A high-powered financial consultant has told trustees that the Viking windfarm is the best renewables investment opportunity he has ever seen.
Quayle Munro’s Edinburgh division managing director Rob Cormie is said by Shetland Charitable Trust to have made the bold claim during a private briefing on the project for councillor-trustees earlier this month.
His opinion was based on what the trust called the “extremely high wind capacity factors” of the 103-turbine windfarm in Shetland, which gained planning consent in April.
Specialist corporate finance advisers Quayle Munro were called in to value the windfarm project prior to the trust contemplating further investment of £6.3 million after having spent £3.4 million getting it to the stage of achieving planning consent.
Quayle Munro concluded that the trust’s 45 per cent share of the windfarm project could now be worth between £50 million and £130 million. Even at the lower end of the estimate it would represent a return of about £15 for each £1 spent by the trust so far.
According to the trust, Quayle Munro’s valuation took into account not just the strong winds but the likely impact of high transmission charges, the capital costs, the effect of phasing the commissioning of the windfarm and the price of power. The trust says that taking account of all five factors and including best and worst outcomes, the project remains “highly profitable”.
However, the flow of money to the trust, which it has consistently predicted to be over £20 million a year, is not expected to start before 2018.
The trust is to sit down on Thursday to consider investing a further £6.3 million as the trust’s share of a £14 million spending programme needed to get the windfarm to the stage where contracts are ready to be signed.
Alternatively, the trustees may decide to sell out to partner Scottish and Southern Energy or to do nothing, which would see its share diminish if the project continues.
According to the report by trust financial controller Jeff Goddard, £1.8 million of the new money will be spent as soon as possible while the remainder will be used “as required”.
Trustees are also being asked to agree a fund of £150,000 to cover “professional advisory costs” which might be incurred over the next two years from independent advisers like Quayle Munro.
The trust report says that, nationally, Quayle Munro has advised on over 130 major transactions in the last five years valued at over £8 billion.
Mr Cormie appears to have formidable credentials in the field of renewable finances. He was formerly head of the energy & natural resources group at accountants KPMG and has wide experience of projects which include wind, tidal and wave power, new nuclear generation and thermal generation.
He has advised the likes of SSE, Shanks, Pulsar Energy, Ecotricity and International Power.