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andrewduckerA friend sent me this link to Ripple Energy, a company which sets up a cooperative company which then invests in wind-farms that Ripple build/run. The idea being that you then get paid back in the form of energy produced by that wind farm, which then reduces your energy costs.
And the basic idea sounds simple/nice enough - buy a share of a windfarm, get paid in the electricity it produces. But it makes me feel uncomfortable, and I'm struggling to articulate why.
The way I want electricity to work is "Some people who are good at building/running electricity generators do so. And they then sell that electricity to me, competing against other providers to keep the price down." I don't mind "Slap some solar panels on my roof and keep the energy they produce for myself." But something as complex as "Buy shares in a coop that invests in a specific wind farm company to get electricity sent back to me (requiring me to buy it from their partners)." starts to feel like the kind of thing where to do it sensibly requires me to be fluent in various areas of business and law which I'm frankly not. It starts to feel like the kind of thing where it could be a giant scam and I wouldn't be competent enough to know in advance that that was the case.
Not a giant scam in the "Take the money and run" sense. But more in the "Be not that good at building or running wind farms, and not explain in great detail the risks, and not have arrangements with the grid to actually hook them up for a decade, and oh no it turns out that this is all more complex than we thought it would be and we've gone bust, paying our board of directors a few million along the way" - all of which are in the small print, and none of which is obvious to your average person.
My other thought is "What's in it for them?" - normally an electricity generator would go to some kind of investor (a large bank or someone else with huge wodges of money to invest) and show them very detailed plans, and people *whose job it is to investigate whether you are likely to be successful at generating electricity, and who have experience in the legal, financial, and politicial aspects of that* would scrutinise those plans and your competency, and then either lend you money or not, with careful wording around how that money would be taken back if things went wrong. And if you're an electricity generator then that would be a normal cost of business for you. Your reason for doing it a different way would be either if you thought that the investment bank would say "No" or because you thought you could get the money cheaper by doing it differently. Neither of which is terribly attractive to me as the provider either of money to someone a bank would say no to, or as someone who is the cheap option.
I'm possibly too cynical here. It's plausible that this is actually a great way to invest in the future of green energy, and I've just backed too many things on Kickstarter that never delivered. And if they can get investment in wind farms from ordinary people that pay off, and we get more wind farms built because of it, that's awesome!
So, have I missed anything obvious?
And the basic idea sounds simple/nice enough - buy a share of a windfarm, get paid in the electricity it produces. But it makes me feel uncomfortable, and I'm struggling to articulate why.
The way I want electricity to work is "Some people who are good at building/running electricity generators do so. And they then sell that electricity to me, competing against other providers to keep the price down." I don't mind "Slap some solar panels on my roof and keep the energy they produce for myself." But something as complex as "Buy shares in a coop that invests in a specific wind farm company to get electricity sent back to me (requiring me to buy it from their partners)." starts to feel like the kind of thing where to do it sensibly requires me to be fluent in various areas of business and law which I'm frankly not. It starts to feel like the kind of thing where it could be a giant scam and I wouldn't be competent enough to know in advance that that was the case.
Not a giant scam in the "Take the money and run" sense. But more in the "Be not that good at building or running wind farms, and not explain in great detail the risks, and not have arrangements with the grid to actually hook them up for a decade, and oh no it turns out that this is all more complex than we thought it would be and we've gone bust, paying our board of directors a few million along the way" - all of which are in the small print, and none of which is obvious to your average person.
My other thought is "What's in it for them?" - normally an electricity generator would go to some kind of investor (a large bank or someone else with huge wodges of money to invest) and show them very detailed plans, and people *whose job it is to investigate whether you are likely to be successful at generating electricity, and who have experience in the legal, financial, and politicial aspects of that* would scrutinise those plans and your competency, and then either lend you money or not, with careful wording around how that money would be taken back if things went wrong. And if you're an electricity generator then that would be a normal cost of business for you. Your reason for doing it a different way would be either if you thought that the investment bank would say "No" or because you thought you could get the money cheaper by doing it differently. Neither of which is terribly attractive to me as the provider either of money to someone a bank would say no to, or as someone who is the cheap option.
I'm possibly too cynical here. It's plausible that this is actually a great way to invest in the future of green energy, and I've just backed too many things on Kickstarter that never delivered. And if they can get investment in wind farms from ordinary people that pay off, and we get more wind farms built because of it, that's awesome!
So, have I missed anything obvious?
no subject
Date: 2024-10-20 12:58 pm (UTC)In Rhandir-mwyn the Bute wind farm is causing issues because they will not bury the cables and insist on massive pylons with concrete bases which will blot the landscape long after the lifetime of the wind farm.
