Wind energy

robp

Hi,

I am looking for some sources that discuss the pro and cons wind energy investments. I am not referring to stocks of wind energy companies but actually participating directly in a feed-in tariff wind energy scheme. Some companies are present in Ireland offering this but it seems to be harder to obtain info compared to traditional investments.

Has anyone here got involved in these? What are the risks involved in a feed-in tariff scheme? What happens if the local government changes what they pay for electricity? Does it matter if it in the EU or outside the EU?

gordongekko

robp wrote: »

Hi,

I am looking for some sources that discuss the pro and cons wind energy investments. I am not referring to stocks of wind energy companies but actually participating directly in a feed-in tariff wind energy scheme. Some companies are present in Ireland offering this but it seems to be harder to obtain info compared to traditional investments.

Has anyone here got involved in these? What are the risks involved in a feed-in tariff scheme? What happens if the local government changes what they pay for electricity? Does it matter if it in the EU or outside the EU?

Any company issuing shares or debt in this type of investment will issue a prospective which will answer all your questions.

robp

gordongekko wrote: »

Any company issuing shares or debt in this type of investment will issue a prospective which will answer all your questions.

Thanks for your response. I was hoping for an external point of view of the whole sector as surely surely the official prospective is bias to the company and the sector. For example if I relied on the prospective of any given mutual fund I would have made some serious investing errors by now.

Fabo

German Windparks - financial returns

http://rtw-freiolsheim.de/wp-content/uploads/2013/06/130213_Daldorf_Praxiserfahrungen_mit_BA__1_4rgerwindparks.pdf

The above presentation in German was actually made to their own wind energy industry associations about the financial return of wind farms, in particular those which are community owned. The reality has been very different from the theory used to justify the initial investment, (a) the actual electricity produced has been significantly lower, on average only 86% of what has been claimed for in the investment decision. (b) The operating costs have been much higher due to more maintenance, etc, amounting to some 27.5% of the yields from electricity sales. Slide 21 is key one :

Nach Auswertung von 1.150 Windpark-Jahresabschlüssen haben dieAnleger in den Jahren 2002 -2011 Ausschüttungen erhaltenim Durchschnitt von2,5 % p.a.Über die Summe der Jahre waren dies 25 % ihrer Einlage, während nach den Prospekten zwischen 60 bis 80 % versprochen wurde.Bei differenzierter Betrachtung ergibt sich ein noch katastrophaleres Bild:25 von 127 Windparks haben gar keine Ausschüttungen > 2 % = 20 %22 von 127 Windparks haben nur in 1 Jahr ausgeschüttet = 17 %27 von 127 Windparks haben nur in 2 Jahren ausgeschüttet = 21 %

This relates to the evaluation of 1,150 wind park annual accounts in which the investors in the years 2002 to 20011 have received dividends (distributions) in average of 2,5% per year. Over the sum of the years this was 25% of their investments, while according to he sales literature 60 to 80% had been promised. A differential analysis results in a more catastrophic picture.

25 of 127 windparks have indeed no dividends > 2% = 20%
22 of 127 windparks have only provided dividends in 1 year = 17%
27 from 127 windparks have only provided dividends in 2 years = 21%

As slide 22 concludes:

Aus meinen bisherigen Untersuchungen zur Wirtschaftlichkeit von Windparks ziehe ich folgende Schlüsse:
1. Rund die Hälfte aller kommerziellen onshore-Windparks laufen so
schlecht, daßderen Anleger froh sein können, wenn sie nach 20
Jahren ihr Kommanditkapital zurückbekommen haben.
2. Bürgerwindparks haben dieselben Probleme wie kommerzielle
Windparks. Da sie aber i.d.R. günstigere Herstellungskosten und
weniger Bankschulden hatten, sind die Chancen ihrer Anleger
auf eine geringe Rendite etwas besser.

Translation:

From my previous investigation of the commercial performance of wind farms, I draw the following conclusions:

1. Around half of all commercial onshore wind parks run so poorly, that as a result their investors could be pleased, if after the 20 years their investment capital could be got back.

2. Community wind parks have the same problems as commercial wind parks.However, as they as a rule had more favourable manufacturing costs and lower bank debts, the chances of their investors for a small return on investment are somewhat better.

Fabo

There are also legal problems surrounding the wind industry in Ireland. The Irish Renewable Plan (NREAP) was in contravention of the Aarhus Convention.

This complaint has now been accepted by UNECE at the Meeting of the Parties, which is the 47 Countries which have ratified the Aarhus Convention, in July 2014.

https://www.google.com/url?q=http://www.unece.org/fileadmin/DAM/env/pp/mop5/Documents/Category_II_documents/ECE.MP.PP.2014.16_e.pdf&sa=U&ei=PHhRVJfxC-bW7AaA1oHoAg&ved=0CAwQFjAE&client=internal-uds-cse&usg=AFQjCNEPyNPtvMixyOGuwOzsZLT1RO6C_g


So the onus is now on the European Commission to go back and re-assess the NREAP.

Not the best time to be investing in wind farms in Ireland.

robp

Fabo wrote: »

There are also legal problems surrounding the wind industry in Ireland. The Irish Renewable Plan (NREAP) was in contravention of the Aarhus Convention.

This complaint has now been accepted by UNECE at the Meeting of the Parties, which is the 47 Countries which have ratified the Aarhus Convention, in July 2014.

https://www.google.com/url?q=http://www.unece.org/fileadmin/DAM/env/pp/mop5/Documents/Category_II_documents/ECE.MP.PP.2014.16_e.pdf&sa=U&ei=PHhRVJfxC-bW7AaA1oHoAg&ved=0CAwQFjAE&client=internal-uds-cse&usg=AFQjCNEPyNPtvMixyOGuwOzsZLT1RO6C_g


So the onus is now on the European Commission to go back and re-assess the NREAP.

Not the best time to be investing in wind farms in Ireland.

Some companies in Ireland are engaging in wind energy in Italy. Is there a similar situation there?

Fabo

robp wrote: »

Some companies in Ireland are engaging in wind energy in Italy. Is there a similar situation there?

Hi Rob

You can read the Decision on Compliance by the Meeting of the Parties:

http://www.unece.org/env/pp/ccimplementation.html

Two of the findings related to the implementation in Ireland, but the main finding applied to all Member States as the implementation of the Directive completely by-passed the provisions of the Convention. It was all rushed through. The necessary information was never generated or presented to the public. If you look at the NREAPs, Section 5.3 was on impacts, nineteen of the Member States including Ireland left this blank, the others fudged it. None completed the necessary Strategic Environmental Assessment to Directive 2001/42/EC, which was required since 2004 under Community law.

So yes, Italy like all Member States didn't comply.