The use of the rotor equivalent wind speed for determination of power curves and annual energy production for wind turbines is advocated in the second edition of the IEC 61400-12-1 standard. This requires the measurements of wind speeds at different heights, for which remote sensing equipment is recommended in addition to meteorological masts. In this paper, we present a theoretical analysis that shows that the relevance of the rotor equivalent wind speed method depends on turbine dimensions and wind shear regime. For situations where the ratio of rotor diameter and hub height is smaller than 1.8, the rotor equivalent wind speed method is not needed if the wind shear coefficient at the location of the wind turbine has a constant value between −0.05 and 0.4: in these cases, the rotor equivalent wind speed and the wind speed at hub height are within 1%. For complex terrains with high wind shear deviations are larger. The effect of non-constant wind shear exponent, ie, different wind shear coefficients for lower and upper half of the rotor swept area especially at offshore conditions is limited to also about 1%.