Ripple Energy wind farm?

thevilla

The share offer states that if the finance changes to the detriment of co-op members they would be advised and given the opportunity to bail out with a refund.

dharm999

dharm999 said:

Looking back through emails, they did say 30% of the funding would be via a finance option, but that should have been around £7.2M, so why borrow £14m, nearly double the original amount that was identified as requiring finance?  

Got my figures wrong, 30% is around £10m, but that still leaves £4m extra being borrowed.  I wonder what the impact on the returns will be

paul991

shouldnt make any difference because you buy a fixed kw percentage any other investments wwill not effect you

dharm999

paul991 said:

shouldnt make any difference because you buy a fixed kw percentage any other investments wwill not effect you

Can’t see how it won’t, as costs are going to increase, surely that is going to have an impact on the return?  

Exiled_Tyke

This one is pretty complicated.   A business is financed by shares and loans.  Shareholders generally require larger returns than lenders as they have more security. So loan capital is cheaper for the business than financing the shares (usually through dividends but in this case it's a bit different).  If (and only if) the larger amount of debt means that there are fewer shareholders claiming their stake. So profits are shared between a smaller number of shareholders.  So greater returns per sharholder.  This could (conceivably) be the case here although the way this is structured with kW and kWh confuses the situation.

An other perspective is that costs have gone up and so more funds are needed hence the borrowing. However this is compensated by inflation which has and will continue to increase the sales price of electricity (in theory and in the long run).  If inflation remains in the economy then prices of electricity will continue to rise but the loan interest will remain constant. So in the long run the debt becomes relatively cheaper and less significant. 

Whilst we don't have the figures this situation will have been modelled and the relative risks and returns considered.  Personally I'm not concerned about the debt in the business. It is at relatively sensible levels and I'm optimisitic that the expected returns will materialise.  

dharm999

Got an update email from Ripple today.

Basically, there have been extra costs, and also there is a VAT facility (not sure what this refers to, but as its VAT it should just be a cashflow timing issue), so they are now borrowing more than previously planned.  I can understand how this can happen, so that isn't a big issue.  The debt is subject to is own Power Purchase Agreement.  As there is now £4m more debt than planned, this will take longer to pay back than originally planned - I cant see a likely situation where the underlying financials are so much better that the debt gets paid back quicker than originally planned.  Therefore I am assuming that the overall return to shareholders is now going to be lower because of the extra debt, as the debt will take longer to pay back than originally planned.  I can see how this cant be true, when you compare the current situation to the original plan.  If I remember correctly, the original plan was based on shareholders getting a certain amount that was then uplifted once the debt was paid back, as the revenue generated from the wind farm would then not be used to pay back debt.  

I have asked Ripple to clarify the expected impact on the returns from this extra debt, shall post when I get an update.

chqshaitan

Yea, the other consideration is that interest rates are a lot higher than they were last year, so between the increase of circa 40% of the loan value, the interest rate is going to be significantly higher.

would be interesting for ripple to detail the original forecast including payback duration, interest compared to what they actually have in reality.

Coastalwatch

Thanks for that ET, it certainly makes sense to me and if we want the wind farm up and running at the earliest opportunity then surely they are planning ahead to ensure it remains so. At least from all aspects under their control, not forgetting there are still some areas over which they have none, or very little. I've no doubt they continually monitor these and when necessary send reminders to those outside organisations should progress not appear as it should.

chqshaitan

Hi guys, just noticed this about virgin money and ripple

https://www.thescottishfarmer.co.uk/news/23667351.virgin-money-seals-14m-deal-back-wind-farm-project/

JKenH

Surprised no one has posted this before. While most of us were bemoaning July’s poor sunshine Graig Fatha was proving every cloud has a silver lining. 

Graig Fatha members ‘blown away’ by high summer savings

Wow. What a month it has been for our Graig Fatha members. July has been the second best month yet for electricity generation, with a total generation of 708MWh, saving over a whopping 150,000kg of CO2 emissions. 

https://blog.rippleenergy.com/environment/graig-fatha-members-blown-away/