Dr. Dave Muth: How Wind Turbines Affect Farmland Value

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As renewable energy looks to strengthen the rural landscape, wind turbines have offered a source of power and income even as changing federal policies and organized local opposition threaten to stymie the speed of that growth.

Dr. Dave Muth, a trained mechanical engineer, has particular interest in the design and function of wind turbines. But as Director of Capital Markets for Peoples Company, he also sees the revenue potential that turbines can bring to landowners.

Muth acknowledges that research is somewhat limited on how turbines impact farmland values. But he told American Farmland Owner that the numbers show income potential.

“We’ve grabbed some wind developments where we could find comparables,” Muth explained, “…farms of similar quality without turbines. And with turbines that have sold, What we see is somewhere between about a 3% and a 16% premium on the land value.”

Dave Muth bio:

• Peoples Company -- Director of Capital Markets

• Alternative Equity Advisors -- Former Managing Partner

• EFC Systems -- Former Vice President Sustainability and Agronomic Planning

• AgSolver -- Former Senior Vice President/Co-Founder

• Idaho National Laboratory – Research Engineer

The 16% premium potential that Muth cited can be substantial. But it varies depending on the buyer.

“Where we see that kind of value add is when the revenue stream is really getting valued at full freight, from a financial buyer,” Muth said. “In regions dominated by farmer buyers, they’re not paying as much of a premium as the financial buyers. That’s where we see variation.”

Financial Buyers vs. Farmer Buyers for Wind Energy

Muth pointed out that institutional and financial investors tend to value the future cash flow from turbine leases more aggressively than traditional farmers.

“It’s the discounted cash flow. It’s a very financially driven analysis,” he said. “How much are investors playing, and how much value do they put on that revenue stream? That’s where it starts to dial in on how much value add we see.”

RELATED: Wind produces about 25% of the power generated in this state. 

Wind Energy Income Potential Not as Strong in Some Rural Communities

In northwest Iowa, for example — an area with strong livestock operations and farmer buyers looking to expand — turbine income is not always viewed as a major value boost. But in areas where outside investors are more active, turbine-hosting farms are more likely to command a higher premium.

Factors to Consider about Wind Turbines

Of course, value isn't the only factor in play. Muth stressed that landowners need to weigh the legal and logistical impacts of entering a wind agreement.

“You’ve got to make sure you’re comfortable with the contract and what it provides for you,” he said. “There are real considerations…underground easements, infrastructure, and 40x40 concrete blocks under the ground. These are not temporary structures.”

He emphasized the importance of having legal and contractual protections in place, especially when it comes to decommissioning. “You need expertise, legal advice, and contractual protections,” Muth said. “Making sure the right bonding is in place, so the land is returned to its initial state. That’s a big piece of it.”

Wind Turbine Income Potential Can Help with Hard Financial Times

While aesthetics and long-term use are considerations, Muth acknowledged the undeniable financial appeal. With commodity markets uncertain and farming costs rising, wind turbine revenue can provide a financial buffer.

“It used to be $10,000 to $12,000 a turbine annually. Now, we’re seeing north of $20,000 per turbine, all in,” said Muth.

Payments may include base lease rates, production incentives, and additional fees for underground infrastructure.

“It’s a great tool for being able to service higher-cost debt, boosting long-term internal rates of return, using leverage,” Muth noted. “That cash flow becomes a mechanism to continue to grow portfolios, making it competitive in some cases with other investments.”

While wind energy can offer financial upside, it is not a one-size-fits-all proposition. Landowners need to think about more than just income. Do they want to build a home on the property in the future? Will easements or aesthetics limit that possibility?

Landowners may also give up some control. “These easements are recorded; they’re real. That’s why we’ve built out our energy management team, because landowners need help navigating this,” he said.

Wind turbines can boost farmland value and provide a valuable revenue stream, especially for investors. But they come with long-term implications that require careful consideration and legal guidance.