Introduction
This article provides an illustration of the potential investment Price for a Community should it be offered shared ownership stakes in a 75 MW onshore wind project (the ‘project’). The intention is to use illustrative figures to demonstrate how different commercial terms within such an offer could impact the investment and ability to finance it. The article considers:
- Changing the percentage of ownership which the Community acquires, using 5%, 10% and 20% of the Project.
- Changing the Investment Price which is offered to the Community.
- Changing the stage of advancement of the Project at which investment by the Community is made.
The illustration assumes that the Community’s investment is made in exchange for a return that is equivalent to a proportional payment of net profit. For example, if the Community acquires a 5% stake in the project, it will be paid 5% of the Net Profit. It is structure agnostic and does not differentiate between a Joint Venture investment or a Shared Revenue or Profit investment (more information about structures for Shared Ownership can be found here).
The article first considers possible calculation methodologies of the Investment Price and how this can change depending on when the investment is made (Investment profile). The next section considers how the Community’s funding structure could be impacted by the Investment Price and how changing the funding structure might affect its ability to meet its financing costs (Impact of community funding costs). The last section considers the impact of debt funding at Project level on the Community investment (Impact of project level debt on community investment).
A glossary of key terms and an outline of all illustrative assumptions used are available also.
