Ripple Energy wind farm?

QrizB

chqshaitan said:

So at some point, we can expect to get about a 30% increase in our 'profit', just no idea as to when that will occur.

More than that.

The SPV (owned by the co-op and Bruntwood) is currently receiving 70% of the electricity and (all things being equal) 70% of the returns. The finance agreement is receiving the other 30%.

Once the finance is paid off (whenever that might be) the SPV will be receiving 100%, 10/7ths - almost 43% more than at the start.

Exiled_Tyke

chqshaitan said:

I have just spoken to ripple regarding any expected duration of the finance agreement but due to it being based on the returns, he was unable to provide me anything specific. I then asked if he had any rough idea and the answer was no, but he is confident that the finance will be settled prior to the 25 year anniversary.

So at some point, we can expect to get about a 30% increase in our 'profit', just no idea as to when that will occur.

Well banks would normally have more security than shareholders (i.e. if the project fails they would get the residual assets for the project or in our case the reduced resale value of the wind farm ahead of the investors).  Because of this (in theory) they shouldn't get quite the same rate of return as the shareholders.  This will be the case here (because we are told there should be more return for the investors).  However we do not know these terms. However given that shareholders are expected to reach payback in 13 years and that the banks repayments again depend on the performance of the farm then I'd expect something similar for the bank situation - but that is speculation. BUT if energy prices remain high and returns are greater (at current rates payback would be about 6 years) then the bank should be paid off sooner as well - hopefully !

And yes the 43% bonus is correct and would be great! 

JKenH

What is not known are the terms of the loan facility or the PPA, only that the arrangement “will not affect members’ returns”. Members will however eventually get a 43% boost to their ‘profit’. How does the old adage go? If it sounds too good to be true then it usually is.

One wonders why Ripple didn’t borrow 50% or even 90%. The returns for investors would be fantastic once the loans had been paid off. In fact why bother with investors at all? The answer of course is that the risk would be too great for a finance company and the investors are there to carry the risk. 

If the PPA is so advantageous that it will pay off the loan and interest before the end of the 25 year period as well as providing security then why do Ripple not enter into a PPA for the members’ share. In fact I thought that is what they would be doing given the agreement already entered into for Graig Fatha with Octopus. 

I haven’t invested but if I had I would be very interested, as a minimum, to know the interest rate on the loan. 

Edit: I started typing this before I saw the comments from @Exiled_Tyke so apologies for any duplication there. I hadn’t picked up on the expected 13 year payback. Do we have a calculation on which this is based?

QrizB

JKenH said:

I hadn’t picked up on the expected 13 year payback. Do we have a calculation on which this is based?

For Graig Fatha, page 29 of the offer doc gives a matrix of payback periods vs. electricity price estimates and P50 / P75 / P90 performance.
For Kirk Hill, page 35 has the numbers for P50 & P90. At the central price forecast and P50 performance, payback takes 13 years.

Exiled_Tyke

I'm not sure that it sounds too good to be true it's just the way this is working out and a 43% increase many years into the future sounds great but taking into account the time value of money probably isn't as good as it sounds.  

Why didn't they borrow more: well I think the intention was to involve as many shareholders as they could get because that's the whole idea of the project but realistically knew that they'd need to line up some debt finance.  This is a massive step up with seven times as many investors and 8 turbines.  

While there's great academic debate on optimum levels of gearing in general terms 30% is not considered unduly risky.  For comparison Greencoat UK Wind which is mainly invested in onshore turbines limits itself to 40% gearing (calculated slightly differently, I admit) and expects it to be between 20 and 30% as the norm.  

The 13 year payback is found in the offer documentation and also can be calculated from investment projections using a 'reward' price of 4.3p per kWh.  Though as I've expressed on these boards a number of times no-one should ever be using payback as it is inherently flawed (again another academic discussion for the offing) but is an easy short-hand for people to appraise investments with.  

Hope this is some help. 

70sbudgie

As @Exiled_Tyke said, the whole point of the Ripple projects is to construct windfarms (own and operate) on a more of a community / cooperative model. Debt finance is a common way to finance generation. I am not surprised that was Ripple's back up plan.

Exiled_Tyke

A few things I've learnt/interested me on this project: 


1. There's news on the Ripple website regarding latest stage of development.  But I can only get hold of the first few lines.  Can anyone else get the rest of it? 
2. https://www.enercon.de/en/news/news-detail/cc_news/show/News/enercon-receives-order-from-ripple-energy-for-eight-e-92-wind-turbines/   This one cheers me.  Only one piece of news here: the turbines have been ordered. But enough to excite me 
3. I've only just learned that this development overlooks Turnberry and hence upset Trump.  Did others know this already? I feel I should have known this.  I won't be political and express how this makes me feel.  But I don't regret my decision to invest. 

QrizB

Exiled_Tyke said:

1. There's news on the Ripple website regarding latest stage of development.  But I can only get hold of the first few lines.  Can anyone else get the rest of it?

Yes, if you scroll far enough down the page (further than you'd expect) you'll see a purple plus-in-a-circle. Click on that and the full story will pop up. (It's not a great UI/UX, but I guess we're paying them to build turbines not websites ...)

3. I've only just learned that this development overlooks Turnberry and hence upset Trump.  Did others know this already? I feel I should have known this.  I won't be political and express how this makes me feel.  But I don't regret my decision to invest. 

I found that out 3-4 weeks ago, after I'd invested. I assumed everyone else already knew so I didn't mention it   I do remember some news stories where Citizen Trump was complaining about wind turbines but apparently he didn't even file an objection.

Here's a non-political article from 2017:
https://www.dailyrecord.co.uk/news/local-news/wind-farm-near-turnberry-given-11659918

imeldamarcos

I notice that in the latest news, the timeline for starting the turbines has slipped from "November 2023" (as given below) to "2023/2024". Slightly alarmed that no month is given in the 2023/2024 estimate. I will ask Ripple Energy's CEO to explain why the project is already behind schedule as, even allowing for the delay in raising funds, it should still have started generating by the end of 2023.

Project timeline: At a glance

May 2022
Share offer closes

May 2022
Pre-construction preparation

July 2022
Track works start

September 2022
Crane hardstandings construction

December 2022
Turbine Foundations works start

January 2023
Grid connection works

February 2023
Control building construction

July 2023
Turbine deliveries begin

November 2023
Turbines start

70sbudgie

I remember reading in the offer document, that the grid connection works were being reviewed. It is quite possible that the delay for energising the turbines has been delayed until early spring 2024 due to grid constraints. It is not unusual for grid companies to refuse to schedule planned works during winter due to increased likelihood of unplanned works. More storms in winter, therefore operational staff are too busy fixing existing network to be able to energise new connections. 

It could also be that they have learned from the energisation of Graig Fatha and have tweaked the timeline to be more realistic.