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Mike Blanch Associate Director BVG Associates
Westmill Wind Farm – challenges and benefits Renewable Futures - 11th November 2009
by Mike Blanch, BEng MSc MPhil CEng MIMechE Advisor to Westmill Wind Farm Co-operative Ltd
About Mike Blanch 1. Technical Advisor to the Westmill Wind Farm Cooperative Ltd Board from its formation in 2004. 2. Treasurer of Westmill Sustainable Energy Trust (WeSET). 3. Worked in renewable energy since 1990 Advised many on wind project development. 4. Works for BVG Associates in South West nr Swindon
3
Westmill Wind Farm Exists because of the – vision and investment of landowner Adam Twine – foresight of Baywind who formed Energy4All – support of Energy4All (Coop’s development co.) – support of local people (e.g. WOW - Wind Over Westmill), SEEDA grant (£50k) and Midcounties Co-op (largest shareholder, marketing etc) – dedication of the various Co-op board members • Past: Harvey Tordoff, Jean Nunn-Price, Steve Lunn, Clive Burke, Kim Littlewood, Andrew King, Stephen Andrews, Alec Yeowell and Angela Duignan (PM) • Current: Mark Luntley (Chair), Rod Blunden, Richard Lord, Isobel Burbidge, Eoin Lees, John Twidell 4 – 2,374 members who bought shares
Westmill Wind Farm – 6.5 MW wind farm north of the A420 at Watchfield, Oxfordshire – Largest 100% community owned energy project in UK – Follows in the footsteps of Baywind Coop (which extended its ownership of 40% to 100% of 2.5 MW Harlock Hill Wind Farm in 2001), and Gigha, Eigg, Findhorn, Bro Dyfy etc – Raised £4.6 million up front from members joining – Investment eligible for EIS 5
Enterprise Investment Scheme 1. Required the formation of a Co-op which legally is an Industrial and Provident Society. It is possible that an existing Co-op is expanded. 2. Asset and 100% Ownership options are 1. Eligible for the Enterprise Investment Scheme (EIS) allowing UK tax-payers who invest a minimum of £500 in any one year to reduce their taxable income by the full amount of their investment once project operational (~20%). 2. EIS relief equivalent to raising return on investment by about 3%. 3. Since most return occurs towards the end of the project’s life then EIS is good way of realising benefit 6 near the start.
Normal Community Benefits The normal ‘community’ benefits expected from any wind project should also be present i.e. 1. A community trust in receipt of circa 0.5% revenue. 2. Business rates circa £5k per MW p.a.
7
100% Community Owned Contract & Build Money Received 600000.00 500000.00 400000.00
Value
Project
300000.00 200000.00 100000.00
04 /0 3/ 06
22 /0 2/ 06
12 /0 2/ 06
02 /0 2/ 06
23 /0 1/ 06
13 /0 1/ 06
03 /0 1/ 06
24 /1 2/ 05
14 /1 2/ 05
04 /1 2/ 05
0.00
Date
Funds Interest
Co-op formed
8
Midcounties Co-op
Westmill Wind Farm Co-operative Ltd • Industrial and Provident Society est. Aug 2004 • Bought project from developer Adam Twine • Energy4All (Co-op Dev company) facilitated share offer • Mid Counties Co-op, Co-op investor • Individual members investing (min £250 to max £20k) • Governance – One member one vote – Board of 7 elected directors who are primarily local members
• Support/repayment contract with Energy4All
9
Total construction budget Turbines Foundations and roads Grid Connection Other costs Contingency
£5.2m £1.4m £0.6m £0.55m £0.25m
Total [Actual
£8.0m £7.7m]
10
Budgeted funding Shareholders’ funds Bank loan (Coop bank)
£4.6m £3.4m
Total funding
£8.0m
11
WTG Erection
Rotor guided into place
Tower base being lifted into place 500 ton Crane lifting nacelle
12
And as seen from the sky
13
Benefits • 1% of the 85 hectares land area used • CO2 emissions reduction ~10,000 tonnes/yr • Annual Output ~ 2,500 homes’ equivalent electrical consumption (~ 7,500 people) • Construction & embedded energy was recovered in first 9 months • Very low carbon footprint energy • Sustainable Energy Fund - WeSET
14
Performance in 1st Year of operation • Produced clean and renewable electricity every day • Capacity factor = 21% (as expected) • 11.5 GWh, within 5% of the predicted P90 output of 12 GWh • All ‘profit’ (interest) will be distributed to members annually - first done May 2009 • EIS certificates were issued in July 2008 • Share capital returned at end of life ~ 25 years 15
3. Energy4All 1. A not-for-profit company owned by the renewable energy co-ops it creates. 2. Owned by member energy cooperatives. 3. Professional and not grant funded. 4. Regional managers. 5. Dedicated to helping communities around the UK to own a stake in renewable energy schemes. 6. Keeps a record of those interested in investing in projects. 7. To date over £13 million has been raised through the 7 coops share offers. 8. Developed EnergySteps web site (www.energysteps.coop) with Greenpeace, and East Midlands Development Agency. 9. Runs ‘Sharenergy’ supported by funding from Advantage 16 West Midlands.
