Wind farm – payback methods

[Integrator741]

Hello,
I am trying to think of a way how an onshore wind farm can pay back money borrowed to its original shareholders or whoever loaned the money, what would be the payback method? For example let’s say I proposed some sort of a scheme to build an onshore wind farm, and the scheme gets approved, so what would be the usual methods of paying back the money that I received?
Thanks.

 

[hexreader]

Wind farms are profitable because governments plough huge subsidies into the technology and implementation - at tax-payers' expense. No return on investment required.

If Wind farms had to compete on the same terms as established technologies, there would be far less of them, and those that exist would be in windy areas where other energy sources are more expensive than the average.

.... and yes... this is a biased, cynical view, for which I make no apology.

... but to be fair, maybe this paves the way for better technology in the future. Efficient, affordable storage of the energy seems to be a big problem at the moment.

If you invest money in wind farms - be sure that subsidies will give you sufficient payback, because the electricity generated will probably not.

... or maybe I am just plain wrong - discuss...

 

[Integrator741]

Wind farms are profitable because governments plough huge subsidies into the technology and implementation - at tax-payers' expense. No return on investment required.

If Wind farms had to compete on the same terms as established technologies, there would be far less of them, and those that exist would be in windy areas where other energy sources are more expensive than the average.

.... and yes... this is a biased, cynical view, for which I make no apology.

... but to be fair, maybe this paves the way for better technology in the future. Efficient, affordable storage of the energy seems to be a big problem at the moment.

If you invest money in wind farms - be sure that subsidies will give you sufficient payback, because the electricity generated will probably not.

... or maybe I am just plain wrong - discuss...

Well all I understand is that if you got the funding you have to give something back right?

 

[hexreader]

Wow - you really are naive.

The world is full of people who will happily take all they can get and give nothing back. In fact they will probably keep asking for more.

Sorry....

 

[hevans1944]

... let’s say I proposed some sort of a scheme to build an onshore wind farm, and the scheme gets approved, so what would be the usual methods of paying back the money that I received? ...

Well, cash works for me.

Or did you mean how to distribute the income received from selling wind-generated electrical energy to a local utility? Are you assuming there will be any income left after paying interest and principal on the construcition loan, purchase of the land, providing for an installation and maintenance fund for the wind turbines, amortization of their replacement cost, and paying salaries of management and maintenance workers? If so, then that is considered profit and can either be distributed to stockholders as a dividend or retained by the company for future expenses. After taxes, of course. Or, if this will all be covered by a government subsidy, never mind. There is then no need "of paying back the money that I received." Google Solyndra for details of how that works.

 

[Integrator741]

Wow, this seems really confusing to be honest.

 

[(*steve*)]

In simple terms, you have costs and you have income generated.

Costs will be:

1. Initial capital costs
2. Interest payments
3. Operating costs

Income generated will be from:

1. Power Generated
2. Tourists
3. etc.

(OK, so the only likely one will be (1))

You keep your capital costs to one side.

Then you look at your monthly income and subtract the monthly expenses to get a net income (you may or may not have to subtract taxes from this).

What is left is expressed as a proportion of the capital cost.

So, if your capital was $100,000, interest is $750 per month, and operating costs are $1000 per month, and your gross income is $3500 per month then your net income is $1750, or about 1/57.

This tells you that the payback period (in this case before tax) is 57 months.

In real life the calculations will be more complex as the amount of power generates will vary and the tariffs received will not be constant. If you need to pay tax, then you may also need to look at the cost of depreciation because that can be offset against your tax. Whether you include that in your payback figure depends on what you're trying to prove.