Ripple Energy wind farm?

Coastalwatch

70sbudgie said:

NedS said:

will-he-payitoff said:

ProDave said:

Thanks. So about 2 years from signing up to starting to receive income.  That 2 years needs to be added to any calculated "payback period"

The wind turbine is going to operate for  25 years so you are saving for 25 years from start of generation not when you paid your money.

Yes, but I think the point being made is that when accounting for that cash investment, there may be a 1-2 year period where that cash is tied up, producing zero income, could have been yielding 5% in a savings account whilst inflation is at 10%

The 2 year delay between investing and any return is what made me limit my investment (as well as wanting to suport more projects, so not maxing out on my first).

However, given the increases in the cost of electricity since I made my investment, I would do it differently. I would invest more and hope that I would be able to support additional projects later, on the assumption that my electricity usage would increase (with the installation of things like heat pumps).

It would be interesting to hear from someone who invested in Craig Fatha as to what sort of return their (almost) first year is looking like.

Currently sitting at a tad under 10%, so approx 1% per month. Remembering that 5% of the year end figure will be capital return.

70sbudgie

I think I got my head around the capital return bit, but isn't "just" a financial terminology thing for the tax calculation? (And sort of like a guarenteed minimum RoI).

If I were to do a standard return on investment calculation, ie how much I make a year over how much I invested, that leaves you with the 10% (for 10 months, I can't remember when CF went live?). That is more than reasonable since inflation didn't start going up severely until the middle of the year. Next year, at 27%, (unless it is a no wind year like 2021), it will be an ever better RoI.

I wonder if the strike price of 27p is to protect Octopus, a little, from the price cap? Although the cost of electricity may keep going up, it is impossible to tell what OFGEM will do with the cap. Perhaps it also takes into account the renewable energy that is planned to come online next year - this year's additional wind generation must have made a dent in the average p/kWh. (I don't include Kirk Hill in that as 20MW isn't much compared to 1.2GW). The invasion of Ukraine wasn't something I think anyone in the energy industry predicted, so couldn't possibly be accounted for in advance.

Coastalwatch

With normal financial investments your money is returned at the end of the agreed period, but at the end of the turbines life, 20 to 25 years there is little value remaining, hence returning 5% of capital each year to address this.

My priorities in determining whether or not to invest were:-

1, It was clean renewable energy so minor assistance in cleansing the grid.

2, It was a community project so all proceeds being returned to its members each having one vote no matter what size their share..

3, Security of fixed cost of energy supply at a little over 2p/kWh for 25 years.

4. ROI was projected at 14 years based on energy prices at the time(about the same as for our PV array) so if you were taking part purely for financial returns it really wouldn't stack up.

None of us knew, or indeed knows, what the future holds but energy at 2p/kWh while we were in the throws of transitioning away from FF's was simply an opportunity not to be missed.

 

Coastalwatch

Coastalwatch said:

With normal financial investments your money is returned at the end of the agreed period, but at the end of the turbines life, 20 to 25 years there is little value remaining, hence returning 5% of capital each year to address this.

 

I've been pondering further on the above and while it is in essence correct then with the turbine at it's life's end and removed there remains a considerable asset value, not least connection to the Grid, turbine foundations and trackwork etc.

I've no idea how much a turbine is to purchase/deliver/install but presumably only a portion of the £4.7m originally required to install and connect to the grid from a bare greenfield site!

My only previous knowledge of anything similar was in regard to self build properties whereby once services were in place and foundations laid then a mortgage could be arranged and approved for up to 50% of the finished value of the property. No idea if a similar % would apply with WT1.

From the Coop's point of view then rather than just walking away from the site or starting again elsewhere presumably the aim would be to install a replacement turbine upon the same foundation and grid connection at a fraction of the cost of the first.

I appreciate an extension to the original lease would need to be negotiated(maybe an option for this is already in place) but fundamentally the cost to install a replacement should be significantly less than the original and for all its members a fresh opportunity to engage for a further 25 years on even better terms!

Or am I just peering through rose tinted glasses once again?

Martyn1981

Coastalwatch said:

Coastalwatch said:

With normal financial investments your money is returned at the end of the agreed period, but at the end of the turbines life, 20 to 25 years there is little value remaining, hence returning 5% of capital each year to address this.

 

I've been pondering further on the above and while it is in essence correct then with the turbine at it's life's end and removed there remains a considerable asset value, not least connection to the Grid, turbine foundations and trackwork etc.

I've no idea how much a turbine is to purchase/deliver/install but presumably only a portion of the £4.7m originally required to install and connect to the grid from a bare greenfield site!

My only previous knowledge of anything similar was in regard to self build properties whereby once services were in place and foundations laid then a mortgage could be arranged and approved for up to 50% of the finished value of the property. No idea if a similar % would apply with WT1.

From the Coop's point of view then rather than just walking away from the site or starting again elsewhere presumably the aim would be to install a replacement turbine upon the same foundation and grid connection at a fraction of the cost of the first.

