Viking windfarm best renewables investment ever, says consultant

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.


Add Your Comment
  • ian tinkler

    • June 26th, 2012 18:47

    “He has advised the likes of SSE” Good to see he is impartial then.

  • John Tulloch

    • June 26th, 2012 20:02

    I’m relieved to hear it’s “highly profitable” irrespective of worst-case subsidy i.e. no subsidy – no concerns over viability, then – and that trustees have been, presumably, fully and professionally briefed on the options open to them.

    The more valid information trustees have to help them make their decision the better.

  • Johan Adamson

    • June 27th, 2012 9:07

    As long as it is a balanced assessment, including risk assessments, and bearing in mind a charity must be risk averse to protect its funds; shows future costs as well as those known about; takes into account environmental damage; and takes into account that these turbines have to stop in the high winds – because either they will fall apart or the grid wont be able to take the extra power.

    Are these the same experts who valued Facebook and made investors pay far too much for it? Investment in the channel tunnel may go up in 30 years time, I suppose.

    And spare a thought for those in fuel poverty while we are counting our millions, on a depopulated outpost in the North Sea.

  • Kathy Greaves

    • June 27th, 2012 9:15

    I don’t see how Quayle Munro can be said to be ‘independent’ when they stand to gain £150,000 over the next two years, if this investment goes ahead! And nothing if it does not go ahead. Vested interest maybe.

    Or am I wrong?

    Kathy Greaves

  • ian tinkler

    • June 27th, 2012 9:53

    Whatever the potential income from Viking, I feel there is a far more important issue here. The threat to the quality of lives of those living in and under this wind farm. Can anyone seriously deny lives will be spoilt and great unhappiness created for at least a generation? Why, simply for the sake of mammon. That appears to be the sole concern of far too many, just sell people, the Enviroment for the greatest profit, so very typical of Fat Cat industrialists and the Banks, they always will find the fools to bribe and coerce with the promise of endless riches!

  • Paul O'Brien

    • June 27th, 2012 12:49

    This draws a comparison with the land mark deal in 1974 to set up the Oil Fund through the Disturbance Agreement with the oil industry that led to the Shetland Charitable Trust of today.
    While the fund has reached as high as £250m, and has fluctuated in value over the years, the actual amount of money paid over by the oil industry was £81m up to when the Disturbance payments ended in 2000. (Shetland Times figures)

    No-one seems to dispute the value that this inspired deal has brought to Shetland over the years but I wonder what the opposition to the Sullum Voe terminal were saying in 1972-1974. Possibly similar to some of the above comments?

    The Trust’s funds are reliant on the wider global economy for growth and can no longer be affected by local income from the oil industry. Is it now sustainable to keep spending £10-£12m per annum of the Trust’s funds without a substantial income stream?

    The Viking Project offers such a income stream which over the next 20 year will far exceed the income from the oil industry in the period from 1974-2000. At an estimated £20m per annum from 2018 it will make the Trust’s annual spend sustainable for the foreseeable future. A 20 year income stream from Viking will amount to £400m which in turn will be used as the Trust has done in the past to support the fishing industry, agriculture, local arts, culture, sport and the wider Shetland community.
    Do Shetlander’s now view the Sullum Voe terminal as an eyesore or an asset?
    How will future Shetlanders view the Viking Porject? I predict it will be viewed as a major asset.

  • S Winks

    • June 27th, 2012 13:30

    Pay someone enough and potentially they’ll say anything to the paying audience!!
    As soon as the cash is handed over the ‘coulds’ and the ‘might dos’ etc… will become ‘wont’s’ …. Time frames will move, estimated fund benefits will become brutal costly realities and Shetland will be decimated to achieve loss, distress, disappointment and a wealthy few.

    Just my thoughts…….. but then, they
    aren’t just mine are they!

  • Johan Adamson

    • June 27th, 2012 13:49

    Can you let us know the source of this information on the income stream and costs. Does it take into acount the demise of the subsidy and higher transmission charges as well as the lower number of turbines?

    Sullom Voe was not built on such a vast area, nor was it so close to so many, nor were the structures so high.

