Ripple Energy wind farm?

Craglett

I've been wondering about the cost of investing in subsequent projects because, as far as I can tell, this won't be the only opportunity to invest in your own portion of a wind turbine. So is the next turbine cheaper and more powerful/efficient than this one? 

Martyn1981

Craglett said:

I've been wondering about the cost of investing in subsequent projects because, as far as I can tell, this won't be the only opportunity to invest in your own portion of a wind turbine. So is the next turbine cheaper and more powerful/efficient than this one? 

Again, a great question, but a tricky answer. We can expect WT's to get more efficient, and possibly gain from size too, but there are issues around the max size of on-shore WT's due to the transport problems, and costs of moving/renting super size cranes and the necessary site preparation. So bigger might cost more to install, and the best locations may have already been cherry-picked, such as good wind, easy access, and nearby leccy connection. So the better future WT's may have the potential to generate more leccy, but may also have higher costs in some regards negating some of the wins.
Then we have old sites being improved with a smaller number of larger WT's being rolled out as the original ones get old, less efficient.
And of course ...... almost anything else could happen too ..... which is kinda fun?

JKenH

Craglett said:

I've been wondering about the cost of investing in subsequent projects because, as far as I can tell, this won't be the only opportunity to invest in your own portion of a wind turbine. So is the next turbine cheaper and more powerful/efficient than this one? 

With new technology there is always something better/more efficient/cheaper just round the corner. When it comes to items for domestic use just get the latest and enjoy it and upgrade later if you want. We expect our phones/laptops to depreciate rapidly and accept that as part of our lives but we have had fun from them while they were the latest thing.

With an investment you need to look at whether the revenue it generates will still give both a return on capital and a return of capital; i.e. will you get more back over time than you put in. I have been urging caution on investing in renewable energy because of the recent experience of falling energy prices leading to write downs in the value of assets. (There are some comments on the green and ethical investment thread and the alternative green energy thread regarding this.)

Mart may be right that any future increases in efficiency from larger turbines may come at an increased cost of installation so today’s wind farm night produce less power but could still produce the same return of/on capital as one built in 5 years time. The technology has effectively matured.

What we can’t predict is the future of electricity prices for the reasons already discussed.

There is an increasing demand for green and ethical investments which should help maintain the value of green assets (in fact most renewable energy focussed investment trusts are trading at a premium to net asset value). However a number of established players are reigning back investment in wind and solar as they are concerned that future revenues (electricity prices) may make new investment uneconomic.

As others have said on this thread we owe it future generations to support the roll out of new renewable technology but only you can decide whether that is sufficient motivation to proceed given that this like any other investment comes with a risk of losing some or all of your capital. 

It also depends on how risk averse you are as an individual and what you might otherwise do with that sum of money you were thinking of investing. Personally I get satisfaction from owning assets where there is risk and I say that having lost 100% of my investment In one company and seen a couple of others taken over when the value of my investment had fallen by 90%. I have also, like many investors who thought their money was safe, seen my investment in a unit trust run by a celebrated fund manager decimated.

You might never get your investment back but at least you’ll save some money on your bills.

mgfvvc

I'm thinking I'll probably go into the second or third co-op. It's not for me this year, but it might be for next year.

Craglett

My situation is that I've already got solar panels (a shade greener owned), an air source heat pump for space and water heating, and an elecreic car. As mentioned before, my elecreic comes from Bulb who buy (and offset?) renewable already. So for me, this is probably an exercise in reducing (or stabilising) my electricity bills in the years to come.

If I invest, its likely I'll have to add that amount to my mortgage (15 years remaining). With Ripple predictions I stand to save on average £125 per year on my bills after outlay (but not including interest paid on the extra mortgage amount). 

Perhaps if the saving were more, I probably wouldn't even be thinking about this and would just have gone ahead already, but I can imagine £125 saving could get swallowed up quickly if the cost of electricity drops. 

The predictions in the 3 reports posted earlier seem to show the cost of generation dropping quite quickly £85 per Mwh down to £55. Unless I've misinterpreted those figures (or of course they turn out to be wrong). 

joefizz

Craglett said:

Crystal ball moment here... Based on solar panels, wind turbines and battery storage reducing in price significantly, over the next 25 years are we expecting electric prices continue to rise, stay the same or reduce? Anyone know enough about this to hazard an educated guess? 