I appreciate an extension to the original lease would need to be negotiated(maybe an option for this is already in place) but fundamentally the cost to install a replacement should be significantly less than the original and for all its members a fresh opportunity to engage for a further 25 years on even better terms!

Or am I just peering through rose tinted glasses once again?

Hiya CW. I don't know if this follows for onshore wind, but a few years back I read that the cost of installing offshore wind monopiles and building out the leccy infrastructure, was around 40% of the cost. So if that follows, then a replacement onshore wind turbine, from the ground/base up, would be around 60%, assuming no cost savings as turbines develop.

[For PV farms, I think the non panel costs are around 50%.]

Alnat1

Not sure there'll be another 25 years left in me though.

JKenH

Alnat1 said:

Not sure there'll be another 25 years left in me though.

Good point; me neither. One more issue for the executors to sort out. Current annuity rates for a 70 year old, single life, are around 8%. No wait before an annuity starts paying out either. Ripple is a good idea for the youngsters.
          

NedS

JKenH said:

Alnat1 said:

Not sure there'll be another 25 years left in me though.

Good point; me neither. One more issue for the executors to sort out. Current annuity rates for a 70 year old, single life, are around 8%. No wait before an annuity starts paying out either. Ripple is a good idea for the youngsters.
          

Agreed - I'm mid 50's and wouldn't consider it if I were much older, but figure I hopefully have 30 years left in me so long enough to make sense. For anyone much over 60, it adds a further dimension to consider.

Coastalwatch

NedS said:

JKenH said:

Alnat1 said:

Not sure there'll be another 25 years left in me though.

Good point; me neither. One more issue for the executors to sort out. Current annuity rates for a 70 year old, single life, are around 8%. No wait before an annuity starts paying out either. Ripple is a good idea for the youngsters.
          

Agreed - I'm mid 50's and wouldn't consider it if I were much older, but figure I hopefully have 30 years left in me so long enough to make sense. For anyone much over 60, it adds a further dimension to consider.

 
That's easily resolved as one simply nominates who is take over the vacant share, so not really any great obstacle.

Graig Fatha is just completing it's first weeks generation of the year showing a capacity factor of 62%. The best start to a month since installation. So fingers crossed for another healthy return this month and while I may not see our shares fulfilment in its entirety I'm jolly well enjoying the journey while here.

S'funny how some peoples glasses appear to be permanently half empty!

70sbudgie

Martyn1981 said:

Coastalwatch said:

Coastalwatch said:

With normal financial investments your money is returned at the end of the agreed period, but at the end of the turbines life, 20 to 25 years there is little value remaining, hence returning 5% of capital each year to address this.

 

I've been pondering further on the above and while it is in essence correct then with the turbine at it's life's end and removed there remains a considerable asset value, not least connection to the Grid, turbine foundations and trackwork etc.

I've no idea how much a turbine is to purchase/deliver/install but presumably only a portion of the £4.7m originally required to install and connect to the grid from a bare greenfield site!

My only previous knowledge of anything similar was in regard to self build properties whereby once services were in place and foundations laid then a mortgage could be arranged and approved for up to 50% of the finished value of the property. No idea if a similar % would apply with WT1.

From the Coop's point of view then rather than just walking away from the site or starting again elsewhere presumably the aim would be to install a replacement turbine upon the same foundation and grid connection at a fraction of the cost of the first.

I appreciate an extension to the original lease would need to be negotiated(maybe an option for this is already in place) but fundamentally the cost to install a replacement should be significantly less than the original and for all its members a fresh opportunity to engage for a further 25 years on even better terms!

Or am I just peering through rose tinted glasses once again?

Hiya CW. I don't know if this follows for onshore wind, but a few years back I read that the cost of installing offshore wind monopiles and building out the leccy infrastructure, was around 40% of the cost. So if that follows, then a replacement onshore wind turbine, from the ground/base up, would be around 60%, assuming no cost savings as turbines develop.

[For PV farms, I think the non panel costs are around 50%.]

I'm not sure about the relative costs, but it must be worth doing as I understand that the early onshore windfarms have already been through "repowering". I think it must come down to the terms of the land agreement as to whether it is done or not.

But as wind turbine technology moved on a lot during the first 25 years, deciding to repower introduces a lot more questions - new turbines are different sizes to 25 year old turbines, so do you go bigger? Do you go for the same output, but fewer turbines? These changes may require planning consent (taller turbines, different locations) or modification to the grid connection. 

I have a feeling that the Kirk Hill costs include for the removal of the windfarm, so repowering would have further implications than just more years of generation.

Also, I'm not sure if the term repowering just applies to changing the turbines or whether it would apply if it was decided (arranged) to just keep generating with the same turbines. The 25 year operation is based on the asset life - this is a financial term. My PV panels may have a 25 year asset life, but I am hoping / expecting that they will be operating for longer. They may need maintenance within the 25 years that significantly extends their life (eg replacing a single faulty panel, replacing the inverter).