Winds of Change Bring Investment Opportunities

Farmers have traditionally tended everything from cotton to corn. But wind? Cash crops come in all shapes and sizes, and giant energy-producing wind turbines have become the latest …

Farmers have traditionally tended everything from cotton to corn. But wind?

Cash crops come in all shapes and sizes, and giant energy-producing wind turbines have become the latest incarnation. Energy companies are paying top dollar to landowners willing to lease or sell space for wind turbines, and investors may want to follow the breeze.

The move toward wind energy is fueled by major energy companies trying to rack up clean energy credentials and state legislatures passing laws requiring increased use of energy from renewable sources.

Texas is becoming a pioneer in the wind market; many of its western plains feature the consistently high wind speeds capable of sustaining a productive wind farm. Wind speeds need to average 14 miles per hour annually to effectively power the 200-foot high wind turbines, according to Alliant Energy, an energy company serving the Midwest.

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Besides strong gusts, expansive acreage is needed to catch sufficient amounts of wind. States such as Minnesota, Wisconsin and Iowa have the land and the necessary wind potential. Regions available to invest in are limited because of these constraints; expect to heavily scout the Midwest, where the most viable states are located.

To put into perspective what a wind farm is capable of, take Buffalo Gap, the third-largest wind farm in Texas. With its most recent expansion complete, it produces 354 megawatts annually—enough to power nearly 100,000 homes, according to the Dallas Business Journal.

Leasing space for wind turbines can net a landowner between $3,000 and $5,000 per turbine annually, according to the Texas State Energy Conservation Office. Lease agreements vary and can include monthly rental income and royalties. Typical leases last anywhere from 10 to 25 years, making wind farms a potentially viable long-term investment, as long as energy companies remain interested in wind energy.

Lobbyists in Texas are pulling for remote Briscoe County—one of the windiest regions in the state—and its 900 square miles of ranchland to be connected to the state’s high voltage power lines, according to The Wall Street Journal. Shell is hoping to develop a 120 square mile wind farm in Briscoe should lobbyists’ efforts succeed.

For speculative investors, there are opportunities to buy property that is not connected to a major grid cheaply, with the expectation that it will be connected at some point in the future. Investors could contact the power company to see what their expansion plans are and to find out how much they would have to pay to get the property connected if it was not already planned.

Investors who do not want to take on so much risk should ensure that the property is connected to the power grid prior to purchase and that it is something power companies would be interested in leasing. Ideally, in a low risk scenario, an investor would have a tenant lined up before they ever purchase the property.

Wind farming should continue to flourish as a premier alternative energy source, thus making viable land that much more valuable. Interested investors should begin by researching areas where land can be purchased and keep in mind that suitable property can be hard to come by. The wind energy market and other alternative energy markets are growing in part because of the increasing cost of oil. To get a better idea of the types of properties and locations desired by the power companies, investors can ask them directly.


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