Ripple Energy wind farm?

Exiled_Tyke · 9 March 2022 at 11:52PM

The deal breaker for me on this was that each year shares get cancelled so voting rights and control are lost and in time shareholders are left with nothing. I've never before come across an 'ownership' scheme where rights of ownership are eroded from the outset. Any residual value in the windturbine(s) won't be going to those who invested....so to whom I ask?

Verdigris · 10 March 2022 at 12:09AM

I thought the capital was paid back in annual instalments. A 25 year old turbine is worthless, in theory, as it is at end of life. I assume somebody else gets to gamble on whether it can be re-lifed for another 5/10/15 years.

chqshaitan · 10 March 2022 at 12:10AM

No, my understanding is that the co-op gets to decide what happens after the 25 years

TCA · 10 March 2022 at 12:15AM

Exiled_Tyke said:

Any residual value in the windturbine(s) won't be going to those who invested....so to whom I ask?

As I understand it the co-op/SPV will still own whatever remains and everyone still owns their original share of the wattage output (if there is any).

Costs will have been allocated to decommission the site at end of life, but all options for further investment will be on the table. e.g. refurbishing.

Exiled_Tyke · 10 March 2022 at 7:53AM

TCA said:

Exiled_Tyke said:

Any residual value in the windturbine(s) won't be going to those who invested....so to whom I ask?

As I understand it the co-op/SPV will still own whatever remains and everyone still owns their original share of the wattage output (if there is any).

Costs will have been allocated to decommission the site at end of life, but all options for further investment will be on the table. e.g. refurbishing.

As I understand it every share holder gets some shares cancelled ever year until there are none left. So yes if there is more life left in it then investors don't get the benefit. If I'm wrong on this then that's all well and good, but the prospectus is confusing. It still appears to me to be over complicated. I'd really love to do something like this but can't find an advantage over simply buying shares in a WT company.

Coastalwatch · 10 March 2022 at 10:30AM

Don't know if the lines below help to qualify matters at all. They are taken from Ripples FAQ section.

What happens at the end of the wind farm's life?

Towards the end of the wind farm's life the co-op will assess its options. These may include (1) decommissioning the turbines and walking away (2) putting up new turbines, or (3) refurbishing the existing turbines to extend their life.
If the co-op members decide to decommission the turbines the decommissioning costs and the scrap value of the turbines will be assessed. The difference between the two will be built up over a number of years. If it decides to put up new turbines then it will open a new share issue to raise the money to do that. You would not be obliged to participate in the 'new' wind farm share offer. If the co-op decided to refurbish the turbines the cost of the refurbishment would be built up from the operating costs. Co-op members are not required to pay additional monies to the co-op at any point.

imeldamarcos · 10 March 2022 at 2:20PM

With respect to the end of the life of the wind farm, my opinion is that there would be very little residual value at the end of 25 years as not only will the turbines be worn out, there will also be a need to re-apply for planning permission. However, about 90% of wind farm planning permissions get renewed so perhaps not too much risk here. One much greater risk (which I couldn't find previous discussion of) is political risk arising if Scotland becomes independent as the wind farm could then be in a jurisdiction which may be foreign to most of its owners and managers. The international law firm, Herbert Smith Freehills, has produced an excellent report entitled Scottish Independence: implications for GB's single energy market, renewables and net zero which is currently on the internet. One would expect Scotland and the UK to co-operate closely if the former became independent but at the moment we are only too aware of the political significance of energy supply. I think that cross border energy transmission would become an issue in any future debate prior to a referendum. Perhaps political risk should have been explicitly included in the Risk Factors listed on page 38 of Ripple's Share Offer document. I will take this up with them and ask what they think. I would also be grateful for any other views, am I worrying about something which is not really significant?

Verdigris · 10 March 2022 at 2:45PM

Renewable energy would be a (the?) major export from Scotland, so I don't think they are likely to do anything to impede exports. However, I suppose one small co-operatively owned site is neither here-nor-there in the great scheme of things.

Nothing is likely to happen within the, probably conservative, ROI timescale, so I guess you might not make a profit but you won't have lost your investment.

TCA · 10 March 2022 at 3:00PM

imeldamarcos said:

One much greater risk (which I couldn't find previous discussion of) is political risk arising if Scotland becomes independent as the wind farm could then be in a jurisdiction which may be foreign to most of its owners and managers.

The owners, no matter in which country they reside, would still be the owners. We're not talking about assets owned by countries. The UK already imports energy from abroad, so what's left of the UK importing from an independent Scotland needn't be an issue. It wouldn't be in anyone's interests to alter the national grid setup.