Risks when investing in wind turbines
There is a number of issues to consider regarding the investment in a wind turbine. None the less, through a proper and thorough preparation most risks can be eliminated or reduced significantly.
Insecurity related to wind can occur because of significant fluctuation on a monthly and yearly basis and variations exist from location to location. Nevertheless, through wind studies, reference wind turbines located close by the subject, analyses of production history, and experience from similar wind turbines and locations, we are able to calculate the expected production with a quite reasonable accuracy.
Damage on main components like failure of gearbox, the generator or other large components can be a large expense if you have not secured yourself properly. Different insurance types and maintenance/service agreements can provide the neccessary security. These agreements can be adjusted according investors concrete needs, and in practice you can be covered against accidents to a very large extend.
Electricity is traded on international exchanges such as Nord Pool or EEX. Currently, the electricity price in international markets is so low that there is no economy in mounting turbines, without subsidies from the state. Many countries grant subsidies, and especially Germany is very attractive with EEG law providing fixed prices for 20-years.Thus we mainly focus on German turbines and therefore the price of electricity is no risk i the first several years.
Most projects are made as limited partnerships with a private limited company (plc) as general partner and investors as privates partners. The individual investor's liability may be limited to the investor's own share of the project. The general partner is 100 % liable for the whole investment.
If the turbine is financed through a loan, that is not the German KfW or ERP fixed loan, there will be a risk related to the interest rate. If an investor does wishes to avoid this risk it is possible to be covered through an interest swap.
As in all investments,other risks such as change in the tax legislation, bankrupts’ of banks, environmental legislation etc., should be considered.
Momentum Gruppen A/S provides assistance in planning the investment in the way that the investor will be secured as much a possible from the beginning.
Please contact us for further information.