Sharenergy Run by Energy4All and supported by Advantage West Midlands (AWM) – example of approach 1. The Idea – e.g. a windy hill, a gushing stream, or how do we get rid of this slurry? Sharenergy provides a quick expert opinion, and then help to work out its energy potential. 2. The Group - Supports / helps form a community group. 3. Screening – Determines if it can deliver a real carbon saving, if it is technically feasible (in principle), and if it can it be developed using the Sharenergy structure. 4. Feasibility - AWM funds Sharenergy to work with the group to develop the project. Experts are brought in to take the project all the way to the planning stage. 5. Forming the Co-operative and share offer - as discussed 17 6. Build it - as discussed
100% Community Ownership? Enables 1. Slightly more marginal projects to go ahead. 2. Westmill Wind Farm’s forecast return is >12.5% with EIS (otherwise >10%) compared to 15%+ normal commercial return.
However 1. Project needs to be sound and have reasonable forecast return both for its sake, and for the sake of future projects.
18
100% Community Ownership? But 1. There is no light touch when it comes to planning – possibly more suspicion of amateurism. 2. Longer lead time as extra steps 1. 2. 3.
Share Prospectus needs to written and approved by FSA Share Offer Bank loan, and equipment ordering can only occur once share offer successful
3. Only those that can afford the minimum share purchase prices can benefit from ownership (WWF minimum: £250; set to ensure cost of administration did not undermine project returns) 4. Members (shareholders) may need to extend over a wide ‘local’ geographical area e.g. as Westmill’s ask was so large for its time defined ‘local’ as within 50 miles of the site.1199
Contact www.westmill.coop 01229 821028 [email protected]
Thank you for listening and happy to advise you [email protected] 01792 752 308
20
Funding needed for Large Wind 1. Screening (circa £500) 2. Feasibility (circa £7.5k) WWF source: Adam Twine
3. Development (circa £200k); WWF source: Adam Twine, Energy4All and a SEEDA grant
4. Post consent – contracting & detailed design (circa £200k); WWF source: Adam Twine, Energy4All and WWF Co-op in latterly
5. Build (circa £1.2 million / MW for wind) WWF source: WWF Co-op and Co-op Bank loan
21
Westmill Wind Farm – challenges and benefits Renewable Futures - 11th November 2009
by Mike Blanch, BEng MSc MPhil CEng MIMechE Advisor to Westmill Wind Farm Co-operative Ltd
About Mike Blanch 1. Technical Advisor to the Westmill Wind Farm Cooperative Ltd Board from its formation in 2004. 2. Treasurer of Westmill Sustainable Energy Trust (WeSET). 3. Worked in renewable energy since 1990 Advised many on wind project development. 4. Works for BVG Associates in South West nr Swindon
3
Westmill Wind Farm Exists because of the – vision and investment of landowner Adam Twine – foresight of Baywind who formed Energy4All – support of Energy4All (Coop’s development co.) – support of local people (e.g. WOW - Wind Over Westmill), SEEDA grant (£50k) and Midcounties Co-op (largest shareholder, marketing etc) – dedication of the various Co-op board members • Past: Harvey Tordoff, Jean Nunn-Price, Steve Lunn, Clive Burke, Kim Littlewood, Andrew King, Stephen Andrews, Alec Yeowell and Angela Duignan (PM) • Current: Mark Luntley (Chair), Rod Blunden, Richard Lord, Isobel Burbidge, Eoin Lees, John Twidell 4 – 2,374 members who bought shares
Westmill Wind Farm – 6.5 MW wind farm north of the A420 at Watchfield, Oxfordshire – Largest 100% community owned energy project in UK – Follows in the footsteps of Baywind Coop (which extended its ownership of 40% to 100% of 2.5 MW Harlock Hill Wind Farm in 2001), and Gigha, Eigg, Findhorn, Bro Dyfy etc – Raised £4.6 million up front from members joining – Investment eligible for EIS 5
Enterprise Investment Scheme 1. Required the formation of a Co-op which legally is an Industrial and Provident Society. It is possible that an existing Co-op is expanded. 2. Asset and 100% Ownership options are 1. Eligible for the Enterprise Investment Scheme (EIS) allowing UK tax-payers who invest a minimum of £500 in any one year to reduce their taxable income by the full amount of their investment once project operational (~20%). 2. EIS relief equivalent to raising return on investment by about 3%. 3. Since most return occurs towards the end of the project’s life then EIS is good way of realising benefit 6 near the start.
Normal Community Benefits The normal ‘community’ benefits expected from any wind project should also be present i.e. 1. A community trust in receipt of circa 0.5% revenue. 2. Business rates circa £5k per MW p.a.
