are the most consistent and major economic benefit associated with this renewable energy resource. Typically, this revenue is earned on an annual basis.
The American Wind Energy Association, now called American Clean Power, estimates that the U.S. wind industry paid $912 million in state and local tax payments in . The following map shows the locations of wind energy projects across the United States and the average reoccurring (annual) tax-based or alternative revenue for each state. A comparison of the different revenue dollar amounts between projects or states is difficult because of many factors, including differing property values across the United States, the technical characteristics of the wind energy projects, and varying agreements between landowners and developers.
The total reoccurring revenue in this map represents tax-based and alternative revenue payments. Revenue from a wind energy project is typically collected annually during its lifetime.
State and local tax revenue are generated in communities located near respective wind energy projects. Source: U.S. Wind Turbine Database, American Clean Power .
Under both tax-based and alternative revenue structures, the revenue from wind energy projects flows back into counties and communities. For tax-based revenues, state and local governments can use different methods to calculate the tax revenue from a wind energy project. Depending on tax laws, taxes can be assessed at either the state or county level. Many communities can also approve abatements or exemptions to reduce tax burdens and encourage development. Whereas alternative revenue agreements can be negotiated between developers and communities often in place of a tax-based structure. These revenue payments are usually a consistent amount paid annually to a local government entity.
To understand the options for long-term revenue structures, communities might work with peer counties that have wind energy development experience, the state authority, and the developer. Local decision makers can decide how to best use this revenue to support a wide variety of community economic development projects, as detailed in the Community Development Information section.
State, county, or local governments annually conduct a valuation and collect taxes from a wind energy project owner/operator. The tax valuation depends on specific tax assessment laws and policies. Revenue is collected from the wind energy projects owner/operator during the lifetime of the project, typically 25–40 years.
This type of taxation is an ad valorem (property) tax assessment at full and true value on the land, wind turbine components, or ancillary components, or a combination of multiple approaches. Land, building structures, and other property (e.g., vehicles) associated with the wind energy project might be considered real property, whereas wind turbine components might be considered personal property. Tax or mill rates can vary based on the wind energy project's location, and the assessment can include depreciation. This structure is typically used in areas with lower property tax rates or where wind development is uncommon.
The California State Board of Equalization provides guidelines to assess the value of wind energy projects using existing state property tax rules. Wind energy projects in California are assessed at the county level, and a valuation is based on sales, cost, or income approaches outlined in standardized tax rules. Kern County, California, has hosted wind energy since , with a current installed capacity of 4.2 gigawatts from approximately 2,000 wind turbines. The Rising Tree Wind Farm reported $17.5 million cumulative payments to local government between and . The California State Board of Equalization offers guidelines for assessing wind energy project properties.
This tax is related to the size of a wind energy project or how much energy it produces. To determine tax liability, the valuation might use one method or a combination of nameplate capacity, production tax, or income generation. State or local authorities usually decide which valuation method to use. A tax based on nameplate capacity, production, or income generation often takes the place of property or other tax-based revenues collected from wind energy projects.
State tax policies can specify how revenues are assessed and distributed back to states, counties, or municipalities. The Nebraska Department of Revenue assesses taxes on wind energy project owner/operators based on nameplate capacity. The state collects tax-based revenue on an annual basis and redirects the revenue to a county treasurer where wind energy projects are located with no specific restrictions or requirements for distribution of funds. In South Dakota, the South Dakota Department of Revenue collects a nameplate capacity and production tax from wind energy projects on an annual basis. The department deposits this revenue into a renewable facility tax fund, and then distributes a set percentage to the counties where projects are located, while the remaining funds go to the state general fund.
Tax revenue from the wind energy project is based on a calculation that could include an assessment ratio or a multiplier, a depreciation, millage tax rate, an assessment of the land beneath the wind turbine or easement, an evaluation of the wind energy asset, or a combination of these approaches. These tax calculations could also include a tax abatement or an exemption, usually during a period with a percentage decrease in tax burden.
An abatement is a specified reduction in the assessed value or tax rate applied to a wind energy project. This full or partial decrease in tax burden is typically agreed to at the state or local level. Abatements or exemptions are incentives that encourage wind energy project development by reducing a developer's tax burden. When a county extends a tax abatement or an exemption offer to a wind energy project developer, the proposal will often require a payment in lieu of taxes (PILOT) or other compensation agreement from the company. For example, a project could receive a 10-year tax exemption for all property following the construction or installation of a wind energy project. As part of this agreement, the company could be required to provide the community with a donation; the terms of which are typically negotiated and agreed upon during the tax exemption process. Another example is when a community offers a 100% tax exemption for the land and the facilities in exchange for a PILOT equal to 1% of the gross income generated from electricity sales.
