Friday, January 31, 2014

Wind Power Investments in Germany Proving Riskier than Thought

For years Germany's wind output has been delivering uninspiring growth, while the excitement around the generation source has appeared little diminished.
Spiegel provides an article that fits with the tepid generation performance; financially poor results following rich promises.

Wind Power Investments in Germany Proving Riskier than Thought - SPIEGEL ONLINE:
Investments in renewable energy were supposed to be a sure thing, with wind park operators promising annual returns of up to 20 percent. More often than not, however, such pledges have been illusory -- and many investors have lost their principal to boot.
...mounting claims led Prokon to declare bankruptcy -- 75,000 stakeholders could be left out in the cold.
Data from AGEB shows biomass outgrowing wind
Thus far, it is the highest profile failure of a business model that both politicians and investors praised for being doubly beneficial. Not only would investors boost their own accounts, but they would also help the environment at the same time. And because the state guaranteed high feed-in rates for 20 years, the promises made by financial advisors -- secure returns with a good conscience -- seemed plausible.
Indications are mounting, however, that green capitalism will not be able to meet all expectations. In courts around the country, complaints are mounting from wind park investors who haven't received a dividend disbursement in years or whose parks went belly up. Consumer protection activists are complaining that many projects are poorly structured and lack transparency.
...newly released numbers, collected and analyzed over a several-year period, show what disappointed investors have long surmised: Around half of these commercial wind park enterprises are doing so poorly that investors can count themselves lucky if they even get their initial investment back after the 20 year duration.

...the only solid calculations were the fees and commissions scooped up by participating companies. In many ventures financed via closed-end funds, such expenditures amounted to 15 percent or even 20 percent of the invested principal. Because of the complexity of the financing model, up to a half-dozen firms are involved to take care of such tasks as "project management," "equity raising" or, simply, "marketing."

...[Breeze Two Energy] was able to avoid bankruptcy only because Germany's laws had changed in 2008. Since then, a "positive continuation prognosis" is enough to stay in business.
In the renewables industry, such a prognosis is easy to make: You just have to claim that the wind will blow stronger during the next year.
The entire article can be read at SPIEGEL ONLINE

I wonder if Export Development Canada's new Green Bonds carry the "00" designation.

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