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What would the return on investment be from a wind turbine?

The Return on Investment of a windpower scheme depends on the net income received and the capital costs of the project.

Determining the income is complicated, it depends on:

  • The proportion of electricity exported to the grid vs electricity consumed on site.
  • The current and future cost of using electricity imported from the national grid on site.
  • The current and future price paid for electricity sold to the grid from the wind system.

These figures are complicated because of the uncertainty in the rising cost of electricity. The graph below shows historical prices for non domestic electricity between 2004 and 2019. The data for this is provided by the UK government department, BEIS here.

Historical UK Non Domestic electricity prices

Historical UK Non Domestic electricity prices, 2004 – 2019

This shows an annual average electricity price rise between 2004 and 2019 of approximately 9% per year. Future changes to electricity prices may not follow historical price rises and are very hard to predict because they are heavily influenced by fossil-fuel prices and government policy changes in response to market conditions and carbon reduction commitments.

Committee on Climate Change Electricity Price predictions

Committee on Climate Change Electricity Price predictions

The last assessment of Energy Prices and Bills made by the Committee on Climate change was in 2017, and their report is here. Their assessment of the impact of carbon reduction commitments made to 2017 show price rises of approximately 3% per year to 2030 as shown on the right. The UK government has since increased its commitment to carbon reduction which would mean that investment in low carbon energy will inevitably have to increase beyond that shown in this report. Please note it is possible that electricity prices may rise or fall in the future.

For illustration purposes, the Rate of Return for three scenarios are shown below. This assumes a typical lifespan of 25 years for wind turbine equipment. The wind system’s returns on investment shown are realistic for typical, viable sites:

  • 100% on site consumption, annual electricity price rise of 3%
  • 50% on site consumption, annual electricity price rise of 3%
  • 100% exported to the grid, with export price rise by inflation of 2%

100% on-site consumption, annual electricity price rise 3%

The table below shows what the Internal Rate of Return (IRR) could be for a range of wind turbines with annual mean wind speeds ranging from 5 to 8.5 m/s, where 100% of electricity is consumed on site and there is an assumed annual price rise of the cost of electricity of 3%.

Maximum Power Output Example Turbines IRR’s for sites with for the following annual average wind speeds:
5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5
100 kW Norvento nED-100 3% 5% 7% 9% 10% 12% 13% 14%
900 kW EWT DW52 10% 13% 16% 19% 22% 24% 27% 29%
1 MW EWT DW61 14% 17% 21% 24% 27% 30% N/A N/A
3 MW Enercon E82 11% 15% 18% 22% 25% 29% 32% 36%
3.5 MW Enercon E126 EP3 23% 28% 33% 38% 43% 47% 51% 55%

50% on-site consumption, annual electricity price rise 3%

Unless the commercial operation is a 24 hour, high energy use operation, or energy storage is added, then it is likely that only a portion of electricity generated by the wind system can offset on site electricity usage. If only a proportion of electricity can be consumed on-site, this scenario is complex and depends on electricity consumption and generation patterns over a period of time. Renewables First can assess this demand and generation relationship as part of the Windpower Feasibility Study service. For illustrative purposes, we will assume that 50% of electricity generated is consumed on site, and 50% is exported to the grid.

The table below shows what the Internal Rate of Return (IRR) could be where 50% of electricity is consumed on site and there is an assumed annual price rise of the cost of electricity of 3%.

Maximum Power Output Example Turbines IRR’s for sites with for the following annual average wind speeds:
5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5
100 kW Norvento nED-100 0% 2% 4% 6% 7% 8% 9% 10%
900 kW EWT DW52 6% 9% 12% 14% 16% 18% 20% 22%
1 MW EWT DW61 10% 13% 15% 18% 21% 23% N/A N/A
3 MW Enercon E82 8% 11% 14% 16% 19% 22% 25% 27%
3.5 MW Enercon E126 EP3 17% 21% 25% 28% 32% 35% 38% 41%

100% exported to the grid, annual export price rise of 2%

Finally, if it is not possible to consume any electricity on-site, then 100% of the electricity must be exported to the grid. A typical initial export price of 6.5 p/kWh, which increases annually by an inflation rate of 2%, is used for this Rate of Return illustration:

Maximum Power Output Example Turbines IRR’s for sites with for the following annual average wind speeds:
5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5
100 kW Norvento nED-100 0% 0% 0% 2% 3% 4% 5% 6%
900 kW EWT DW52 2% 4% 6% 8% 10% 12% 13% 14%
1 MW EWT DW61 5% 7% 9% 11% 13% 15% N/A N/A
3 MW Enercon E82 3% 6% 8% 11% 13% 15% 16% 18%
3.5 MW Enercon E126 EP3 10% 13% 16% 19% 21% 23% 25% 27%

Clearly the potential return on investment is very good especially if energy can be used on site, but always remember that wind projects can take two to three years to deliver and that there is no guarantee that a project will succeed until planning consent has been obtained.

The first step for any wind project is a good quality wind feasibility study which will analyse everything in detail, identify any potential project risks and recommend the best way to proceed with the project.

Back to Windpower Learning Centre

Want to install a wind turbine?

If you are in the UK then take our Wind Site Self-Assessment - The first step to provide information we need to complete a Windpower Feasibility Study. It takes about 20 minutes to work through the basic checks, including:

  • Estimating wind speed
  • Checking proximity of nearby properties
  • Checking site access and approach roads
  • Investigating connection with the grid

If you are in the Republic of Ireland, or overseas, the first step is to Contact us to discuss your requirements and to complete a Windpower Feasibility Study.

Start the process here: Take the Wind Site Self-Assessment