Appraisal Economics valued the legal rights to harness the flow of wind on a large tract of high plains acreage in the western United States. So-called “wind rights” permit the holder to generate renewable electricity by converting kinetic energy into electrical energy, which is sold in the wholesale utility market. Wind is one of the fastest growing sources of electricity in the United States, due in part to state mandates regarding the proportion of electricity generated from renewable energy sources such as wind, solar, hydro, geothermal, and biomass, which are cleaner than traditional hydrocarbon-based energy sources. To value the wind rights, we used the income approach, which requires projecting future cash flows, allocating the total cash flows between the tangible real property and the intangible wind rights, and discounting to present value the cash flows that accrue to the owner of the wind rights. The results of our valuation were used by our client for tax purposes.
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