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Wind energy is one of the cleanest forms of electricity, producing little to no air or water pollution and using technology that’s essentially been around since the Middle Ages. With climate change awareness on the rise and a hunger for clean energy, building a wind farm sounds like an attractive proposition. There are several things to consider before starting a project, not least of which are the funding and permits needed to set it up. With careful planning though, you can learn how to start a wind farm, get on the ground floor of the Green Revolution and make a handsome profit at the same time.
Getting a wind farm off the ground can be an incredibly capital-intensive project. While small wind farms designed for homes or schools might only need a few acres and less than a hundred thousand dollars, commercial wind farms designed to put power onto the grid easily run a million dollars or more.
While turbines are obviously the largest cost in building up a wind farm, there’s also permitting, road building, and maintenance –– all of which benefit from economies of scale. Each turbine that’s put up does not incur the same ancillary costs, so it’s better to build larger if you have the funding and enough wind to justify it.
Unless you’ve already made some very successful investments, you’ll need funding for your wind farm. Most alternative energy projects are financed through project funding, where the projecting revenue from the project is to determine the level of capital that a lender will provide. Construction loans are another option to get the project started by securing land and purchasing materials. There are also several tax credits available from the federal government to help to offset some of the costs.
Land for wind farms is typically leased rather than owned, allowing farmers to continue growing crops on their land while generating extra income from the wind farm lease. It’s a win-win situation as both sides make money while minimizing risk.
The most important factor when choosing a parcel of land for your wind farm is the average wind speed in the area. You’ll need a steady 13 mph wind, but 15 mph or 18 mph would be more profitable. The federal government produces maps showing the average wind speed throughout the country. A quick look at it shows that only a few states from North Dakota to northern Texas have wind speeds high enough to make electricity generation sustainable.
The smallest wind farm you could build would have just one turbine. For that you’ll need about sixty acres, and the turbine will only take up a small portion of it. However, a sufficient buffer zone is needed between the turbine and adjacent properties.
Once you have two turbines, things get more complicated since you don’t want the wind passing through one turbine to affect any of the others. A good rule of thumb is that you need a space that is 5x to 10x the diameter of the turbine blades to surround each turbine. Even with just a few turbines, that requires a significant chunk of land very quickly.
There levels of government, local, state, and federal are involved with the permitting of new windmill farm construction. It’s an arduous process, so be prepared for lengthy delays and numerous setbacks.
At the local level, the government is most concerned with how your wind farm will affect your neighbors. Many rural property owners aren’t too keen on having their wide-open views obstructed by 200-foot-tall wind turbines. That might also have a problem with the increased traffic resulting from maintenance workers accessing the turbines. Making sure your wind farm plan is approved by appropriate zoning and building code authorities is crucial for this step.
Your state government will want to know if your wind farm will have any negative effects on the environment or if any historical sites might be disrupted while erecting turbines. More than likely, the land you’ll build on has only been used for agriculture, so it’s important to consider how developing the land could harm nearby stakeholders.
At the federal level, the most pressing concern is whether you’re hindering air travel. The FAA gets involved with any structure over 200-feet-tall that is near an airport and towers need to have visible markings and be indicated on aviation charts to prevent collisions. The Army Corps of Engineers or U.S. Fish and Wildlife Services must also be consulted if wetlands or endangered species are present in the area. Your towers could even hinder radio and microwave signals, so plans need to be approved by the Federal Communications Commission.
A number of factors go into the final cost of setting up a wind farm, but you should expect to pay between 1 and 1.5 million dollars per megawatt of capacity. Most commercial wind turbines put out 2 or 3 megawatts, which means about $4,000,000 per turbine. Land costs might be lower in less desirable parts of the country and some states have a more favorable regulatory environment that makes getting permits considerably cheaper. No matter how you slice it, building a wind farm has a large upfront cost. Fortunately, once it’s up and running, expenses are far lower than comparable fossil fuel plants.
Constructing and maintaining a wind farm is no easy feat. It requires diligent research, time spent securing funding, and care to make your way through the permitting process. Wind and other forms of alternative energy are the future though, and it pays to get in early on the Green Revolution.
AVANA Capital can help you secure the funding to get your windmill farm construction started. AVANA Capital offers commercial construction loans for business owners looking to start a wind farm. These affordable construction loans come with timely closings and customized loan structures. They’re perfect for buying materials, hiring construction teams, and purchasing land for your windmill farm.
Submit a loan request today or contact us to find out how we can help you cover windmill farm construction costs.