Another Repowering Shows the Rewards and Risks to Landowners when Projects are Continued

A February 17, 2016 NorthAmerican WindPower article shows again why it matters to consider repowering when analyzing a turbine lease revenue stream.

NAW notes Gamesa has received an order from Energiekontor (a German developer) for three 4.5 MW machines. These three machines will replace 11 one-MW turbines, doubling the projects’ output.

For a US landowner in this situation and under a royalty-based lease tied to gross revenue, this would mean a doubling of landowner annual income.

But there is also a large, hidden risk here. 11 units are being replaced w/ three, and likely (given larger rotors on taller towers) are being spaced farther apart than the predecessor units. If one landowner owns all of the land in this project, then this change will in fact be a windfall, increasing revenue significantly (not to mention reducing the burden on the land). However, if multiple (maybe even 11) landowners hosted the 11 turbines, then (depending on the lease terms) 8 of these landowners would lose most, it not all, of their lease revenue.

Therefore, repowering should be considered to assess enhanced and longer-term revenue prospects, but also relative to the potential for revenue elimination.