Ripple Energy wind farm?

thevilla

Confirmation that the Tory Govt's green energy tax will not apply to Ripple co-op projects.

From the Ripple CEO on their forum:

"The tax will only apply to projects generating more than 100,000MWh per year. Both Graig Fatha and Kirk Hill are well within this limit, so we do not expect it to impact members' savings."

NedS

I'm looking at Ripple as I love the idea, but I just don't understand the investment case.

I use ~5000kWh per year electricity, so did a quote based on that. The website quotes £2956 and states I may make £5375 in savings over 25 years.

Some rudimentary maths shows that once I have recouped my capital, I'm seeing a return of £2419 over 25 years, or £96.76/year which equates to a 3.27% return on my investment (which does not tally with the claim I may save 25% of my bill). I can get the same return on a 20 or 30 year gilt with zero risk.

Where is the investment case here, or is it simply about being "green"? What am I missing as the argument to invest doesn't look overly compelling.

Also, what happens to my investment if I die? Can I leave it to my partner, or does it die with me?

QrizB

NedS said:

Where is the investment case here, or is it simply about being "green"? What am I missing as the argument to invest doesn't look overly compelling.

It's not pitched as a conventional investment, and there are higher returns available elsewhere (although I'll note that 3.3% gilt yields are a fairly recent phenomenon.)

For some people, it is (as you say) simply about being green.

For others, including me, it's a way of hedging against high energy prices. By owning a slice of an energy generator where the fuel is free and other OPEX is relatively low, higher wholesale prices = higher returns so they counterbalance my electricity bills.

I've got a UKWIND SSISA holding roughly equal to my Ripple membership.

Also, what happens to my investment if I die? Can I leave it to my partner, or does it die with me?

It's an asset held by your estate and can be left to whomever you choose. From the FAQ:

What if I die?

If you die your shares can be inherited by someone else. There is a section in the customer dashboard for you to enter the details of the person you would like your shares to be transferred to. Please also tell them of your wishes.

Spies

Has there still not been any more news about phase 3?

NedS

QrizB said:

NedS said:

Where is the investment case here, or is it simply about being "green"? What am I missing as the argument to invest doesn't look overly compelling.

It's not pitched as a conventional investment, and there are higher returns available elsewhere (although I'll note that 3.3% gilt yields are a fairly recent phenomenon.)

For some people, it is (as you say) simply about being green.

For others, including me, it's a way of hedging against high energy prices. By owning a slice of an energy generator where the fuel is free and other OPEX is relatively low, higher wholesale prices = higher returns so they counterbalance my electricity bills.

Thank you for the reply.

So how do I best apply some numbers to this - even if they are only approximations. If I purchase 100% of my usage (5000kWh), should I assume a 25% reduction in my bills as suggested in their promotional video. If so, that would be a saving of around £470/year which is very different from the predicted £5375 in savings over 25 years (£215/year). Is the difference between those figures due to the currently high energy prices, hence the hedging effect?

QrizB

NedS said:

QrizB said:

NedS said:

Where is the investment case here, or is it simply about being "green"? What am I missing as the argument to invest doesn't look overly compelling.

It's not pitched as a conventional investment, and there are higher returns available elsewhere (although I'll note that 3.3% gilt yields are a fairly recent phenomenon.)

For some people, it is (as you say) simply about being green.

For others, including me, it's a way of hedging against high energy prices. By owning a slice of an energy generator where the fuel is free and other OPEX is relatively low, higher wholesale prices = higher returns so they counterbalance my electricity bills.

Thank you for the reply.

So how do I best apply some numbers to this - even if they are only approximations. If I purchase 100% of my usage (5000kWh), should I assume a 25% reduction in my bills as suggested in their promotional video. If so, that would be a saving of around £470/year which is very different from the predicted £5375 in savings over 25 years (£215/year). Is the difference between those figures due to the currently high energy prices, hence the hedging effect?

