Harnessing wind power: Power purchase agreements for farmers

In the era of renewable energy, wind turbines have become a beacon of sustainable power generation, especially in agricultural landscapes.

For farmers, wind turbines signify a commitment to responsible environmental stewardship and offered a financial opportunity in both additional income and reducing operational energy costs.

It can be complex to navigate, so Conrad Energy have put together this guide to making the most of the energy your turbine produces.

Subsidies several years ago saw a significant increase in the number of wind turbines across the UK, with many farmers taking the opportunity to generate their own electricity and reduce their energy expenses.

In addition, surplus power can be exported back to the grid, contributing to the UK’s renewable energy supply and generating revenue for your business.

Several of those wind turbines are now reaching an age where it is time to negotiate a new export agreement.

Power purchase agreements (PPAs) enable farmers with wind turbines to sell generated electricity (export), securing an increased income.

At Conrad Energy we know that navigating PPAs can be complicated, so we’ve compiled a quick guide to what you need to know. 

Firstly, before any contract negotiations are considered, farmers should make sure they take advice from legal and financial experts with experience in renewable energy contracts.

Some PPAs last twenty years, so their expertise should pay for itself.

© Conrad Energy

What PPAs do

The essence of a PPA lies in the contractual arrangement between the owner of a renewable energy generation asset (i.e. the landowner who owns the wind turbine) and an energy consumer (usually a utility company) outlining the terms of electricity sale over an agreed-upon period.

Contracts offer fixed or indexed pricing mechanisms over an agreed-upon duration.

Duration

Longer-term agreements typically provide more stability but may lock in rates that could become less competitive over time.

Shorter-term contracts offer flexibility but may subject farmers and landowners to market fluctuations.

When deciding upon the duration of a new PPA, the asset owner must weigh up whether long-term predictability is more or less important than flexibility. 

It may be worth considering the long-term plans for the farm. Is there a succession plan within the family or business? Might you be looking to sell within the period of the suggested PPA?

Curtailment implications

Understanding the implications of curtailment clauses is crucial. These clauses dictate circumstances under which the buyer can refuse to purchase electricity, often due to grid congestion or excess supply.

Farmers should negotiate fair curtailment terms to mitigate potential revenue loss.

Maintenance

Regular maintenance and upkeep of turbines is vital to ensure optimal performance and maximise electricity generation.

Integrating smart monitoring systems can aid in identifying and addressing maintenance issues promptly, thereby preventing downtime and revenue loss.

Farmers should ensure that it is clear who is to take responsibility for that maintenance, the costs of any repairs and how downtime is treated within the contract.

The buyer

When choosing a partner for a PPA, farmers are advised to shop around to ensure they are getting the right deal for their business. Reputation, financial backing and track record are all important factors.

Contract negotiations can be stressful, but once it’s signed you should feel a weight off your shoulders. 

PPAs present an enticing avenue for farmers who have ventured into wind energy.

By embracing wind power and leveraging PPAs, farmers not only contribute to a greener future but also secure a resilient economic footing in the renewable energy landscape.

If you’d like to talk about a PPA for your turbine or other existing energy installations on your land, you can always talk to Conrad Energy on ppa@conradenergy.co.uk or call on 01235 427290.