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Profitability depends on wind speed, cost and performance of a wind turbine installation, and energy prices.

Large turbines selling power to the grid can be financially viable where the average wind speed is more than about 7 m/s. They are likely to become attractive to more businesses in future, as technology continues to improve and the deregulated energy market develops.

Small turbines and wind pumps may be viable with average wind speeds as low as 5 m/s, if the only alternative is a more expensive power source such as a diesel generator.

At 1997 prices, power saved was worth around 6.5 p/kwh (the average cost of grid electricity using farm tariffs). The price for power sold outside the business depended on negotiations with the local electricity company, many of the smaller producers receiving only 1.5 - 2.5 p/kWh. Therefore, the most valuable power is what can be 'sold' within the business, or within the joint businesses, that are already operating on the same site as the wind turbine.

De-regulation of the electricity supply industry has changed the situation, and allowed more traders in energy to enter the marketplace. A wind turbine owner now has the prospect of supplying power to consumers anywhere in the country, as well as to his or her own business. Needless to say this is subject to a number of constraints such as licence and metering requirements and charges for use of the grid system - cables, poles, pylons, transformers, etc. - but there are also exemptions which can help to make this attractive.

The average power requirement on most farms is quite small in comparison to the output of a large wind turbine, but may be similar to the output of a smaller machine. For example, an annual electricity bill of £5 000, which is above average for a farm, can be compared with the equivalent output of over £100 000 from a 500kW wind turbine or £10 000 from a 50kW machine.

The Scottish Renewables Obligation (SRO) and the Non Fossil Fuel Obligations (NFFO) for England and Wales and Northern Ireland were schemes introduced by the UK government to encourage production of energy from renewable resources. Developers were invited to bid for electricity contracts under which they receive enhanced prices, index-linked over a fixed number of years. By mid 1997, a total of over 200 wind contracts had been awarded. The 'small wind band' was reserved for projects with a small number of turbines (typically 5 or less) to enable these projects to compete in the bidding process.

Prices paid for power, under each successive round of SRO and NFFO contracts, became progressively more competitive, in line with the government's intentions. Under SRO 1 the average price paid for wind energy was 4.0 p/kWh, while at a similar date under NFFO3 it was 4.3 p/kWh; under SRO 2 the price had fallen to 2.8 p/kWh. The lower prices in Scotland reflect, in part, higher wind speeds. Costs for electricity generated from wind are now comparable to those in large conventional power stations, as a result of technical improvements, lower capital costs for turbines and lower development costs.

A 'green' power market is now starting to emerge, outside the now obsolete SRO/NFFO, paying a premium price for energy from renewable sources such as wind power. This market is being driven by consumers who have a strong concern for the environment, and by businesses who are keen to promote their 'green' image. In some countries, political pressure is persuading governments to legislate for such a market. For example, turbine owners in the Netherlands receive around 70% of the retail price of electricity, equivalent to 4.5 p/kWh for each unit generated by wind power.

In all cases, the long-term power purchase contract is one of the most important features that helps to justify major investment in grid-connected turbines.

In recent years, the unit cost of windfarm projects has been failing steadily from over £1 000 per kilowatt of rated output to under £700. Even so, the total project costs for a single large grid-connected wind turbine could be around £500 000. Detailed analysis of site wind speeds must be carried out to justify such an investment. Planning permission will be needed. Substantial foundations are required for the tower, and the electrical installation must be professionally designed.

Costs for connecting a wind turbine to the grid can be lower if the site is close to an 11 kV power line, but there may still be reasons that expensive alterations to the grid are needed. There may also be more than one possible arrangement for the grid connection, and a careful technical study of the options can lead to substantial cost savings. There are possibilities for wind turbines on farms to improve the grid supply over a wide area.

Grid-connected systems absorb reactive power from the grid, and a charge is made for using this power. There are also metering charges to be paid.

For a wind turbine which will NOT be connected to the grid, costs must be compared with those for alternative energy sources.

Investment in a wind powered water pump has to be compared with the wiring cost for a grid electricity supply, or with the capital, maintenance and fuel costs for an engine-driven pump.

Remote electric fencer units use battery power. A small wind turbine to keep the battery charged may cost under £500, and compares with the alternative of two batteries plus regular journeys by four wheel drive vehicle to change them over.

Without wind power, an isolated dwelling house would probably use a diesel generator to supply electricity, and use solid fuel, oil or LPG for heating and cooking. Installing a wind turbine could save a large proportion of these fuel costs, but keeping capital costs down will depend very much on keeping the system as simple as possible.

In some cases there may be capital grants available, such as

• Crofting Counties Agricultural Grants (Scotland) Scheme 1988
  50% grant up to a maximum of £20 000 for "... provision of an electricity generator"
• Agricultural Business Improvement Scheme (ABIS) (Objective 1 areas)
  40% grant up to a maximum of £20 000 for "... provision, replacement or improvement of ... electricity supplies"
• Rural Diversification Programme (Objective 5b areas)
  50% grant up to a maximum of £25 000
• LEADER II Programme (Objective 5b areas)
  Maximum grant £20 000

These grants would be of most benefit to purchasers of the small and medium sized wind turbines, and would have only a minor effect on profitability of the very large machines.

• European Agricultural Guidance and Guarantee Fund (EAGGF)
  grants provide assistance to on-farm projects for processing and marketing of agricultural produce. (This fund is sometimes known by its French acronym FEOGA). A wind turbine providing power for a project such as a large vegetable packhouse or cold store might possibly be eligible for assistance. Grants can be 25% (or 50% in Objective 1 areas), up to a maximum of £1 million.
• Local Enterprise Companies (LECs)
  may be able to support businesses, with priorities dependent on the needs of the locality.

Capital outlay will inevitably vary greatly from one site to another. Turbine prices alone mean very little - an estimate for a complete wind power system is much more important. There may be great differences in costs for the wind speed survey, obtaining planning permission, site preparation, and electrical installation.

Equipment life is likely to be in the range 15-25 years.

Annual maintenance and insurance costs are typically in the range 2-3% of the capital cost. Routine maintenance and lubrication can generally be carried out by farm staff which helps to keep costs down.

The amount of time spent in supervision and management is likely to be minimal in the case of a single wind turbine.

Where a substantial proportion of the power output is being sold rather than used on the farm, there could be tax implications, for example in treatment of the wind turbine and associated land area with regard to inheritance tax.

Assumptions about inflation can influence any payback calculations. Installing a wind turbine involves making a large capital outlay today in order to produce income over the next 20 years. Electricity prices could change substantially over the duration of a power purchase contract, and could influence returns for the turbine owner, possibly rising along with inflation and possibly rising faster than other prices in future.