Alternative revenue is defined as negotiated agreements for nontax-based or other revenue that typically occur at the county or municipal level. Not all counties or municipalities have the option to negotiate compensation with a developer because a wind energy project siting authority or a state policy might prescribe a certain valuation structure. Communities should also be cognizant of the experience needed to negotiate agreements with developers, especially the first time, and they might wish to consult peers for support. The Institute for Energy Economics and Financial Analysis released "Negotiating Responsible Tax Breaks on Renewable Energy Deals: A Guide To Community Due Diligence," which includes information on best community practices for negotiating renewable-energy agreements.
A payment in lieu of taxes is a payment structure used in place of a tax-based revenue structure, which is allowed in certain parts of the country. A PILOT agreement changes the tax burdens the wind energy developer would pay during the lifetime of the facility. PILOT agreements are often negotiated between the developer and decision makers in the local community. Payment in lieu of taxes are referred to as PILOT or PILT payments, with the terminology varying across states.
PILOT structures deliver revenue to local governments while providing developers with property tax relief. Even though a PILOT agreement removes a conventional tax-based revenue structure, the local communities still receive consistent payments of an agreed-upon amount on an annual basis. By creating a lower levelized cost of payments spread throughout the lifetime of the project, PILOT structures ensure steady payment, regardless of how much the value of the land or the equipment fluctuates and independent of changing state and local tax policies. Additionally, PILOTs can be part of a larger economic negotiation that includes formalized agreements intended to increase local economic impacts, such as local labor requirements and/or the acquisition of community development funds.
An HCA is an alternative payment agreement that provides a long-term revenue stream and other benefits to a local government to mitigate wind energy project impacts. HCAs are also known as extended community impacts, developer community investments, and good neighbor agreements. These contracts are negotiated between the wind energy project developer and the local municipality and help the developer build project support in the local community. Communities can decide how to use payments to support economic development in their local community. In addition to a payment, these contracts can include agreements to cover potential negative community impacts during the construction or operation of the wind energy project, such as impacts to roads, setting up a complaint hotline, or decommissioning. HCAs are frequently used in New York.
In New York, communities can receive revenue from PILOT agreements and HCAs. New York is a home-rule state where local municipalities and county-level industrial development authorities can negotiate with wind developers. In Wyoming County, a PILOT agreement was negotiated between the industrial development authority and the wind energy project developer to provide a stable annual revenue payment to support the county.
In addition to the county receiving revenue from a PILOT, local towns closest to the wind energy project might negotiate a dollar-per-megawatt HCA fee to support economic development and address potential negative community impacts. Common methods to address potential negative community impacts that can be included in HCAs include one-time in-kind payments for community improvements, emergency services stipulations, a citizen complaint management program, and decommissioning agreements.
In New York, where property taxes are high, PILOT and HCA structures enable wind energy project development by creating alternative payments that compensate a community at a rate that reduces the overall tax burden for developers.
Information compiled based on an interview with William Daly, planning and development director of Wyoming County, conducted by NREL staff Matthew Kotarbinski and Amy Sedlak, July 15, .
Commonly applied to wind energy projects in Oregon, this structure allows local governments to negotiate alternative revenue payments with large job creators, including wind energy projects. SIPs include a 15-year tax exemption with a monetary threshold that fluctuates depending on the local population of a specific project. They also include an annual service fee that acts as an alternative revenue payment. In general, SIPs offer an incentive for developing capital-intensive ventures, such as wind energy projects. Business Oregon provides an overview of SIPs in the state.
As part of its SIP, Sherman County, Oregon, negotiated an alternative revenue payment with a wind energy project developer to provide a low fixed-rate annual payment during the project's lifetime. Sherman County decided on how the revenue is allocated within the county. SIPs, which are unique to Oregon, provide counties more financial flexibility while allowing the developer to negotiate a fixed revenue payment instead of a standard tax assessment.
Information compiled based on an interview with Tom McCoy, commissioner of Sherman County, conducted by NREL staff Matthew Kotarbinski, Amy Sedlak, and Jeremy Stefek, July 10, .
