Prospects of a new income stream fuels rural interest in wind farms

RICS surveyors note a growing interest in the use of land to generate renewable energy

Growing concern about climate change and energy security has sparked the country-wide development of renewable energy facilities and commercial interest from landowners and developers, says RICS.

RICS surveyors in rural areas are seeing a substantial increase in demand for due diligence reports from banks who are seeking advice on the viability of using a given site to develop wind or solar power.

Most commonly prompted by developers, banks are increasingly asking surveyors to advise on the suitability of sites to build wind farms. Most importantly, they are seeking advice on the performance of wind turbines, construction and planning issues, and if the site is windy enough to generate sufficiently high energy levels.

The additional revenue and income stream that can be generated for landowners and developers by selling the renewable energy generated – mainly electricity, into the grid has become an increasingly attractive prospect. The UK government has taken a number of steps, including the Feed in Tariff (FiT) to encourage growth in the renewable energy market as it comes under increasing pressure to meet UK and international carbon reduction targets.

Surveyors are also seeing a rise in the demand for freehold and leasehold valuations for sites where the value may rise as a result of its potential to generate renewable energy as the market continues to grow.

RICS has recognised this demand and provided some guidance in its recently published information paper that can assist surveyors in the valuation of the freeholds and leaseholds which should help to deliver consistency and reliability to landowners, investors and the lending community.

The valuation approaches discussed in the paper should provide additional reassurance to financial backers who are more likely to lend on the premise that valuations are transparent and reliable – stimulating further growth in the market.

James Kavanagh, RICS Director of Land said: “Interest in the financial benefits of generating renewable energy is certainly growing. Landowners and developers in rural communities can create an income stream by selling the energy from renewable energy installations, like wind turbines to the national grid – powering homes with electricity across the country.

“As this market continues to become more sophisticated, surveyors are increasingly being asked to perform more complex assessments, needed by all parties, but especially the lending community who need that extra assurance before handing over finance.”