Farmers harvest turbine windfall
Mark Wilson hopes wind power will bring in cash to farming communities, writes Karl West. Sunday Times June 2011
IT'S a typical wet day in North Lanarkshire when Mark Wilson arrives for his next appointment. The chief executive of Intelligent Land Investments parks his Land Rover in the muddy farmyard.
It is a good job he never goes anywhere these days without his green wellingtons.
He may look out of place in his suit and wellies, but he feels at home. The 37-year-old property developer hails from a farming background in his native Northern Ireland. He is using his property know-how to offer Scottish farmers a way of unlocking some of the value of their land, while doing some good for the environment.
Without lifting a finger or investing any of their own cash, farmers are being promised a guaranteed minimum of about £20,000 a year for the next 20 years.
All they have to do is allow Intelligent Land Investments to erect a 500-kilowatt wind turbine, which is capable of powering about 350 homes. If planners approve the projects being lined up by Wilson, he and the farmer hope to cash in on the government's feed-in tariff, launched in April 2010.
The subsidy aims to encourage the development of renewable power by allowing investment in small-scale low-carbon electricity, in return for a guaranteed payment for the power that is produced over the next 20 years.
Although wind turbine development is virgin territory for Intelligent Land Investments, it is experienced in dealing with Scottish farmers. It has been going for eight years and for the first six it worked with farmers to put housing projects, including eco-homes, on their land.
Wilson was forced to reconsider his business plan when the property market collapsed in mid-2008. "When the feed-in tariff came out, it was an obvious opportunity. I was in the right place at the right time," he said.
He scaled up the company and now has 10 people on the road securing sites with landowners, compared with three previously.
The tariff is part of the government's plan to achieve a seven-fold boost to the amount of electricity generated from wind by 2020.
Intelligent Land Investments has raised a private equity-style fund, with backing from a core of 176 investors, to invest in the single-site wind projects.
The farmers are not required to contribute towards development costs. Wilson works with about 10 development companies that help shepherd the projects through the planning maze and then construct the turbine.
The proceeds from the feed-in tariff are split between the developer and Intelligent Land Investments, with the farmer getting about 10%.
While the scheme may be good business for Wilson and the farmer, there is growing scepticism about the true cost of wind power to consumers.
National Grid said last week it could not cope with the occasional surges of power from wind farms and will have to switch off turbines to avoid overloading its transmission networks.
Wind farm operators, including Scottish Power and RWE, are given "constraint" payments to keep their turbines idle for 25 days a year.
Experts reckon the expected proliferation of turbines' idling costs could hit £300m a year by 2020. In some cases, the constraint payments cost up to 20 times the value of the electricity that would have been produced if the turbines had kept running. This cost is passed on to consumers.
Wilson acknowledged this is a concern, noting there is not enough capacity to store the surges in power produced by wind. He added:
"The UK is like a house that hasn't been rewired in 100 years. It needs rewiring to create a grid that can take the capacity."
For now, though, Wilson is focused on pushing through as many turbines as he can before the government changes the feed-in tariff. The subsidy was to be reviewed in 2012 but has been brought forward to this year.
In the past few weeks, the rules governing solar panels have been tweaked to cut funding for large-scale photovoltaic installations. This was to ensure the money assigned to the tariff in the current parliament is not sucked dry by investor-driven solar systems, leaving nothing for householders.
Wilson is confident wind will escape any further meddling by government, but admitted it remains a risk.
These concerns have had little impact on the willingness of farmers to sign up to Wilson's plan. Landowners are joining at a rate of about 30 a week. Intelligent Land Investments has 180 sites today and expects to have 100 of them in the planning process by the end of June, rising to 200 by the end of this year.
Most of these sites are in Scotland, where the company is based and where Wilson already had strong contacts in the farming community. The north of England and Northern Ireland are next on his agenda. If the wind subsidy remains in place, they could also prove a fertile hunting ground.