Commonly used in New Mexico, IRBs fund large industrial projects wherein the local government secures a bond for project's construction. In this structure, real or personal property that is part of the wind energy project is deeded to the county or municipality. The county or municipality then leases the project back to the developer. This allows the project to be tax exempt for as long as the bonds are outstanding. The developer is obligated to purchase the project when the bond matures. If an IRB is approved by the county, the county forgoes taxes, so a PILOT or other alternative revenue is often negotiated. The city of Albuquerque provides a summary of IRBs in New Mexico.
Ancillary Revenues
Employees at wind energy projects tend to spend their earnings in the communities where they live and work during the construction and operation of the project. This spending generates sales tax revenue for localities, which is ancillary revenue not directly related to development fees or recurring long-term revenues collected though wind-related specific tax policies or agreements.
During construction, communities will likely experience an increase in sales tax revenue from construction workers and wind energy project developers. Construction workers spend earnings at businesses such as restaurants, grocery stores, lodging, and retailers. Project developers might spend money in the local community, on worker lodging and construction material purchases at businesses such as gas stations and hardware stores. The amount of sales tax revenue will depend largely on the percentage and distribution of taxes based on local and state policies.
The direct sales tax revenue from purchases made in the community is difficult to quantify. The magnitude of this additional sales tax revenue depends on the size of the wind energy project and number of workers that support construction activities. A study near a wind energy project in Lincoln County, Colorado,surveyed businesses during the construction phase. Most businesses (67%) reported that overall revenue had increased because of wind energy project construction. The development of the wind energy project was noted as beneficial to businesses in the community (72%), and 61% of businesses expected to see an increase in business profitability, sales, or general growth alongside the following year's construction activities. An increase in business revenue should be correlated with an increase in sales tax revenue because construction workers support local businesses in counties near wind energy projects.
During wind energy project operations, operation and maintenance workers often live in nearby communities, contributing to an increase in the long-term local tax base. A December report indicated that 80% of workers "agree" that they spend money in the community they work in during or immediately after a workday. Wind energy project workers spending part of their earnings correlates with supporting local businesses and generating sales tax revenue for local governments. This report showed that economic impacts could be spread among communities, but communities can expect a wind energy project to support between 0.18 and 0.98 full-time equivalent jobs per megawatt at local businesses supported by wind workers and between $10,000 and $58,000 per megawatt in taxes to the local, state, and federal government.
Overview
Whether through crop production, grazing, or other agricultural activities, many rural landowners are accustomed to using property to generate income. Wind energy offers landowners an additional form of revenue that can diversify income for farms and ranches, which can be impacted by fluctuating markets and weather conditions. In addition, the payments are often received on an annual basis, providing a more secure, steady source of income. The land surrounding a wind energy project can continue to be used to raise cattle, grow crops, or for other agricultural purposes. Additionally, the increase in local income can allow farmers and ranchers to invest in the farm or ranch by purchasing local good and services, which supports an increase in economic development in the community.
This section focuses on landowner compensation topics, including:
The Additional Resources section offers information to support landowners who are navigating the land lease or easement contracting process. Landowners should be as informed as possible about a wind energy project and are often represented by legal counsel while negotiating with project developers, especially because the contract commitment is typically 20–30 years, often with an option to renew.
Option Agreements
An option agreement allows a wind energy project developer to determine a project's viability during a short term, providing the developer time to complete activities such as a wind resource assessment, permit approvals, and project design before signing a long-term wind energy development contract. By signing an option agreement, landowners typically receive compensation from a developer in exchange for the option to construct a wind energy project if it is considered a viable project.
The payment structures featured in an option agreement can vary depending on the terms negotiated between a landowner and a wind energy project developer. Differences in these payment structures can include the length of time for the contract, the total dollar amount per acre, and whether that dollar amount is fixed or increases during the length of the contract. An option agreement could last several years before the wind energy project is constructed and typically specifies the terms and conditions under which a project developer will or will not execute their option to develop a wind energy project in the area.
When a developer signs an option agreement with a landowner and the project layout and design plans are still being finalized, the land lease contract participants may change during the option period as the developer completes the wind energy project design. If a developer decides to execute their option on a particular property, they will have to negotiate an additional ong-term lease agreement with the landowner.
For example, a developer approaches a landowner in and agrees to pay a landowner $5 per acre each year while the developer plans the wind energy project and secures additional land. In , the developer decides to build the wind energy project and executes their option on the land. The developer then signs a long-term lease agreement, which includes an annual payment to the participating landowner. Details on this annual payment are summarized in the Land Lease Compensation section.
