Wind farms: how to pay to make it all OK

There is evidence that wind farms affect the price of nearby houses. But there is a simple solution to that, says Merryn Somerset Webb. Give a portion of renewable energy company their profits to their neighbours.


Why not pay part of wind farm profits to those living nearby?
(Image credit: © 2015 Frank Bienewald)

Wind farms do harm their neighbours there is "some evidence" that they cause "significant annoyance" thanks to "excessive noise". That is the conclusion of a new government report into turbines and it is a conclusion that will no doubt chime with the experiences of hundreds of people who live near turbines. So what should be done about it?

The obvious response from many will be to say that some types should be banned or perhaps that new ones should be prevented from going up within earshot of residences. But this might be a problem better solved with money.

There is already evidence that the value of houses are hit hard when turbines go up near them (something accepted by the Valuation Office Agency). That's partly to do with their effect on the view and as this review makes clear partly because of the noise annoyance of living next to them. Who would pay the same for a house next to a wind farm as an identical one not next to a wind farm? Quite.

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With this in mind, I have always been confused as to why the developers of big wind farms set up "community" funds to placate the people living around their projects. It would be much better, surely, to directly compensate the people who are most affected than to faff around building playgrounds and the like for lots of people who aren't. So why not pay part of the profits annually to those owning the nearest houses?

It could be calculated based on the present value of the pre-turbine price of the house, something that would mean that the homeowner could either continue to live in their house, neutralising the annoyance with cash, or sell it with the 25 years' worth of wind farm annuity attached (which should come to the same as the pre-farm value of the house). Problem solved.

The wind farm developers have always resisted this kind of solution on the basis that it would mean recognising that turbines have a negative effect on other people's standard of living. But if that's not up for argument any more, what's the problem with it?

PS for more along these lines see everything we have written in the past on the Land Value Tax. It is all the same sort of idea.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.