    Shouldnt we just cut our cloth like the rest of Scotland instead of trying to manufacture some industry or court a large company to invest here? In Greece and Ireland they have no money and we are fighting over £6m.

  • Sandy McMillan

    • June 27th, 2012 16:12

    Johan, £6.3 Million is peanuts to what Viking Energy will require, if the Shetland Charitable Trust gives in to Viking Energy they will be constantly knocking at the door, until the purse is empty, then what, no more grants, no Christmas bonus for the elderly, care homes become run down, there are dozens of grants given out each year from the Charitable Trust, for example, Social Works Department get a allocation from the Charitable Trust for the Elderly and needy, Cope to help with there workshops and Training, all of this would come to a end if Viking Energy get there hands on Shetlanders Charitable Trusts purse, this purse belongs to us, we the people of Shetland should deside where it goes.
    Sandy McMillan

  • David Spence

    • June 27th, 2012 18:33

    You see Sandy, thats where the big difference of opinion lies. Some take your view, others see it as if the CT *dont* invest, then thats when the pot will dry up and dissapear.

  • roberta clubb

    • June 27th, 2012 20:08

    “He[Mr Cormie] has made a bold claim” ; so what`s new about that in this whole ghastly business of promotion. Mr Cormie also “appears to have formidable credentials” is not good enough. At the 11th hour of decision making are the trustees supposed to swallow this latest bit of information / P.R. whole with scarcely time to ruminate.

  • Douglas Young

    • June 27th, 2012 21:00

    Good reason to ditch then. Not a single “expert”, “consultant”, nor credit rating agency foresaw the credit crunch.
    A grain o wit goes a long way though….

  • S V Jolly

    • June 28th, 2012 1:10

    Interesting that advice is provided from an organisation, namely Quayle Munro, which recently recorded a financial loss. ( They are also forecasting a loss for the whole of this financial year … so, is it prudent to take advice from an organisation that can’t get its own house in order? Might I respectfully suggest that the SCT obtains a second opinion from another firm of valuers?

  • David Spence - Lerwick

    • June 28th, 2012 2:07

    It seems from what information I have researched, the cost of the whole project is estimated to be between £750 – £850 Million. Now, as everybody knows, taking into account the vastly over-budgeted Dome (5 times over budget), Scottish Parliament (10 times over budget) and now the Trams fiasco (3 times over budget) in Edinburgh, when it comes to building and building costs, you can easily double, triple if not more the actual cost of the VE Project and estimate the costs would be in the region of around £1.4 – £2.4 Billion with the CT getting around 1% or less return on their investment. Taking into account the life expectancy of the Wind Turbines, it seems that the return investment for the CT would end up being negative rather than positive. So, would it be good value for money, I very much doubt it.

  • Angela Hunt

    • June 28th, 2012 12:29

    Will the £150,000 requested for PROVISIONAL advisory costs by Qualye Munro include a visit to the proposed wind farm site by the accountants ? It is a bit of a trek up there so perhaps they could be transported in Sedan chairs by locals, set down and served tea from silver thermos flasks with fancies, reminiscent of the golden days of the Empire.
    It is normal practice to pour the cement into a 420 metre sq turbine foundation base in one dry day. Will the accounts then look around them as they take their afternoon tea and calculate where in the Shetland weather calendar they will find 103 dry days of even temperature without sea fogs. Could they be requested to share this information with us because for anyone trying to garden here that would be priceless.

  • W Conroy

    • June 28th, 2012 13:31

    For once it seems Mr Tinkler and myself are in agreement about something!

    I’m in favour of renewable energy such as wind power but when peoples physical (and no doubt mental) health may be affected negatively I think this has to be the main concern.

    Is money more important than peoples health?

  • rosa steppanova

    • December 17th, 2013 21:09

    Wish I had your imagination Angela Hunt (lol), but these are hard times. A measly 150 grand won’t stretch to include sedan chairs and silver thermos flasks. These days such a trifling sum is barely enough to keep professional financial consultants in the lifestyle they’ve become accustomed to. I believe this is called a minimum wage in professional financial advisor speak, and how could the bill-footing Shetland population possibly object to this? After all, the trustees of SCT, according to Dr. Wills, are acting in our best interest.


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