Types of Landowners
Landowner compensation payments are negotiated between property owners (including state, federal, or local agencies, if the land is publicly owned) and a project developer as part of a larger wind energy development contract.
These long-term contracts are often complex and cover property leasing or easement, contract duration, liability issues, payment details, tax considerations, land impact considerations, and decommissioning. Many landowners choose to negotiate independently with the wind energy project developer, but there are several examples of landowners forming an association to combine resources during negotiations.
The number of participating landowners depends largely on the size of the project, the available land, the local wind resource, and other siting elements that project developers use to determine developable locations for the individual turbines that comprise a wind energy project. Although wind turbine hosts receive the greatest portion of landowner compensation, individuals who host project infrastructure are also compensated. Types of landowners who might be engaged by developers include:
Property owners with suitable land to host a wind turbine and sign a lease or easement contract with a project developer. A participating landowner will receive payments as specified under the agreement for each wind turbine installed on their land.
Property owners with suitable land to host infrastructure such as transmission lines, substations, roads, facilities, and other ancillary wind energy project components. A participating landowner will receive payments as specified under the agreement for the type of infrastructure installed on their land.
Property owners who do not have a wind turbine installed on their property might need to sign a contract to provide access to wind turbines via roads, ensure there are no obstacles prohibiting access to the wind, or address any concerns associated with installing a wind turbine near their property. Adjacent property owners can receive compensation but typically at a value less than participating owners.
Property owners who do not have a wind turbine or other project infrastructure installed on their property. Nonparticipating landowners may or may not be in the viewshed of a wind turbine. These landowners do not sign a wind energy development contract and do not receive compensation.
A wind energy project might be sited on land owned by companies, investors, foreign firms, land trusts, or the actual wind energy project operator, rather than being owned by an individual or family living in a community. These corporate entities might also receive land lease compensation from the project developer, but the revenue is less likely to provide rural and community benefits.
Project developers must negotiate with federal or state agencies to secure land rights for any wind energy projects that are developed on public lands. The U.S. Bureau of Land Management—which has approved 35 projects totaling more than 3,000 megawatts (MW)—has leasing regulations that dictate the rent and fees for wind energy project development on public lands that they manage. Wind energy projects can also be constructed on state lands. Each state has its own agency that controls the process for these developments. For instance, the New Mexico State Land Office's Office of Renewable Energy is tasked with managing renewable energy development on nearly 9 million acres of land that are available for lease to renewable energy companies.
Land Lease Compensation
Project developers negotiate payment terms with landowners to secure the land rights that are needed to develop a wind energy project. The American Wind Energy Association, now American Clean Power, estimated in that the wind industry pays $706 million annually in landowner lease payments. The average land lease payment across the United States is $6,700 per megawatt (MW), based on total revenue data from American Clean Power on a per-megawatt basis and supplemented with wind energy project data from a literature review of news articles and press releases.
Landowner payment terms and amounts vary based on agreement negotiations but are generated at properties across the United States. Source: U.S. Wind Turbine Database, American Clean Power, .
Land lease agreement payments are typically structured in one of three ways: fixed payments, revenue-based payments, or a combination. Project developers might prefer to negotiate a certain payment structure with landowners based on the economic considerations of a particular wind energy project. Landowner compensation can vary among individual projects and landowners in a single project could have different agreed-upon terms.
An annual payment based on a per-turbine or a per-megawatt basis. On a per-turbine basis, the contract language might state that a landowner is paid $7,000 annually per wind turbine installed on their land. On a per-megawatt basis, if there is a 2-MW wind turbine and the contract states $3,500 per megawatt, the landowner would receive $7,000 annually.
A percentage-based payment that depends on the annual income a developer receives from selling the energy generated by any project-related wind turbines located on a landowner's property. The lease agreement should clearly define the percentage a landowner receives and how generation is calculated. Depending on the contract specifics, this overall percentage can increase during the agreement lifetime. Additionally, the amount of energy generated at a given location can vary from year to year depending on wind speeds and wind turbine curtailment, which can impact the overall amount of these payments.
A payment structure that features aspects of fixed payments and revenue-based payments. There are two primary ways to combine these structures:
In addition to differing structures, lease payments can vary from one location to another. This chart shows the regional differences in average landowner lease payments in the United States.
