Sunday, 8 April 2018

Brookfield Renewables Sale Part 2

Canadian company Brookfield Renewables sold two wind farms to Greencoat Renewables last week - Knockacummer and Killhill. I took a look at Knockacummer in my last post. This time I will examine Killhill.  Things don't look any better from a financial point of view.

Killhill is outside Cashel in Co.Tipperary. It has sixteen Enercon 2.0 MW turbines and was commissioned in 2014. The latest accounts show operating profits for 2015 and 2016 but a net loss for both years after interest is accounted for. In fact, since it came into operation, it made a loss every single year  and now has accumulated losses of nearly € 900,000. It had net current liabilities of €3.2m and was completely dependent on financial support from Brookfield, the parent company, to meet it's debts. There were about €37m of loans outstanding by the end of 2016. 

Im speculating, but it could be that the banks will be paid out of the sale proceeds leaving the company completely financed by equity under Greencoat. This could account for the apparently large, but undisclosed, sale price of both wind farms. 


  1. Has anyone other than me ever wondered how a money losing operation stays in business? I mean, peoples health and welfare are dependent on energy being cheap and plentiful, why then go to an energy source that fails to deliver? The Irish need to think like Italians, in particular, Romans. When the Romans wanted to unravel a particularly troublesome political conundrum they would ask, "Cui bono?" Who benefits? In the case of the wind and solar fraud, Irish citizens should ask, "Cui bono?" (My apologies, my grasp of Irish is weak, how would, "Who benefits" be said in the Irish?). I think we could all agree the beneficiaries are not the average Irish citizen; who then is the beneficiary, and to what purpose.

  2. In the normal commercial world you either close a loss making operation with no prospect of profitability. Or restructure its cost base to enable it to operate profitably
    With a wind farm a single product producer this is pretty nigh impossible. If you selected the wrong machine and locate them too close one another. Which reduces output significantly. Picked the wrong site where wind speeds turned out to be slower than anticipated. Aligned to that you start having problems with gear box failure,excess leading edge blade wear. Your options are pretty limited. You close it down. But when government and all its institutions encouraged you any many others to invest significant amounts of cash in the same business with the same results. Commercial reality and the obvious consequences become a political embarrassment . So they obfuscate delay and dump it on the taxpayer. Except this time the amounts of cash involved will not easily be hidden.

  3. There is no easy direct translation for "who benefits". The best is "Ce he an bhuaigh?" (who is it that wins). There are other taxation benefits which I am struggling to acquaint myself with. One appears to be rapid depreciation of the wind farms. It has always been a principle of taxation rules that a profit cannot be made on tax avoidance alone. Most rich Irish people keep some of their money in off shore accounts, so perhaps this is some sort of way to clean it up. I wonder where did Brookfield get all the money to begin with. I was debating this on the Irish "" discussion forum and when I mentioned tax avoidance, I was immediately banned off it.

  4. So the Irish Fake Media, The Irish Times, The Irish Independent , RTE etc, know about our next economic collapse but will say nothing about it.They are covering for old Irish type Soviet Fascists and Blueshirt Fascists. To let them get rich at the citizenries expense. In Fawlty Towers it was "don't mention the war" for the Irish Fake(Fascist supporting media) media it is don't tell the truth. It will be very difficult for them to hide the €5bn+ losses of the wind program.

  5. The media are complicit, but I doubt if they could change policy anyway due to the complexity of electricity as an energy source and ignorance of Irish people,
    150 million euros would buy 300 good detached family homes at half a million each in a town like Drogheda, Celbridge or Dunboyne. If the frontage were 20 meters, the total length would be 6km or three and three quarter miles. It would take a normal person an hour to walk it. If built on both sides, the avenue would be 3 km long.

    If a pension fund decided to invest that amount in Knockacummer wind farm which is (100 MW) capacity and that money were used to buy it. (which has happened). A typical way would be to issue 150,000,000 ordinary shares @ 1 euro each. There would be no further debt to be paid. It made a loss of 4 million per year in recent years after it paid 12 million interest. So it could have managed to pay 8 million interest. Say the directors decided to keep 1 million as reserves and pay the rest in dividends (7 000,000 euros) divided by 150,000,000 = 4.66 cents per share.

    100 cents/4.66 = 21 years and 5 months to get the 150 million back.

    What happens next. A 21 year old wind farm will yield inadequate power to pay for the running costs. It will have little value. New turbines might be capable of being mounted on the plinth, but the cost would still be at least 150 million to restore it.. So new capital would be needed to refit the wind farm and there would be nothing to pay investors their principle. In short, they would be lucky to get 80% of their money back within 17 years, and that is doing well. The wind speed won’t change, so either electricity rises to luxury status of there will be a lot of poor pensioners. I would go further to say, starving pensioners.

    Gaelectric has gobbled up the last 92 million of the National Pension Reserve Fund and at least 65 million of Irish private investment and there is a court case on the 8th May for 10.6 million of private debt recovery = 170 million down the drain. The newspapers did cover it, but no one bought the papers and no one read them. Its all Colm McGreggor. As William Shakespeare wrote, "A fool and his money is easy parted"