Monday, 3 December 2012

Raising the wind

Click Green waxes enthusiastic about the easy moolah to be made from onshore wind. 

This year has been the most successful year for securing long-term finance in the UK onshore wind sector since the financial crisis began in 2007, according to a new report.

Project finance specialists at audit and advisory firm Mazars have carried out research that reveals more deals in excess of £15m closed between January and the end of October 2012 than any year since the onset of the credit crunch, with a total value in excess of £500m.

These figures are even more striking when taking into account the wider context of a sharp contraction in overall infrastructure project lending.

However, as anyone with even the most lackadaisical brain cells will have guessed, there are certain caveats to this form of investment. Although the word subsidy is notable by its absence, even Click Green feels constrained to mention the darker aspects of the world of wind. 

“The combined effect of positive macro-economic factors is very significant, and any reversal back to 2010 levels would lead to a sharp reduction in equity returns and a significant increase in the equity funding requirement.”

David Donnelly, Director of Mazars’ specialist renewable energy project finance team comments: “There is an opportunity for Government to reduce this vulnerability through the move to fixed feed-in tariffs under the Electricity Market Reform Bill - this will remove the current exposure to market power price.

“However, this will only be of benefit if the price for the feed-in tariffs is set at the right level;

So, not only do these guys require subsidy via feed-in tariffs, but don't fancy any exposure whatever to market prices. Remember markets - where we choose what we buy?

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