The differences in per-megawatt landowner lease compensation can vary among U.S. regions. Source: Chart was created from data from the American Wind Energy Association and downloaded wind energy project capacity across a state level from the U.S. Wind Turbine Database to determine an average payment, .
A variety of factors can influence the total amount a specific landowner will receive for hosting a wind turbine or any project-related infrastructure, resulting in compensation differences at the regional, local, and project levels. These factors include:
Impacts During Construction
Participating landowners and the wind energy project developer should initiate conversations to understand how project construction and operation could affect the agricultural uses of their property. Although agricultural activities can continue on a significant portion of land throughout the construction process, some areas will be temporarily disrupted while construction activities occur, increasing the need for landowner and developer communication. After construction is complete, only a small portion of the land is typically impacted by the wind turbine and roads.
Landowners and project developers have negotiated crop damage payments to make landowners financially whole for any loss of agricultural production. Terms and conditions for crop damage payments are agreed upon in the land lease contract. Landowners might choose to document the condition of the agricultural land prior to construction to support their claims of crop damage.
A payment to the landowner for damage or destruction to agricultural crops caused by the wind energy construction or operations. The definition of "crop" can be loosely defined as agricultural crops or grasses, but the definition should be agreed upon between the landowners and project developer. Payments are typically one-time lump-sum payments based on the type of crop and a valuation method agreed upon in the land lease contract.
Sustaining Rural Landowners
Research indicates that, in some cases, revenue generated from wind energy projects allows farmers to increase their overall farm investments and create succession plans for their farm. These annual payments can supplement income generated by other land uses and are guaranteed for the lifetime of a project. By agreeing to use some land to host part of a wind energy project, many landowners are diversifying or increasing the revenue streams on farms and ranches, which can be especially helpful given the variability in agricultural yields and commodity prices. A study of wind farms in the Midwest surveyed landowners with wind turbines compared to communities without wind projects and concluded:
Though wind energy projects can be spread over large swaths of land that involve several properties across multiple counties and/or townships, the actual footprint of these projects is relatively small once the development is operational. Although there are different ways to define this footprint, approximately 95%–99% of land around and in a wind energy project can be used for other purposes, such as farming, ranching, or recreational activities. Access roads to the wind turbines usually account for a large portion of the disturbed land during the operational lifetime of a wind energy project.
In a survey on the impact of wind energy projects on farming in Michigan, 43% of farmers stated there was no difference on farming fields with wind turbines, 22% reported it was both easier in some regards and more difficult in others, 5% reported it was easier, and 32% reported it was more difficult to farm. It is important for landowners to discuss land considerations with wind energy project developers, ensuring infrastructure will not disproportionately impact agricultural operations.
These land lease payments increase the income of participating landowners who might be local residents, which contributes to the local economy. Because a wind turbine could displace agriculture or other land uses, the net impact to the economy might reduce the gross amount paid to the landowner. Many landowners voluntarily participate by accepting payments, however, suggesting that the benefits of wind turbines from an income perspective exceed the costs.
A wind energy project will be decommissioned at the end of its lifetime, which is typically 25–40 years. Information on the removal of a wind energy project (turbines and associated infrastructure) and land restoration can be found in the "Land-Based Wind Energy Siting Guide."
A University of Michigan survey provides more detail about how landowner lease payments affect farmland preservation.
Additional Resources
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Overview
The construction and operation of a wind energy project can have a positive impact on local businesses, with project developers hiring local contractors and purchasing local materials and workers spending locally on other goods and services for the duration of these activities. The extent of the impact is directly related to the available resources in an individual community, including the availability and skill set of the local workforce and the ability to purchase locally sourced materials and services. If a community wants to increase the job and economic impacts during the construction of a wind energy project, community leaders might coordinate with the project developer and any applicable community development organizations to ensure that efforts are being made to achieve this goal.
This section focuses on the potential impacts wind energy development can have on local businesses and the workforce during two distinct phases of the project:
This section also highlights potential training opportunities developers and communities can consider amplifying the direct involvement of community members in the long-term wind energy workforce.
Timeline
This process timeline illustrates how local governments are impacted by the various stages of wind energy development. Because timing can vary widely depending on location, project type, and other factors, the timeline is meant to illustrate the relative order of events and does not include specific guidance on how long certain steps may take. In the figure, note that "O&M" means operation and maintenance.