I haven't watched their current video, but when I bought my share in Kirk Hill the proposal was based on each kWh generated returning 4.3p in dividend to the owner.

At that rate, 5000kWh would return £215 a year, which is the number you quote. For that to be a 25% reduction in your bill (ignoring standing charges), electricity would have to be around 17p/kWh - and from 2011 to September 2021 my tariffs were never higher than that, so in normal times that would be more than 25% of my bill.

For 25% of your bill to be £470/yr, you'd need to be paying almost 38p/kWh which is, historically, unprecedented (yes, I know, I know).

Exactly how much gets paid out will depend on wholesale electricity prices at the time. Currently, Ripple are suggesting that the first year of Kirk Hill will return 6.4p/kWh - but they've got no more of an idea of what wholesale electricity prices will be in a year's time (when Kirk Hill starts generating) than anyone else does.

What we do know is that the OPEX for Kirk Hill is 2p/kWh so, if they can sell for 10p/kWh we can expect to get 8p/kWh back; if they can only sell for 4p/kWh, we'll get 2p/kWh back.

Exiled_Tyke

I agree with @QrizB all the way on this.  I regard it as a hedge and not an investment. It's locking in a saving of electricity.  Ignore the 25% estimate altogether.  Rather run your own figures with the estimated production from your chosen investment level and the current estimates of savings as quoted by QrizB above.   There's no right or wrong answer to this. It's about your own green motives, attitude to risk and access to cash.

Martyn1981

On top of all the good economic advice given, can I lean into the green side a bit that's also been mentioned. This is really more psychological, but it's nice to be able to account for some, or all of your leccy/energy consumption. One way, as so many have done is PV. which reduces import, and on a net basis can displace a lot, possibly all of your leccy demand.

Many years ago I invetsed small amounts in a number of wind, PV, hydro etc etc generation schemes through Abundance. These are just investments, but in my mind, I pictured owning a small part of RE farms, thus generating more leccy, and netting off more of my consumption on a real time basis, perhaps even a contribution to other energy issues such as the transportation of goods we buy.

Ripple allows you to do this more directly, with an actual impact on your bills relative to the wind (and maybe solar in the future) generation. I love the idea, as I believe it really does, no tricks involved, better allow a household to account for its energy consumption.

For an example, my sister has bought a large property, it's a smallholding, and she's installed 3phase and a large PV system (10kWp). She has been looking into wind generation, but the numbers are very poor, despite the site having better poential v's urban installs. So the Ripple scheme(s) allows her to invest and aim for a situation closer to self generation. She's currently locked into a deal (pre horrific rises) for another year, but is very keen on the Ripple wind side. And of course not all properties are suitable for PV installs, so a PV farm scheme launch widens the green and ethical market too.

Of course not the same as being off-grid, but less complicated and a nice all round solution for on-grid properties going forwards.

NedS

Thank you everyone for your comments and for the discussion. I think you've all convinced me - it's not a large investment and we have the cash. At the worst we can view it as prepaying a good chunk of our bill up front for the next 15 years, and if energy prices stay higher for longer, then we are likely to see a decent return on investment, even if higher bills is something we would rather not see (as you say, it's a hedge against higher bills). Being mid-fifties now, it will nicely take us through to 80.

The only thing that concerns me now is the lack of visibility around what the next project may be, but the £25 reservation fee is not too steep to get on board.

70sbudgie

To add into the mix, I also had another reason for investing in a Ripple project. It is my personal belief that the we need more renewable generation connected to the grid. The Ripple model appears not to be to create new projects, but to buy and move forward with existing projects. (I'm less sure about this for Graig Fatha, but it certainly appears to be the case for Kirk Hill and I suspect that is what is happening with prohect 3 now, the sale negotiations). So it is a mechanism by which funding is made available to actually get generators online. And because of the mechanism by which the investment is returned, it is open up to the likes of me, who has a very limited pot available for investment.

So I chose my investment value for Kirk Hill so as to enable me to support multiple projects (I settled on 3 as the optimum).