7
100% Community Owned Contract & Build Money Received 600000.00 500000.00 400000.00
Value
Project
300000.00 200000.00 100000.00
04 /0 3/ 06
22 /0 2/ 06
12 /0 2/ 06
02 /0 2/ 06
23 /0 1/ 06
13 /0 1/ 06
03 /0 1/ 06
24 /1 2/ 05
14 /1 2/ 05
04 /1 2/ 05
0.00
Date
Funds Interest
Co-op formed
8
Midcounties Co-op
Westmill Wind Farm Co-operative Ltd • Industrial and Provident Society est. Aug 2004 • Bought project from developer Adam Twine • Energy4All (Co-op Dev company) facilitated share offer • Mid Counties Co-op, Co-op investor • Individual members investing (min £250 to max £20k) • Governance – One member one vote – Board of 7 elected directors who are primarily local members
• Support/repayment contract with Energy4All
9
Total construction budget Turbines Foundations and roads Grid Connection Other costs Contingency
£5.2m £1.4m £0.6m £0.55m £0.25m
Total [Actual
£8.0m £7.7m]
10
Budgeted funding Shareholders’ funds Bank loan (Coop bank)
£4.6m £3.4m
Total funding
£8.0m
11
WTG Erection
Rotor guided into place
Tower base being lifted into place 500 ton Crane lifting nacelle
12
And as seen from the sky
13
Benefits • 1% of the 85 hectares land area used • CO2 emissions reduction ~10,000 tonnes/yr • Annual Output ~ 2,500 homes’ equivalent electrical consumption (~ 7,500 people) • Construction & embedded energy was recovered in first 9 months • Very low carbon footprint energy • Sustainable Energy Fund - WeSET
14
Performance in 1st Year of operation • Produced clean and renewable electricity every day • Capacity factor = 21% (as expected) • 11.5 GWh, within 5% of the predicted P90 output of 12 GWh • All ‘profit’ (interest) will be distributed to members annually - first done May 2009 • EIS certificates were issued in July 2008 • Share capital returned at end of life ~ 25 years 15
3. Energy4All 1. A not-for-profit company owned by the renewable energy co-ops it creates. 2. Owned by member energy cooperatives. 3. Professional and not grant funded. 4. Regional managers. 5. Dedicated to helping communities around the UK to own a stake in renewable energy schemes. 6. Keeps a record of those interested in investing in projects. 7. To date over £13 million has been raised through the 7 coops share offers. 8. Developed EnergySteps web site (www.energysteps.coop) with Greenpeace, and East Midlands Development Agency. 9. Runs ‘Sharenergy’ supported by funding from Advantage 16 West Midlands.
Sharenergy Run by Energy4All and supported by Advantage West Midlands (AWM) – example of approach 1. The Idea – e.g. a windy hill, a gushing stream, or how do we get rid of this slurry? Sharenergy provides a quick expert opinion, and then help to work out its energy potential. 2. The Group - Supports / helps form a community group. 3. Screening – Determines if it can deliver a real carbon saving, if it is technically feasible (in principle), and if it can it be developed using the Sharenergy structure. 4. Feasibility - AWM funds Sharenergy to work with the group to develop the project. Experts are brought in to take the project all the way to the planning stage. 5. Forming the Co-operative and share offer - as discussed 17 6. Build it - as discussed
100% Community Ownership? Enables 1. Slightly more marginal projects to go ahead. 2. Westmill Wind Farm’s forecast return is >12.5% with EIS (otherwise >10%) compared to 15%+ normal commercial return.
However 1. Project needs to be sound and have reasonable forecast return both for its sake, and for the sake of future projects.
18
100% Community Ownership? But 1. There is no light touch when it comes to planning – possibly more suspicion of amateurism. 2. Longer lead time as extra steps 1. 2. 3.
Share Prospectus needs to written and approved by FSA Share Offer Bank loan, and equipment ordering can only occur once share offer successful
3. Only those that can afford the minimum share purchase prices can benefit from ownership (WWF minimum: £250; set to ensure cost of administration did not undermine project returns) 4. Members (shareholders) may need to extend over a wide ‘local’ geographical area e.g. as Westmill’s ask was so large for its time defined ‘local’ as within 50 miles of the site.1199
Contact www.westmill.coop 01229 821028 [email protected]
Thank you for listening and happy to advise you [email protected] 01792 752 308
20
Funding needed for Large Wind 1. Screening (circa £500) 2. Feasibility (circa £7.5k) WWF source: Adam Twine
3. Development (circa £200k); WWF source: Adam Twine, Energy4All and a SEEDA grant
4. Post consent – contracting & detailed design (circa £200k); WWF source: Adam Twine, Energy4All and WWF Co-op in latterly
5. Build (circa £1.2 million / MW for wind) WWF source: WWF Co-op and Co-op Bank loan
21