Workforce Estimates During Construction
The wind energy project construction phase typically takes 8–10 months, but could be longer depending on project size, multiphase planning, local weather conditions, and seasonal conditions. During the construction phase, construction crews might rotate in and out of the community, supporting different construction activities. These activities can include building roads, laying electrical cabling, erecting the wind turbines, or commissioning the project. For detailed descriptions of construction timelines and roles throughout the entire process, see the "Land-Based Wind Energy Siting Guide." After construction is complete, crews move on to a new project. Communities should consider how they can support an increase in shorter-term economic development from the influx of workers during the construction phase.
Wind energy projects typically employ many workers during the construction phase, with the total number varying depending on project size, installation strategy, and site conditions. Constructing a 100-megawatt wind energy project will likely support an average of 80–100 jobs. A 600-megawatt development in Colorado supported approximately 245 on-site construction jobs. These estimates are total employment during the development and construction phases. At the height of construction, many phases might overlap; at other times, smaller crews might rotate through the community, supporting different construction activities.
The National Renewable Energy Laboratory's Jobs and Economic Development Impact model can help community members understand the potential job and economic impacts from the development of a wind energy project.
Like other large-scale construction and infrastructure projects, most workers employed during the installation of a wind energy project are typically from outside the community, because of the specific skills and experience required to complete the work. For example, some workers must be appropriately trained to work at the unique heights associated with wind turbines, whereas others must know how to use specific equipment, such as the large cranes used during turbine installation.
Many local community hires might come from subcontracting services to support the construction process. Communities should talk to developers to gain understanding of what local contracting opportunities are available. Examples of these types of subcontractors include:
Local Businesses Interactions With Construction Crews
Communities should prepare for an influx of construction workers in the community that can vary depending on the size, scale, and stage of a project. Workers will be eating at restaurants, buying necessities, and living at hotels or recreational vehicle (RV) parks while they work on a project. Construction crews can support local businesses outside of the material purchases that are directly related to the wind energy project. Crews are likely to spend a portion of their earnings on personal goods and services at locally owned or operated businesses, providing a temporary influx of revenue that exceeds typical margins. In addition to providing revenue directly to these businesses, this local spending will likely have a positive impact on sales tax revenue in counties. These construction crews might also lead to strains on existing housing stock and an increased use of county services.
Construction activities are temporary and last a mere fraction of a wind energy project's lifetime. Therefore, a community can plan ahead and identify local business, subcontractor, and community assets to leverage during wind farm construction. Communities can also identify local development opportunities that support wind energy projects which continue to be active post-construction (e.g. building a new RV park).
Prior to the start of construction, communities can work with a wind energy project developer to understand the day-to-day needs of construction workers, how those needs can be met by existing local businesses, and how businesses can adjust operations to better meet those needs. Some examples of businesses that might be impacted during the construction phase include:
Wind energy project construction crews will often rent available space in hotels and motels. The higher occupancy rates at these establishments could impact the amount these businesses can charge because of the limited availability of unoccupied rooms. In some cases, increased demand for temporary lodging has spurred new hotel construction, especially in communities that expect future wind energy projects and in areas that can take advantage of the additional lodging space beyond the wind project.
Construction companies have also used RV parks as a lodging option for their crews during the installation of a wind energy project. Many communities have noted that other large infrastructure projects—such as road development and oil and gas operations—also use these accommodations, which can result in a strain on available RV space. Communities and developers might consider working together early in the development process to ensure adequate lodging space for construction crews.
Construction crews and companies will often visit local restaurants, creating an increased temporary demand that could support the need to hire additional personnel. Based on community interviews, some restaurants have found it necessary to double weekend staff to accommodate the increase in customers during wind energy project construction. Smaller communities, however, might have difficulties finding additional qualified workers.
Operation-and-Maintenance Workforce Considerations
In addition to the workers employed during project construction, wind energy projects support the long-term employment of an operation and maintenance (O&M) workforce during the operational lifetime of a project. Wind projects typically employ 2–16 full-time workers, but the overall number of people employed in an O&M workforce depends on the project size, wind turbine capacity, project location, and date of installation. An estimated 8,200 O&M workers were employed at wind energy projects across the United States in .
Long-term O&M jobs could contribute to diversifying employment opportunities for existing or new residents in rural communities. A study on the regional workforce and economic development considerations of operating wind energy projects revealed that most O&M workers commuted less than 30 minutes each way and that more than 80% of respondents spent money in the community where they work and live. The local spending by O&M workers supported 0.003–0.145 jobs per megawatt in the community, depending on the makeup and size of a community's existing economy. These jobs are often associated with retail stores, restaurants, and other local services that exist prior to the construction of a wind energy project.
