Listed WIND companies vs. Abundance Generation.

GentlemansFamilyFinances
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Listed WIND companies vs. Abundance Generation. Mar 27, 2014 11:20:22 GMT

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Post by GentlemansFamilyFinances on Mar 27, 2014 11:20:22 GMT

Hello,

Can anyone help me out in this investment problem that I have.

I'm attracted to the potential returns offered by investing in wind/solar energy projects and Abundance Generation is a good way to get invested with a slick website and some interesting projects.
However, I can also invest in companies which do the same thing except there is diversification of risk from mutliple windfarms/solar farms.
E.g. WIND and UKW have multiple windfarms, presently pay a secure dividend stream and have market capitalisation of more than £100m each. For the REG High Down windfarm on AG, WIND actually own the wind turbine and AG is being used to provide the CAPEX to build the turbine.
From www.regwindpower.co.uk/our_wind_farms

High Down Redland

This single turbine project is located outside the village of Pensilva in Cornwall. We anticipate that the project will be generating safe, clean renewable energy in March 2014. Local people have an opportunity to invest in High Down through our partners Abundance Generation. Please visit www.abundancegeneration.com to find out more.

Which is the better investment?
Paying AG 1.5% annual management fee and getting your targeted return on a wind turbine or investing in the company that runs a large number?

Any ideas?

Long time investor in P2P Lending - I've seen the good, the bad and the ugly!
I have a blog that you can have a look at - covers personal finance, family life and our family journey towards FIRE.
gentlemansfamilyfinances.com/
My blog contains referral links which you should be aware of.

shimself
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Listed WIND companies vs. Abundance Generation. Mar 27, 2014 15:31:36 GMT

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Post by shimself on Mar 27, 2014 15:31:36 GMT

The value of a company's shares are not directly proportional to its operating profits, so you know more what you're getting if you invest in projects.
If you are unlucky enough to invest at a fashionable time for the sector you could lose money (says he ruefully thinking of an alternative energy ETF which was heavily into solar panel companies, of which there became far too many, solar panel prices collapsed, many panel producers went out of business and I lost money)

Interests declared:
I have shares in Assetz, Syndicate Room, The Housecrowd.
They are as nothing compared to my investments on and reliance on the good health of many other platforms here.

mikes1531
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Listed WIND companies vs. Abundance Generation. Mar 28, 2014 3:50:26 GMT

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Post by mikes1531 on Mar 28, 2014 3:50:26 GMT

Mar 27, 2014 11:20:22 GMT GentlemansFamilyFinances said:

Which is the better investment?
Paying AG 1.5% annual management fee and getting your targeted return on a wind turbine or investing in the company that runs a large number?

Any ideas?

I've not investigated AG very deeply, so what I'm about to say is based on ignorance, but here goes...

Is the income from AG considered to be interest or dividends? If it's interest, then that income is generally not worth as much to taxpayers as dividends, so that's something to consider. If the AG payments are dividends, then the issue goes away.

GentlemansFamilyFinances
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Listed WIND companies vs. Abundance Generation. Mar 28, 2014 7:57:34 GMT

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Post by GentlemansFamilyFinances on Mar 28, 2014 7:57:34 GMT

Some of the older projects have interest paid as Income - but now most projects pay offer debentures that pay a dividend.
This has been discussed somewhere else - I can't remember where but a quick search should pull up some more info.

Long time investor in P2P Lending - I've seen the good, the bad and the ugly!
I have a blog that you can have a look at - covers personal finance, family life and our family journey towards FIRE.
gentlemansfamilyfinances.com/
My blog contains referral links which you should be aware of.

GentlemansFamilyFinances
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Listed WIND companies vs. Abundance Generation. Mar 28, 2014 8:00:08 GMT

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Post by GentlemansFamilyFinances on Mar 28, 2014 8:00:08 GMT

From AG:

www.abundancegeneration.com/why-invest/faq/

How can I be sure that I will earn the quoted returns?

There are three different types of return attached to our Energy Projects:

Variable Return Debentures, where the income you receive on top of your capital is linked to how much energy and therefore profit is generated. Two main factors affect the predictions of your estimated returns: the annual energy production for the project and the price the Energy Project achieves for selling its electricity. Each of these will vary slightly from project to project but the principle is the same. By focusing on mature technologies, we can more confidently predict how the estimated sun and wind energy in a given year will convert into electricity. This is then applied to the price of the energy, which is essentially fixed for the life of the project and rising with inflation for projects that are eligible for the Feed-in Tariff.

Fixed Return Debentures, where the amount you receive by way of interest is fixed at the outset and remains the same for the life of the investment. As well as using conservative estimates to predict the amount of revenue projects will generate and the costs they will incur, cash 'buffers' are used to protect against any short-term shortfall.

Inflation-linked Debentures, where both your capital and any additional interest are both increased in line with inflation each year. As well as using conservative estimates to predict the amount of revenue projects will generate and the costs they will incur, cash 'buffers' are used to protect against any short-term shortfall.

There are risks, as with any investment, and you should take financial advice if you have any concerns.

Long time investor in P2P Lending - I've seen the good, the bad and the ugly!
I have a blog that you can have a look at - covers personal finance, family life and our family journey towards FIRE.
gentlemansfamilyfinances.com/
My blog contains referral links which you should be aware of.

jamesmc

Posts: 8

Listed WIND companies vs. Abundance Generation. Apr 10, 2014 20:19:54 GMT

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Post by jamesmc on Apr 10, 2014 20:19:54 GMT

I agree with Shimself the direct model into a project avoids the volatility of the public markets which is appealing. Plus the direct model also means that the risk is contained in the project and with Abundance these tend to be operational this makes them pretty low risk. Once a renewable project is operational they tend to work well and have various insurances and warranties covering down periods. Plus if you build a portfolio of different projects you can spread your risk because inevitably each project at some point will have period where it is not generating at max output. With a fund on the other hand you are reliant on the the fund manager or company management continuing to make good investment decisions. I have invested in some VCT wind funds and they have performed badly because the fund backed projects that failed to get planning consent in a timely fashion impacting on the funds returns. Funds are often under pressure to deploy capital quickly in order to generate returns for investors and this can lead to poor investment decisions.

regarding the fee point, it is worth digging into the fees on the funds. Often they are higher than 1.5%, the funds tend to have hidden charge for instance covering their costs of trading and or your cost of selling your shares! Worth remembering if you get in early on abundance projects you can get an annual bonus which sort of mitigates the fee.