But the way the inter connected companies of Bute operate is opaque and troubling as well
no subject
Date: 2024-10-20 01:07 pm (UTC)Two answers occur to me offhand, one more encouraging than the other. The encouraging possibility is that they're hoping to get the energy to consumers cheaper, because there wouldn't be a layer of private investors who got to squeeze out a profit. How much difference would removing at least some dividends to investors, or interest on bank loans, make to the balance sheet? And would that affect what they charged consumers for the electricity? (I assume here that the wind farm might generate more electricity, at least some of the time, than what the consumer-investors are using at that instant.)
The flip side of that is, does this let them evade some relevant laws or regulations? Are any of the people behind this names that would make a bank or regulatory agency look askance? And why are there two layers here: they're asking you to invest in company A, which would set up company B to invest in wind farms that company A builds and runs. Why isn't it just, you invest in company A, which builds and runs the wind farms?
no subject
Date: 2024-10-20 01:15 pm (UTC)So far Greencoat has paid me £700 in dividends while the valuation has gone down by £900, and NESF has paid me £125 while the valuation has gone down by £300, so these have been significantly inferior investments to sticking the money in a one-year bond.
no subject
Date: 2024-10-20 01:24 pm (UTC)"You cannot sell your shares, but you will be able to request to withdraw your shares via Ripple's customer services. This will terminate your membership of the co-op. Equally, if you terminate your electricity supply agreement, this will automatically terminate your membership of the co-op. At that point, Ripple will calculate the value of any remaining shares you own in the co-op.
Using a windfarm as an example, if you withdraw your shares 5 years into the project’s expected 25-year operating life and the co-op has withdrawn 5% of the shares each year to return your share capital, you would be entitled to receive 75% of your original share capital back. If you withdraw your shares 15 years into the project’s 25-year operating life you would be entitled to receive back 25% of your original share value.
Please note: you will not be able to withdraw your membership of the co-operative until the project has been operating for two years and after that you may not be able to withdraw your shares immediately. More details are described in the Customer Agreement for your project."
no subject
Date: 2024-10-20 01:25 pm (UTC)no subject
Date: 2024-10-20 06:05 pm (UTC)no subject
Date: 2024-10-20 06:06 pm (UTC)no subject
Date: 2024-10-21 07:42 am (UTC)That means: structure and ownership, managers and their track record, cashflow and balance sheet (or comparable companies' if it's a startup), the market they operate in, and the types of contract the business will take on.
Right now, the UK energy market is a mess, and wind farms are adversely affected by underinvestment in the transmission grid - not just the "we've got a connection" end - and by a rigged and dysfunctional market in storage.
Also, Britain's power trading arrangements with the EU are in flux.
So it's a risky investment: some projects will succeed, and some will not.
By all means, take the risk: but I would strongly advise you to do that after you've invested in (say) an established generator or (better still) a green fund manager with transparent accounts, a good track record in wind farm investments, and managers you trust to keep that on track.
Get some skin in the game at a 'game on easy settings' level of risk, get a deeper understanding of the business, and *then* branch out into riskier (=potentially more rewarding) projects.
no subject
Date: 2024-10-21 08:26 am (UTC)no subject
Date: 2024-10-21 08:47 am (UTC)There are some good reasons why you might set up a windfarm energy coop. One, you are very keen on there being more windfarms and think investing in a coop is a good way of funding those things. Two, the coop is being set up on community land with some of the energy / income going to power community things. One of my step-mums is involved with just such a scheme in the Huntly area.
Electricity and energy investments are pretty fungible. You don't need to get the electricity you consume from a windfarm you have a personal share in (and in fact unless you live next door to and have private wires you won't be) for putting some money in to a windfarm to be a decent hedge against energy prices. Any investment in any wind generator will behave the same. When prices go up your dividend goes up, when prices go down your dividend goes down.
Coops should get access to cheaper capital. That's a good and proper outcome of the way they are set up and probably quite helpful for a long-term capital intensive investment like a windfarm.
This seems like quite a complex way of doing things. Potential investors would need to be keen on all of the aspects of the bundle of investments all at the same time and for 25 years or so.
And I think you are right about the sort of "scam" failure state you could get.
I suspect there are investment funds that specialise in proven tech renewables or in novel tech renewables (perhaps available through your pension fund) - those might be better vehicles for some spare money you wanted to see support investment in new energy infrastructure.
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Date: 2024-10-21 08:52 am (UTC)(Unless, as you say, you're setting it up on cooperatively owned land and running it yourself.)
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Date: 2024-10-21 09:36 am (UTC)no subject
Date: 2024-10-21 12:45 pm (UTC)no subject
Date: 2024-10-21 01:34 pm (UTC)no subject
Date: 2024-10-21 01:42 pm (UTC)