Ripple Energy wind farm?

TCA

Exiled_Tyke said:

"Applicants should understand that any share purchase they make is an acknowledgement of their support for the development of renewable energy and accordingly, a subscription for shares in Ripple Wind Coop 2 should be primarily regarded as an investment for social and environmental purposes rather than one which will produce a significant financial return"

So why not simply invest in a wind turbine company such as Greencoat Wind (not a recommendation by the way) which is an 'investment for social and environmental purposes' and is currently also paying decent returns?

The two were compared at some point in this thread (last month I think) and although I was being devil's advocate for the Ripple Co-op (in terms of it being a different beast to a straightforward investment like Greencoat), I'm struggling to convince myself that actually owning a share in a wind farm this way is worth the bother. I think perhaps I'm not as altruistic as I thought I was and now leaning towards what Greencoat offers. I've no desire to own both.           

thevilla

retireddoc said:

I paid my £25 a few months ago and am now thinking about what to do. The return in terms of energy bill reductions doesn't look too bad, but that of course will depend on future electricity prices.

If I understand it correctly, you get back the difference between wholesale cost and the cost of production which is factored in at about 2p/Kwh. They've projected 6p/KwH but wholesale is currently around 16p so if it stays around that then payback is much quicker. But current prices aren't likely to last, it seems to be a bit of a political issue that's put them up, and lots more wind power will be coming on stream.

It took me a while to get my head around what happens to the capital. It looks like they assume depreciation of 5%pa so will depreciate your capital down to zero over 20 years. But you don't get any of it back, it's included in the payments that are based on electricity production and wholesale cost. This makes the projected 4.9% return look poor. What happens in 20 years time? Do you continue to get income from it? Or do they then have a green light to ask for more dosh for new blades or whatever?

"It looks like they assume depreciation of 5%pa so will depreciate your capital down to zero over 20 years. But you don't get any of it back"

I believe the 5% capital is expected to be repaid in addition to the share of operational profit

"Each year of operation the Board expects to 
repay 5% of share capital to each shareholder."

chqshaitan

thevilla said:

retireddoc said:

I paid my £25 a few months ago and am now thinking about what to do. The return in terms of energy bill reductions doesn't look too bad, but that of course will depend on future electricity prices.

If I understand it correctly, you get back the difference between wholesale cost and the cost of production which is factored in at about 2p/Kwh. They've projected 6p/KwH but wholesale is currently around 16p so if it stays around that then payback is much quicker. But current prices aren't likely to last, it seems to be a bit of a political issue that's put them up, and lots more wind power will be coming on stream.

It took me a while to get my head around what happens to the capital. It looks like they assume depreciation of 5%pa so will depreciate your capital down to zero over 20 years. But you don't get any of it back, it's included in the payments that are based on electricity production and wholesale cost. This makes the projected 4.9% return look poor. What happens in 20 years time? Do you continue to get income from it? Or do they then have a green light to ask for more dosh for new blades or whatever?

"It looks like they assume depreciation of 5%pa so will depreciate your capital down to zero over 20 years. But you don't get any of it back"

I believe the 5% capital is expected to be repaid in addition to the share of operational profit

"Each year of operation the Board expects to 
repay 5% of share capital to each shareholder."

yea the repayment is included in the monthly money returned. you can log on to the portal and get a detailed breakdown of the split annually.

I am in not sure what to do about this myself but am feeling like it's worth the money, as I suspect the price of electricity can only go one way, it's just a matter of how bumpy the ride is.

Coastalwatch

Yep, I'm in for it as well. My take being that energy secured at 2p/kWh is going to take some beating in the years ahead. Given that the last round of published CfD prices were circa 4.5p/kWh to come on stream in about five years time. Then add on the cost of nuclear at circa 10p/kWh and a reducing % of gas, at who knows what price, then I cannot see wholesale prices approaching any where near 2p/kWh in the foreseeable future(life of the turbine). But that's just my take. Others may have different views of course, perhaps clinging to the hope that the nuclear fusion riddle will be solved where upon there will be an abundance of energy available for us all at near zero cost.

That's assuming they haven't blown us all up in the attempt in the meantime.

legoman62

I'm in today

tmo10984

thevilla said:

retireddoc said:

I paid my £25 a few months ago and am now thinking about what to do. The return in terms of energy bill reductions doesn't look too bad, but that of course will depend on future electricity prices.

If I understand it correctly, you get back the difference between wholesale cost and the cost of production which is factored in at about 2p/Kwh. They've projected 6p/KwH but wholesale is currently around 16p so if it stays around that then payback is much quicker. But current prices aren't likely to last, it seems to be a bit of a political issue that's put them up, and lots more wind power will be coming on stream.

It took me a while to get my head around what happens to the capital. It looks like they assume depreciation of 5%pa so will depreciate your capital down to zero over 20 years. But you don't get any of it back, it's included in the payments that are based on electricity production and wholesale cost. This makes the projected 4.9% return look poor. What happens in 20 years time? Do you continue to get income from it? Or do they then have a green light to ask for more dosh for new blades or whatever?

"It looks like they assume depreciation of 5%pa so will depreciate your capital down to zero over 20 years. But you don't get any of it back"

I believe the 5% capital is expected to be repaid in addition to the share of operational profit

"Each year of operation the Board expects to 
repay 5% of share capital to each shareholder."

It looks like it's not additional to savings, maybe it's instead of ?

TCA

The forecast returns are about 7% per annum. 5% of that will be return of capital, which isn't taxable. The rest, which they call "trading benefit" in the latest share offer document, is taxable. What they can't confirm is how it'll be taxed.

The share offer document for Graig Fatha referred to interest income and the personal savings allowance. The share offer document for Kirk Hill also referred to interest income in parts but also mentioned the annual trading allowance. I asked Ripple which it was and they don't know. They "are looking to open dialogue to treasury to clarify the position".

If the trading benefit turns out to be taxable as self-employed income, the £1,000 trading allowance will work for those who aren't self-employed, but anyone who is self-employed and wants to claim their expenses as a tax deduction (because they're over £1,000) can't also claim the trading allowance and would therefore would be liable to pay income tax and national insurance on the trading benefit.            

QrizB

Coastalwatch said:

Yep, I'm in for it as well. My take being that energy secured at 2p/kWh is going to take some beating in the years ahead. Given that the last round of published CfD prices were circa 4.5p/kWh to come on stream in about five years time. Then add on the cost of nuclear at circa 10p/kWh and a reducing % of gas, at who knows what price, then I cannot see wholesale prices approaching any where near 2p/kWh in the foreseeable future(life of the turbine).

I was thinking about exactly this earlier.

The current Ofgem price cap - 21p/kWh - was based on wholesale electricity at 7.4p/kWh inc VAT. The coming 28p April cap is based on something like 17p/kWh. Ripple is unlikely to achieve those averages - when the wind blows, prices fall - but even so it seems to me that wholesale electricity prices will remain bouyant for the next few cap periods.

Longer term, if wholesale prices fall back to 6p/kWh we will hopefully see retail prices returning to the teens. And if they really were to plunge to 2p/kWh (reducing Ripple's profits to zero) my hedge will have been unnecessary and I'll just enjoy the unprecedentedly-cheap energy.

em987623232

Thanks all. There are worse problems to have!!

em987623232

I'm so sorry that was for the wrong thread.

I too think that electricity prices are only going one way so have also sprung for this this as a hedge.