Ripple Energy wind farm?

paulbds

My understanding from reading the announcement  is that its a new project that is forthcoming

I stand to be corrected

Have a great weekend 

imeldamarcos

Yes I agree that today's email about the Kirk Hill financing does sound promising for members of the Co-op and I look forward to finding out more about the terms of the financing. It sounds to me as though the bank financing may be repaid, at least in part, with electricity from the wind farm but we will have to wait for further details.

Exiled_Tyke

Petriix said:

QrizB said:

From today's Kirk Hill email:

All you need to know about the Kirk Hill share offer: 

The breakdown of the SPV, the entity which owns the project is as follows: The equity raise has funded 70% of the project. The remaining 30% of the funding will be from a finance facility. The cooperative's share is made up of 5,603 individuals and 18 businesses. It will own 57.6% of the project. That's a raise of over £13m. Commercial property company Bruntwood, Kirk Hill's co-investor, will own a 42.4% share The finance element will have a separate, longer term power purchase agreement to provide certainty over revenue to the bank and will not affect the member returns.  Once the finance facility has been repaid, members are set to receive additional returns from the excess power being generated.

That sounds promising.

The last bullet point is particularly interesting. It implies that the finance is less expensive than paying out to coop members; so we might all be better off this way than if it had sold out completely. 

This is a point I have raised before when the issue of taking out loans was raised and potential investors expressed concern. Loan capital carries less risk to the lender than share capital and therefore is usually cheaper. Hence (in theory at least) with a smaller number of shareholders and greater debt each shareholder can potentially end up better off.   The argument has lead to a whole field of academic theory on the optimum balance between debt and equity structure. 

Reed_Richards

But the so-called shareholders are not shareholders, they are lenders who will see their debt repaid at 5% per year.  Ripple writes about ownership but it's only ownership in the same sense that your mortgage company owns some of your house.    

Exiled_Tyke

Reed_Richards said:

But the so-called shareholders are not shareholders, they are lenders who will see their debt repaid at 5% per year.  Ripple writes about ownership but it's only ownership in the same sense that your mortgage company owns some of your house.    

Yes it's a strange situation. However the key issue here is that for the life of the project it is the investors who will benefit from the upside risk, or (as they have put it) any excess returns will go to the investors (as lenders returns are fixed.  That said it is investors that will also suffer downside risks (i.e. under production) but it does appear that they have incorporated a lot of slack into the structure to try to avoid that.  

Reed_Richards

Do Ripple state explicitly what happens if an investor (or their heirs) want their money back prematurely?

Exiled_Tyke

Reed_Richards said:

Do Ripple state explicitly what happens if an investor (or their heirs) want their money back prematurely?

"Share withdrawal: Shares can be withdrawn by members terminating their Customer Agreement by giving notice to Ripple or as otherwise described in the Customer Agreement and subject to the discretion of the directors. If no one wishes to buy a corresponding number of shares, or the co-op lacks sufficient cash, the value of the shares you wish to withdraw may not be paid until such time as the Board decides it is reasonable to do so."

QrizB

chqshaitan said:

paul991 said:

they have announced a new offer  coming  but if there's a implied limit on total watts  bought most existing members wont  be able to invest but we have to wait and see when launched

Yes, I thought that this was strange, as even though you may have maxed out your existing allocation, you can still reserve into the new farm. 

I reckon that they will only allow peps who have not maxed out their allowance to invest, but you never know

Your "allowance" is pretty much arbitrary and self-declared.

If you decide that, actually, you're going to use more electricity than expected (eg. you're going to buy an EV or two, and replace your gas combi with a heatpump) then you can increase your expected annual consumption figure and buy a biigger slice of Ripple.

Someone said there's a soft cap in the system somewhere but it seems fairly high.

pochase

The soft cap seems to be 7000KWh, but that only means up to 700KWh they will allow you to buy without any proof, after that you have supply a proof why you want to but more than 7000KWh, for example an energy bill showing a higher usage.

JKenH

QrizB said:

From today's Kirk Hill email:

All you need to know about the Kirk Hill share offer:

The finance element will have a separate, longer term power purchase agreement to provide certainty over revenue to the bank and will not affect the member returns.  Once the finance facility has been repaid, members are set to receive additional returns from the excess power being generated.

The finance element will have a separate, longer term power purchase agreement to provide certainty over revenue to the bank and will not affect the member returns. 

I would be interested to know how variations in generation volume and price variation are dealt with under the PPA. Presumably the buyer will have agreed to take a certain volume of the project’s output at a fixed price. 

Will this will be a fixed percentage of hourly output or will it be a set volume of generation over a longer period or some other alternative? When output is low/prices high will Ripple be at liberty to sell as much as they can on the open market (e.g. the day ahead market) maximising the returns to the members or will it be obliged to provide a minimum amount to the buyer?

Conversely can Ripple supply their customer under the PPA at the fixed price at times when wholesale (day ahead) prices are low. I just don’t know how PPAs provide for these scenarios so any insight would be much appreciated.

Edited to include the reference to the PPA. Previously this disappeared and just referred to quote but now appears twice. Also deleted @QrizB comment as otherwise by my quoting a specific clause it appeared the comment related specifically to this rather than the entirety of the Ripple quote. 

Edit 2: added “Conversely…. … appreciated”