lobster
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Post by lobster on Aug 17, 2019 5:33:31 GMT
There has been a recent update on this suite of 9 turbine loans, with a generation report being produced for all 9 turbines up to the end of June 2019. It is stated in the document that all 9 turbines underperformed due to adverse weather conditions (ie. less wind than expected) in May and June 2019.
I have taken a little time to have a close look at the numbers provided, and I'm almost certain that they are seriously flawed, resulting in totally incorrect "% actual against budget" figures. The bottom line is that, in my opinion, all 9 loans are performing far better than is stated in this latest generation report. However, before I contact AC next week, I would be very grateful if anyone else with an interest in these loans could have a look and see if you agree with my findings, which are as follows :
The figures in the "Forecast Generation to June 2019" column are exactly twice those in the previous generation report for March 2019. As the reports are cumulative, this is suggesting that the generation for Apr-Jun was forecast to be the same as it was for Jan-Mar. This is surely incorrect, because there will obviously be more wind in the winter months of Jan-Mar , than in Apr-Jun. Compare this with the 2018 generation reports for March and June, in which the June forecasts are much less than twice the March forecasts, as one would expect.
The Mar 2018 and Mar 2019 generation reports give identical forecasts for all 9 turbines (except for Ballyduggan, which is probably a typo) , and I would therefore expect the June 2018 and June 2019 generation reports to also give identical forecasts, but they are very different, and I feel confident that the current June 2019 report is using incorrect forecast data.
As mentioned above, I would appreciate anyone's views on this before I take this further. Thanks.
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dave2
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Post by dave2 on Aug 17, 2019 14:04:08 GMT
Agreed. If we just concentrate on the first three loans in the list: The March 2018 and March 2019 forecasts are identical. The June 2018 forecasts are just over 50% greater than the March 2018 forecasts, the June 2019 forecasts (highlighted) are exactly twice the March 2019 forecasts.
Summary of the "Generation Updates" for the first three loans:
 If we adjust the June 2019 forecasts used in this summary table to be the same as for June last year, (see below), then the percentage of actual against budget for the first six months of 2019 is very similar to last year. So after a disappointing start to the year in the first quarter of 2019, the turbines have actually roared back into action in the second quarter using the seasonally adjusted forecasts of last year. Revised summary for the first three loans:  Hope I copied all the numbers over OK, that's a lot of typing... |
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lobster
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Post by lobster on Aug 17, 2019 15:44:18 GMT
Many thanks for your analysis, dave2 . As it happens, I used the same logic regarding adjusted forecasts as yourself, and therefore produced the exact same revised "Actual vs Forecast" percentages as you for June 2019. Of course we are assuming that the latest actual generation figures are correct, because if they are, then some of the turbines have indeed roared back into action during the second quarter, as you suggested. The second quarter performance of the top turbine in the list , "Win*mill Win*", would be particularly impressive - so hopefully it is genuine. Then what are we to make of the "poor weather conditions for May and June" remark ?! OK - I shall most certainly be taking this up with AC Towers on Monday, and I'll report back here with any progress. With the dismal (and probably erroneous) performances in the latest report, some lenders may well choose to sell out of perfectly good turbine loans. This could land AC in big trouble if it then emerges that these lenders were acting on incorrect data. To be fair though, it's quite possible that the source of the error could lie with the borrower, if they have reported their own forecast figures incorrectly. |
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lobster
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Post by lobster on Aug 19, 2019 16:50:26 GMT
OK, so I explained the issue to AC in an email, and received the following response (the bold is mine) :
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The 2018 figures were provided with a monthly breakdown of the forecast enabling a more accurate performance figure to be published. We have not received this for 2019 but have requested this from the borrower so we can improve the accuracy of the figures provided rather than using a pro-rata figure of the annual forecast. (i.e. we have simply quartered the total rather than apportioned in accord with seasonality)
We hope to get this with the July generation figures which are due by 26th August and as such, will provide a further update by close of business 2nd September 2019.
In the interim, and indeed our focus to date, has been that the latest Management Information shows all turbines are profitable and all repayments are up to date.
I hope this answers all of your questions.
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To my mind, in producing the latest forecast , AC have not "simply quartered the total". The forecasts in the Mar 18 report were the same as for the Mar 19 report which covers the windiest 3 months of the year (Jan-Mar). Both these reports are seasonally adjusted , forecasting relatively high generation for this period. Then , for the Jun 19 report, the forecasts are simply double the Mar 19 report. This is not the same as "quartering the total" , and will inevitably result in forecasts which are far too high, because the figures for the windiest quarter are doubled.
I'll wait to see if anyone wishes to respond to this, and then email the above back to AC first thing tomorrow.
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SteveT
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Post by SteveT on Aug 31, 2019 6:39:36 GMT
Revised figures to July 2019 now posted, which look much more in line with past performance.
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lobster
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Post by lobster on Aug 31, 2019 10:43:55 GMT
Revised figures to July 2019 now posted, which look much more in line with past performance. Indeed, but unfortunately there were no management accounts to go with the generation update, so we just have to take the numbers at face value. But at least they look credible now. I see there is no availability in any of the 9 loans within the portfolio. I thought that turbine loans had fallen out of favour - clearly not in this case. Personally I think in general that wind turbines are a decent bet, but only after having been fully commissioned , and after having demonstrated a few months of operation in line with (or preferably exceeding) forecasts. They also represent an obvious diversification from property loans.
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SteveT
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Post by SteveT on Aug 31, 2019 17:49:54 GMT
Yup, there’s a world of difference between an established, generating wind turbine and a patch of a farmer’s field with planning consent!
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ceejay
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Post by ceejay on Aug 31, 2019 19:52:40 GMT
Yup, there’s a world of difference between an established, generating wind turbine and a patch of a farmer’s field with planning consent! But would it not also be the case that an established wind turbine, with a track record and some sort of supply contract, would qualify for cheaper finance than any P2P? Unless there were something slightly murky in the background of the owners, I guess.
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SteveT
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Post by SteveT on Sept 1, 2019 15:18:25 GMT
Yup, there’s a world of difference between an established, generating wind turbine and a patch of a farmer’s field with planning consent! But would it not also be the case that an established wind turbine, with a track record and some sort of supply contract, would qualify for cheaper finance than any P2P? Unless there were something slightly murky in the background of the owners, I guess. Once a couple of years of audited company accounts are available, likely yes. I recall another portfolio of Assetz wind turbine loans refinancing in this way some 18-24 months ago.
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