This is the Kirk Hill site in SW Scotland. Planning permission was granted in 2020 and they are currently installing the hard standings for the turbines which should be arriving in the summer. It is due to become operational in November following which I will start to receive a regular discount to my electricity bills...just in time for next winter! I was encouraged to learn that over the past year, investors in the first project in S Wales have received an average of £977.
In less than 10 minutes, the much larger Kirk Hill site will generate enough electricity to power the average home for a whole year.
This time last year I was paying 21.8p/kWh for electricity and 23.5p/day standing charge. Just 12 months later and charges have increased dramatically... 66.1p/kWh - an increase of 203% before the price cap discount and 44.7p standing charge.
Last March the energy price cap was £1,277 but next month this will be £3,280. I’m not sure how Ofgem arrive at this figure as wholesale gas prices - which set our energy bills - have fallen back significantly over recent months and are now below the level of last February when Russia invaded Ukraine. However the government have held average prices at £2,500 for the past 6 months under the Energy Price Guarantee and there is a strong possibility this could continue for a further 3 months. In addition most households have received £400 winter support over the past six months but this will not be extended so we will need to find the extra £67/month to fill the gap until the next quarterly review of the price cap. Hopefully this will fall below £2,500 from July.
Buying directly into a renewable energy project is a way for everyone to protect themselves from rising energy costs.
The New Solar Offer
Building on the two existing wind turbine projects, Ripple are now proposing their third offering which will be solar. This will offer investors a chance to diversify their energy mix.
So basically, you buy shares in the new solar farm based on your average annual electricity consumption. Enter your annual consumption here to give an idea of the likely initial cost.
When the project is completed and connected to the grid and starts generating power, your electricity provider eg Co-Op Energy (powered by Octopus), buys your share of electricity generated from the solar farm and pays the operator a low amount to cover operating costs and passes on the rest to you via a reduction in your bill.
The initial purchase is a one-off payment...typically £2,500 which would buy enough electricity for the average house. This payment can be spread over 12 months. At current prices, this would mean a saving of around £200 per year and therefore a payback period of under 15 years. The estimated lifespan is 40 years. Of course, wholesale energy prices will fluctuate - they could go higher which would mean even more saving but could go lower but then energy bills should come down.
Of course only a proportion of our bills are for the actual energy consumed and you still have to pay the daily standing charges, VAT, green levies etc. which can account for over 40% of the average bill.
Environment and Climate Change
In addition to the savings on our energy bills, there are significant benefits to the climate. This is a new solar farm which would not otherwise have been built. So the more consumers who join up means Ripple have more confidence they have a good model and can plan ahead with more new clean energy projects in the future. Around 950 people signed up for the first wind farm project and over 5,000 for Kirk Hill. I expect this third offering to be far more popular after the energy crisis of the past year and around 18,000 people have registered a firm interest in this latest project.
|Windier in winter, sunnier in summer...|
a good combination
Onshore wind and solar are some of the lowest CO2 sources of power in the UK. The model is around 50% to 60% cheaper than individuals installing their own rooftop solar PV...currently around £6,000 on average.
The Kirk Hill site is estimated to save 12 million Kg of CO2 every year which is equivalent to taking 8,200 petrol/diesel cars off the road.
Obviously the invasion of Ukraine has brought into sharp focus the need to reduce our dependence on Russian oil and gas and become far more self reliant.
So, last year I signed up for my small share of the Kirk Hill wind farm and have just paid the final monthly instalment. I like the idea of solar and the opportunity to share in the first consumer-owner solar co-operative. However, my initial calculation suggest that it will be roughly 50% more than the cost to buy into the Kirk Hill project so I will need to look into the details when the prospectus and formal share offer is launched. I need to find out why the up front cost is significantly more expensive as I think the construction costs for onshore wind and solar are very similar. Obviously inflation and the increased costs of construction will be a factor; I believe the load/capacity factor is different for solar compared to onshore wind. In the UK, wind is 3x more efficient than solar but has higher long-term maintenance costs; also the estimated 40 year lifespan means more savings compared to the 25 years for the wind farm.
But initial costs considerations aside, I do like the idea of ordinary people joining together to establish a new solar farm feeding clean energy into the grid which would not otherwise be built and which will be a small part of the transition to net zero emissions.
It will probably be 2025 before the solar park is completed but in the meantime I look forward to getting my regular monthly discount off my bills from Kirk Hill wind farm later this year.
As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!