I'll disagree with your first comment about them reducing in price. Certainly you will get more for your money (the apple effect) but I cant see prices reducing 'significantly' at all. Certainly in terms of investment, things have never been cheaper to finance and that is starting to unwind but perhaps another discussion for another time.
To answer your second question, all of the above is the most likely answer in that most electricity suppliers are gearing towards time of use tariffs and seasonal costs. It is highly likely that say at the minute costs will be higher than a couple of weeks ago due to having to burn coal again due to inefficiences of gas and unavailable wind. How and when are the questions. The results from smart meter trials have been in for a while and smarter meters need to roll out to a higher level to get more results and so on. Right now the meter standards havent fully been set so until thats sorted its hard to put a timeframe on it. Smaller schemes or certain tariffs may require installation of the meter (as some do already) as part of any deal and it may just be that fixed tariffs increase in price so much people will have to move.
Something Ive touched on before is the roc/fit subsidies and people thinking they will last for the term (despite some of the contracts specifying buy out clauses or fixed rates for the last 10 years) but if you look at the proposed green deals (David McWilliams did a great recent podcast with the Angrynomics guys where he touched on a possible way forward, which seems to be gaining traction from a lot of commentators), then a lot of the green stuff could be nationalised (yes including the panels on your roof if you have signed up to rocs/fit). The current thinking is definitely moving away from individual subsidies to national scales so whilst I wouldnt lose any sleep over it, it is a possibility if you are basing calculations on more than say 5 years into the future. Of course David McWilliams comments are mostly about the EU green deal and national infrastructure bank/sovereign fund (which may apply here in NI as opposed to GB) but it is well worth a listen for context rather than detail (Id also recommend Mark Blyths podcasts as well - angrynomics book is on order here ;-))

Exiled_Tyke

I looked at this and found the whole scheme too odd.  Why can't they just offer a straightforward cash return on investment? My main complaint is that its just too tying. I want to be left with the freedom to choose from the open market and my investment decisions to be entirely separate from that. I cannot see a sensible reason to link the two together.  It's a 'No' from me. 

JKenH

I like the thought of investing in a wind turbine (that isn’t in my back yard) to get cheap electricity but I’m not sure the figures stack up.

Looking at the prospectus the cost of the wind turbine is £1.65/watt or £1650/kWp so is in the same ball park as a small solar installation. 

In the example quoted in the prospectus an investment of £1879.50 (£1790 plus 5%) buys 1.08 kwp which is estimated will result in average generation of 2900kwh p.a. If I have understood this correctly the cooperative returns 4.5p/kwh generated so you get back £130.50 in “savings“.

Part of your saving is return of share capital, and part is trading benefit.

5% of the initial investment is £93.95 so the trading benefit (I.e the return on investment) is £36.55 p.a. or 2% p.a. Subject to the caveat (see below) that the savings are sufficient to cover the return of capital. (The savings are based on the wholesale cost of electricity being £65/MWh)

It is the intention that 5% of the shares issued in this offer will be withdrawn each year of the turbine’s operation. The value of those share withdrawals will form part of your savings and will not be taxable. The remainder of the savings will be potentially taxable as your trading benefit as a member of the co-op. In the event the savings in any year are less than the value of the equivalent of 5% of the share capital, a larger proportion of shares will be withdrawn in following years (if the savings are sufficient) so that the 5% per annum cumulative position is achieved on an average basis. 

(I don’t know about anyone else but I hate doing my tax return and try and keep all my investments in a tax free wrapper. Not only do you have to pay tax on the £36.55 but you have also to mess about finding the tax certificate to find the figure to enter on your tax return.)

So the bottom line is you are getting a 2% before tax return on investment with a risk that if the wholesale electricity price drops below £65MWh you won’t get all of your capital back. It also doesn’t seem particularly easy to get your money out quickly if you need it and if the term of the project is greater than your anticipated remaining lifespan that is a complication your executors won’t thank you for.

Maybe if a cooperative investment in a bigger more efficient turbine was available it would produce a better return. 

JKenH

I just had a look at the average wholesale price of electricity and for the year 1/3/2019 to 29/2/2020 (.i.e. pre Covid) and the average was £38.46/MWh.
The other point to bear in mind that there is generally an inverse relationship between the wholesale electricity price and the wind generated. (i.e. at times/days when the wind turbines are generating at their best the wholesale price tends to be lower.) So when the wind turbine is running at its maximum output the likelihood is the price achieved will be less than average and on a still winters day when the price is high output might be minimal. 

starquake

I signed up this morning -> just to offset future massive price increases once Nuclear power starts to turn off in the 2025 timeframe.    It's also fact we are moving house in next 5 years, so we can't put solar/battery in, so seemed the best "green" thing we could do whilst we limited in moving.   Equally I can't see us moving off Octopus's Agile tariff anytime soon, meets what we want with our EV at home, and is easily teh cheapest tariff on market right now.