Power to the People?
A new legal blend of Company and Partnership called a “Limited Liability Partnership” (“LLP”) allows a simple new way for Communities to develop wind, tide or biomass energy projects.

The “Community Energy Partnership” allows the Community, Investors, and Developer/Operators to jointly develop, install and operate community-owned renewable energy projects and to share the energy production.

Q. What’s in it for the Community?
The Community owns the asset in perpetuity, and receives a proportional “Equity Share” in the energy it produces.

Q What’s in it for the Investor?
The Investors buy energy, in the form of “Equity Shares” in production at today’s price (or even a discount) deliverable over (say) 20 to 25 years. They may use it, or sell it to someone else. Although there is no return ON the Investment, who thinks energy is going to get cheaper?

Q What’s in it for the Developer/Operator
The Developer/Operator manages the development and operation of the project and receives an Equity Share, which he may use or sell. He doesn’t have to risk a penny of his own money, but his interests are exactly the same as other Members.

Example
The Community of the Isle of Wiskay wishes to acquire 4 second-hand 250 kiloWatt wind turbines at a total cost installed of £400,000. The wind is such that the turbines will each produce an average of 600 MegaWatt/hours of electricity each year, so that over ten years the four turbines will generate in total 24,000 MegaWatts/hours.

At a sale price of £50.00 per MW/Hour it is necessary to sell 8,000 MW/hrs (or 33% of production) to raise the necessary £400,000 from Investors.

So a total of 16,000 MW/hrs or 66% of production remains with the Community of Wiskay from which a Developer/Operator receives 16% in return for managing and operating the installation.

And 50% of energy produced is available to the Community as an “energy dividend”. They agree to distribute 20% of this to retired Community Members and the balance equally to all, thereby reducing their bills.

Chris Cook - 22nd June 2006
Article Published in S.S.E.C Newsletter
www.opencapital.net