The size of nearby communities can have an impact on where O&M workers live and how they spend their money. As shown in the following figure, wind energy projects located near fewer population centers are more likely to have a higher presence of workers living in a centralized community. In this scenario, workers are more likely to spend their earnings in a single community, increasing the economic activity in one area. Wind energy projects located near multiple communities with population centers >1,000 people are more likely to have workers living in different towns or counties, thus increasing economic activity in multiple areas.
Wind energy project workers tend to live closer to a project if it is located near communities with populations larger than 1,000 residents. Left: Wind Plant 1 -- Shows more dispersion where O&M workers live around the wind plant because there are more communities with poopulation greater than 1,000 residents. Right: Wind Plant 2 -- Shows less dispersion where O&M workers live around the wind plant because there are fewer communities with populations greater than 1,000 residents. Source: Kotarbinski, Keyser, Stefek. . Workforce and Economic Development Considerations from the Operations and Maintenance of Wind Power Plants.
During the project development phase, community decision makers might want to have a discussion with wind energy project operators to understand employment plans for operations. The industry is trending toward diversified employment structures, with wind energy project operators choosing between hiring contracted O&M workers or the more traditional approach of hiring in-house employees.
A survey of contracted O&M workers indicates that contracted workers are more likely to be new residents in a community, having lived less than a year in the region. Contracted workers, however, plan to live in the communities near the wind energy project for an extended period. These workers are still likely to spend their earnings in the local economies on housing, goods, and services; however, there is some uncertainty as to whether economic impacts differ when a wind energy project operator hires a contracted crew. A developer collocating several wind projects and using a single O&M crew to service and maintain multiple projects could also reduce economic impact on the community.
With an in-house employment structure, the operator might hire their own workers to support O&M activities and these workers might comprise a more local workforce. Based on survey results, in-house employees have lived longer in their communities prior to working at a wind energy project. Of all in-house employees, 50% responded that they lived in their community because they or a close family member grew up there.
Community members might consider asking a wind energy project operator:
By understanding O&M workforce implications, communities can better work with wind energy project operators to ensure the O&M workforce can support local economic growth.
Development and Workforce
The Role of Partnerships in Economic Development
Local entities could strategically plan for regional economic development efforts when a wind energy project is proposed in a community. Bringing together several of these local organizations to share knowledge, create partnerships, and connect with developers can help communities achieve their desired economic goals. Key community partners in workforce and economic development include:
As an example, the Limon Workforce Center recognized the need to collaborate with nearby regional workforce centers and the developer to fill the construction workforce needs for a wind energy project on the eastern Colorado plains. Working with the developer, the center created a list of construction subcontractors in their respective partnership areas who could support construction activities. When the developer needed additional labor, they worked with the workforce center to find qualified local workers, which helped local job seekers gain valuable employment in the region.
The Role of Technical Programs, Community Colleges, and Wind Technician Training
Communities could engage with wind energy project developers to create programs offering scholarships or educational opportunities for high school students and community members to attend local technical schools and community colleges to train for jobs that can support construction and operation and maintenance activities.
Wind energy project developers need a variety of skilled workers, such as electricians and welders, during the short-term construction phase. These jobs represent a unique opportunity for students to learn a new skill and gain occupational experience. After construction is complete, these newly trained workers could continue to support wind energy project developers or subcontractors on other projects. In some cases, wind energy project operators have committed to hiring locally and sending local community members to nearby technical schools or community colleges that have wind-related certificate or degree programs.
This map shows the concentration of technical and community college programs with a wind or renewable energy curriculum within 10 miles of U.S. wind energy project locations. Source: ESRI. Community Colleges (Listed as Wind Energy Education and Training Programs) Near Wind Turbine Locations. Web Map by Jeremy Stefek, April 26, .
The following examples showcase how wind energy project operators have partnered with community colleges to offer local community members an opportunity to become wind technicians and to provide additional local workforce development options:
Additional Resources
With high electricity prices it makes sense for SMEs to consider generating their own energy.
Wind power generated through wind turbines:
Compared to solar panels, wind turbines typically have higher upfront costs and longer pay back times.
However, wind turbines generate more electricity and more regularly.
