The average airflow inclination in complex terrain may be substantial. The airflow inclination affects wind turbine performance and also affects the cup anemometer being used in power performance measurements. In this article the overall dependence of the power curve on inclined airflow is analysed for its influence on both the wind turbine and the cup anemometer. The wind turbine performance analysis is based on results of measurements and theoretical calculations with the aeroelastic code HAWC coupled to a 3D actuator disc model for varying yaw angle. The cup anemometer analysis at inclined flow is based on an averaging of measured angular characteristics in a wind tunnel with the distribution of airflow inclination angles over time. The relative difference in annual energy production in terrain with inclined airflow compared with flat terrain is simulated for cup anemometers with theoretical optimal angular characteristics for two different definitions of wind speed, as well as for five commercial cup anemometers with measured angular characteristics. Copyright © 2004 John Wiley & Sons, Ltd.