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Copenhagen Off-shore Community Wind Co-op, Project Financing


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Project Perspective: Middelgrunden (Denmark)
Speaker: Evan Ferrari, President, WindShare Cooperative

Published in: Business, Technology
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Copenhagen Off-shore Community Wind Co-op, Project Financing

  1. 1. Middelgrundens Vindmøllelaug
  2. 2. Middelgrunden Wind Turbine Coorperative Middelgrundens Vindmøllelaug
  3. 7. Middelgrunden Shoal 3.5 km offshore
  4. 8. Middelgrunden Project
  5. 9. <ul><li>Middelgrunden Project </li></ul><ul><li>40 MW Project </li></ul><ul><li>20 –Turbines </li></ul><ul><li>2MW/Turbine </li></ul>
  6. 10. <ul><li>50% Middelgrunden Wind Turbine Cooperative </li></ul><ul><li> (Middelgrundens Vindmøllelaug ) </li></ul><ul><li>50% Copenhagen Municipal Utility </li></ul><ul><ul><li>(Københavns Energi) </li></ul></ul>Ownership
  7. 11. <ul><li>3% of Copenhagen power </li></ul><ul><li>2001 World’s largest offshore wind project </li></ul>
  8. 12. Background <ul><li>1996 Proposal = 27 wind turbines </li></ul><ul><li>Initial Support from civil servants & utility </li></ul><ul><li>Public support </li></ul><ul><li>Support from Parliament </li></ul><ul><li> from Parliament </li></ul>
  9. 13. Background <ul><li>97–99 </li></ul><ul><li>Environmental Impact Assessment </li></ul><ul><ul><li>27 turbines in three rows </li></ul></ul><ul><ul><li>Becomes </li></ul></ul><ul><ul><li>20 turbines in an arch </li></ul></ul>
  10. 14. Background <ul><li>Public consultation >50,000 people </li></ul><ul><li>10,000 local people pre-subscribe </li></ul><ul><li>Strong local support helped approvals </li></ul><ul><li>Electricity market restructuring governing wholesale price of renewable energy </li></ul>
  11. 15. Community Power in Denmark <ul><li>> 75% of Danish wind owned by locals </li></ul><ul><li>2,100 wind coops = 50 % installed wind </li></ul><ul><li>100,000 Danish households own a stake in cooperatively owned wind turbines </li></ul>~180,000 households in Ontario?
  12. 16. Public Support <ul><li>Public resistance can be largest barrier </li></ul><ul><li>Danish law ensured local participation </li></ul><ul><li>Polls </li></ul><ul><ul><li>>70% of population wind power </li></ul></ul><ul><ul><li>only about 5% </li></ul></ul><ul><li>In 2000 the legislative ‘limits to ownership’ were removed </li></ul>
  13. 17. Public Support <ul><li>2000 ‘local law’ removed. </li></ul><ul><li>Expect decrease in public support </li></ul><ul><li>Surprisingly little resistance to Middelgrunden </li></ul><ul><li>Other offshore projects </li></ul><ul><ul><li>Samsø Cooperative Project, with local people and municipalities as members, was finished early 2003. </li></ul></ul><ul><ul><li>Grenå, owned by a private developer, has been significantly postponed due to local resistance. </li></ul></ul>
  14. 18. Local Ownership <ul><li>Results in more installed capacity </li></ul><ul><li>Creates local dialogue and acceptance </li></ul><ul><li>Raises public awareness </li></ul><ul><li>Reduces problems and conflicts through early local involvement </li></ul>
  15. 19. Local Ownership <ul><li>5. Reduces line losses </li></ul><ul><li>6. Democratic </li></ul><ul><li>- locals engaged in decisions & planning – benefit and can be a disadvantages </li></ul><ul><li>7. Local production makes sustainable development understandable </li></ul>
  16. 20. Pre-subscriptions (early financing) <ul><li>Financed early work, sell pre-subscriptions </li></ul><ul><ul><li>7 EUR/Subscription($9.28 CAD) </li></ul></ul><ul><ul><li>30,000 pre-subscriptions sold </li></ul></ul><ul><ul><li>210,000 Euros ($278,000 CAD) </li></ul></ul><ul><ul><li>Once Share Offering complete, value of the pre-subscriptions subtracted from the price of the first share the members bought </li></ul></ul>
  17. 21. Sale of shares <ul><li>40,500 shares </li></ul><ul><li>570 EUR/ Share ($765 CAD) </li></ul><ul><li>23 million EUR ($31 million CAD) </li></ul><ul><li>Loans available for members </li></ul><ul><ul><li>Less than 5% of the shareholders made use of this opportunity </li></ul></ul><ul><li>Coop able to raise share capital through share offering </li></ul>
  18. 22. Who are the shareholders <ul><li>8,552 members </li></ul><ul><ul><li>electricity consumers </li></ul></ul><ul><ul><li>companies, </li></ul></ul><ul><ul><li>organizations, </li></ul></ul><ul><ul><li>unions </li></ul></ul><ul><ul><li>foundations </li></ul></ul><ul><li>88% in the Greater Copenhagen </li></ul>
  19. 23. +5% Variance (foundations) CAD 31.8 30.5 Total Cost (millions) EURO 24 23 Total Cost (millions) Currency Actual Budget Middelgrunden Wind Turbine Coorperative Final Capital Costs vs Budget
  20. 24. 7.5% ROI after depreciation 42.5 EUR/year Income after depreciation 28.5 EUR/yr Depreciation 5% Annual depreciation 8 Years Simple pay-back 12.5% Rate of return 70 Euros Net Income/year/share 1 Share = 570 Euro ($765 CAD) Annual production 1,000 kWh
  21. 25. Lessons Learned for wind cooperatives <ul><li>Must have local involvement during the whole process </li></ul><ul><li>Essential to disseminate information in a timely manner </li></ul><ul><li>Critical concerns should be taken seriously and project modified if possible </li></ul><ul><ul><li>Middelgrunden from 27 turbines to 20 </li></ul></ul><ul><ul><li>Cost an extra year of planning, </li></ul></ul><ul><ul><li>Broad local support was assured in the end. </li></ul></ul><ul><li>Environmental Impact Assessment must be taken very seriously </li></ul><ul><li>Large projects need a minimum amount of start up capital – or large amount of voluntary work. </li></ul><ul><li>Ensure due diligence when preparing tenders and contracts. (foundations) </li></ul>
  22. 26. Middelgrunden Wind Turbine Coorperative Middelgrundens Vindmøllelaug