A wind turbine is a tower with rotor blades that are turned by the wind to produce electricity. The more wind, the more energy is produced.
There are 3 types of wind turbine for domestic and home use:
Building mounted turbines:
Pole mounted wind turbines:
Modern free standing turbines:
Your business will benefit from wind turbines if you use more electricity and more evenly throughout the year, for example:
Depending on the size of the system and the size of the business, wind turbines are a good fit for businesses who:
According to Energy Saving Trust, for a wind turbine to work properly, you need an average wind speed of at least 5m/s.
The surrounding area should be free from obstacles such as trees or tall buildings.
Visit Energy Saving Trust for details on how to measure wind speeds (PDF).
Enter your postcode in Energy Saving Trust’s wind speed predictor if you live in Scotland to find average wind speeds in your area.
It is always better to put the turbines in the windiest place possible.
Wind turbines have cut-in and cut-out speeds. The cut-out speed will halt generation when it is too dangerous.
How much you will pay for a single wind turbine depends on the size and type of system.
Roof-mounted turbines are much cheaper to install than pole-mounted ones, but produce less energy.
The payback period depends on:
Usually, smaller pole mounted and roof mounted wind turbines are used to support on site generation.
Any surplus electricity can be sold back to the grid through the Smart Export Guarantee (SEG) program. This option becomes particularly beneficial during periods of low energy usage or when wind speeds are high. The SEG program allows for the sale of excess electricity with a capacity of up to 5MW.
The greatest benefit from wind turbines comes from onsite consumption and SEG provides second income stream.
Different energy suppliers offer different rates (tariffs). Generators thinking of applying for a SEG tariff should therefore shop around to see which tariff is best for their individual circumstances.
Find out if you are eligible for SEG and apply for a licence on Ofgem’s website.
Larger, free standing turbines can both:
Usually, free standing turbines are on mainly on larger commercial premises such as warehouses or heavy industry plants.
There is more than one way to sell excess electricity back to suppliers, depending on the size of the system.
Electricity generated by a wind turbine can also be exported to the electricity network or used directly by the consumer (or both) via a Power Purchase agreement (PPA).
You should review a range of short-term PPAs if you have more than 60kWs of renewable assets. You should negotiate a power purchase agreement with your supplier for the best possible deal.
This can provide additional income for the electricity you generate.
Examine the manufacturer’s warranty and maintenance terms carefully when choosing a unit.
The average life of a good quality wind turbine is 20-25 years. Some parts may need replacing in this time.
You will need to carry out a maintenance check every few year – this can cost between £100 and £200.
You may need to replace the inverter at some point – this can cost anywhere from £1,000 to £2,000.
Buy batteries if you wish to store energy. The cost of batteries varies depends on the design and scale of the system.
When you need to replace batteries depends on how often and how you cycle your battery. Usually, battery manufacturers offer 10-year warranties for small systems at 80% of original capacities.
Check with your landlord if you rent your property before installing a wind turbine – even if it’s a small roof-mounted system.
You might not need planning permission if you own your property and your system is below certain thresholds. This would be considered a permitted development.
How thresholds and planning permission for wind turbines are decided depends on which region you live in the UK.
Visit the Planning Portal for a full list of relevant planning permission guidelines for England and Wales.
You must apply for planning permission to install a wind turbine in Scotland and Northern Ireland.
Get planning permission from your local planning authority at an early stage.
Contact a certified installer if you need help designing an energy system which is right for your business.
You can also find local installers using the Green Economy website.
There are incentives available for investing in wind turbine installations. These include:
From to VAT will no longer be charged on some domestic energy saving measures in England, Scotland and Wales.
This means that it will be up to 20% cheaper to make your home business more energy efficient.
Eligible measures include insulation, heat pumps, solar panels, wind turbines and more.
Targeted business rates exemptions apply for eligible plant and machinery used in onsite renewable energy generation and storage, and a 100% relief for eligible low-carbon heat networks with their own rates bill until 31 March .
Businesses who are eligible can fully expense their plant and machinery costs and access 50% first-year allowances for special rate expenditure.
Visit GOV.UK for more information on capital allowances.
Use our finance and support page to find green business grant programmes in your region.
Many are designed to help with improving energy efficiency, including the cost of heat pumps.
They can also offer:
Funding is dependent on the size of your business and where it’s located.
Contact us to discuss your requirements of automatic street lighting system. Our experienced sales team can help you identify the options that best suit your needs.