Ian Hamilton QC

(The blog is indebted to the people of Gigha for this technical information. If you want a glimpse of heaven click on www.gigha.org.uk/home/tour/index.php

The Gigha windmills comprise three, pre-commissioned (that’s second hand to you and me!) Vestas V27 wind turbines, each with an installed capacity of 225 kilowatts. Each turbine stands on a three section, 30 metre, rolled steel tower, set on steel reinforced foundations. Three glass fibre blades are fitted to each machine, measuring 13.5 metres in length, giving a swept area diameter of 27 metres (hence the V27 in the manufacturers name).  The windmills are medium sized by modern standards and whilst they are significant structures in their own right, they sit particularly well within the small island landscape.

1. Second-hand you say, is this wise?

Yes.  Since many smaller windfarms across Europe are now ‘powering up’, replacing medium sized turbines with much larger machines, there is a good availability of second hand turbines many with significant remaining design lives. The Gigha Windmills, for example, were earlier turning at Windcluster’s Haverigg 1, windfarm in Cumbria and each have eight years of their design life left.

2. Does this mean the Gigha Windfarm will be all worn out in eight years?

No.  Apart from the windmills themselves all the other equipment (cabling, substation, transformer, switchgear etc) is brand new. Over the first eight years of the project, the Isle of Gigha Heritage Trust will build up a capital reinvestment fund, sufficient to replace all the second hand equipment.  Given the V27’s reputation as the ‘Honda 125’ of the wind turbine world (BSA Bantam for the more mature observer – Willie!), properly maintained, we expect the windmills to last significantly longer than their original design life.

3. Why are they so special?

Gigha’s windmills are ground breaking. This is Scotland’s first community owned, grid connected, windfarm.  Perhaps even more significantly, the financial model that has been developed to underpin the project is very robust and capable of widespread replication by communities throughout Scotland. In this way we anticipate that where Gigha’s ‘dancing ladies’ have led the way, many more community windfarms will follow.

4. And what is the financial model?

Put simply, the financial model comprises a three-way mix of grant funding, loan finance and equity finance. In Gigha’s case, grants of £50,000 and £82,000 where secured from the Fresh Futures, Sustainable Communities Project Fund (National Lottery funding administered by Forward Scotland) and the Scottish Community and Householder Renewables Initiative (Scottish Executive money administered by Highlands and Islands Enterprise), commercial loan finance of £148,000 was provided by Social Investment Scotland and equity holdings of £80,000 and £40,000 were taken by the Highlands and Islands Enterprise and the Isle of Gigha Heritage Trust. Total capital cost, therefore, is £440,000.

The loan will be repaid over a five year period at a fixed rate of interest, with the equity currently held by HIE bought back by the Isle of Gigha Heritage Trust in year five. Furthermore, over the first eight years of the project, a capital reinvestment fund of approximately £160,000 will be built up, sufficient to replace the wind turbines (blades, nacelles, gearboxes, generators etc) when required.

With the exception of the grant funding, the project is a purely commercial one. The loan is at commercial rates and the equity held by HIE comprises shares upon which a 6% dividend is paid. The capital reinvestment fund ensures that the windfarm is financially sustainable, providing a pot of money sufficient to replace the machines when required, without recourse to further grant, equity or loan finance.

5. How much power do they produce?

Given the prevailing wind conditions on the Isle of Gigha, (you may have noticed we have a very good wind resource!) we estimate that the three windmills combined will produce approximately 2.1 gigawatt hours of electricity a year. This makes the Gigha windmills a small, but locally significant, producer of electricity.

6. What does that mean in cash terms?

Based on our own projections, (which we have abstracted from anemometer readings taken over the last two years and the rate per unit agreed with Green Energy, our power purchaser) we estimate a gross annual income of £150,000. After all running costs (including maintenance, rates and insurance etc), the creation of the capital sinking fund, the loan repayments and equity re-purchase, the net profit for each of the first eight years is approximately £75,000 per annum.  All Profit from the windfarm will be voted up to the subsidiary’s parent company, The Isle of Gigha Heritage Trust, which is the company set up to run and manage the development and regeneration of the Island following the community buy out in 2002.  Profit will be used toward essential projects on the island.

7. But I thought windfarms were unpopular.

Whilst there may be a small but vocal minority opposed to windfarms elsewhere, all major decisions on the community owned Isle of Gigha are made by the community. In this way a well-attended trip to a nearby windfarm was arranged by the Trust and a full discussion and debate held, culminating in a meeting at the Gigha Village Hall where the vote in favour of the windmills was 100%.

 

This entry was posted on Sunday, February 18th, 2007 at 12:56 am and is filed under Guests. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.