The capital cost of supplying and installing the new wind turbine will be in the order of £1,050,000. It is proposed to raise the finance for the Project by a combination of loans and member shareholdings funds. The following cost breakdown is based on prices from the wind turbine contracts with a contingency reserve provision.
The annual operating costs for the turbine are the responsibility of HoTTWind@Longley, and will be sourced out of revenues from the sales of electricity and the Feed-in-Tariff income from the government. These have been estimated as follows, without indexation:
The projected funding for the capital costs for the Project are summarised, right:
The Project will be funded through the construction phase to commissioning and handover by Longley Farm. The Pioneer share offer funds are being set aside to provide an initial contribution to the purchase of the turbine, and to cover the costs of preparing for this Main share offer together with associated legal costs and due-diligence services and for the start-up costs of the HoTTWind@Longley company. Whilst Members funds from this Main share offer will be used for completing the purchase of the turbine when commissioned, these funds will also be used to reduce interest costs during construction once the minimum sum of £400,000 has been raised. The legal agreements with Longley Farm provide HoTTWind@Longley with the exclusive right to purchase the wind turbine within the option period after handover of the wind turbine by the turbine supplier; the proceeds from this Main share offer funding round will be used to purchase the turbine and associated infrastructure and agreements. In addition to Member funds, Longley Farm have agreed to make available a construction loan of up to £500,000 at an interest rate of 8% fixed over 10 years, which can be used to bridge the gap between Member funds raised and the Project purchase cost. This loan is considered to be a fair commercial deal, and will reduce the legal and due-diligence costs associated with securing conventional commercial loans of this nature. This loan facility may be reduced by the additional Member share subscriptions received over £400,000.
HoTTWind@Longley will receive revenues through electricity sales to Longley Farm and Feed-In-Tariff Payments from Government plus a small quantity from exported power. It is expected that the Longley Farm dairy will consume up to 95% of the generated power.