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article imageAlternative Financing for Wind Farm Projects

By Bob Ewing     Feb 12, 2009 in Business
Community-owned wind farms may have the potential to make a major contribution to the UK's energy mix, helping to provide project developers with alternative sources of finance.
In the East Midlands, a co-operative group has become the first owners of a community wind farm. This venture is part of an initiative that the government hopes will be replicated across the country and provide an effective and sustainable new form of financing for cash-strapped wind farm projects.
There are 1,100 members of the Fens Co-op and they have raised £2.6m to buy two 2MW operational turbines in Lincolnshire from developer Fenland Windfarms. It was possible for groups and individuals to invest as little as £250 to buy a stake in the development.
"We have had enormous support for this project and are proud that there are now community-owned wind turbines in the area," said Paul Rea, chairman of the Fens Co-op.
"There is a high demand for community ownership and whenever people are given the opportunity to have a financial stake in a wind farm, the uptake is very encouraging."
Community-owned wind farms may have the potential to make a major contribution to the UK's energy mix, helping to provide project developers with alternative sources of finance at a time when tight credit conditions are leading to the cancellation of some projects and ensuring that local communities are fully engaged in efforts to cut carbon emissions.
The Climate Change Committee report on moving to a low carbon economy has concluded that "direct engagement with citizens such as community actions are important to promote changes in attitudes".
Recent proposals to introduce feed-in tariffs that would allow smaller scale renewables projects to receive above market rates for the energy they feed to the grid would also mean that communities investing in such projects could enjoy significant financial returns.
The first community-owned turbine in Dulas Valley, Wales is estimated to have brought more than £50,000 into the local economy. this infusion of funds resulted in a second turbine being erected in 2007.
In 2008, the UK's largest community-owned wind farm, known as Westmill Wind Farm Cooperative, opened in Oxfordshire and boasts five 1.3MW turbines.
It is anticipated shares in the project will deliver a return of approximately five per cent over the first five years of the project, rising to an average of 12 per cent over the 25-year life of the development.
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