Westmill Wind Farm

Summary

These figures are a guide only. You can find out how these figures are worked out on the Case studies figures page.

 

Background

Westmill Wind Farm Co-operative is the first wind farm in the UK to be 100% community owned from commissioning. Producing electricity for three and a half thousand homes, Westmill generates around £1 million income a year, and demonstrates just how powerful community energy projects can be.

Local farmer Adam Twine, who started the project, was inspired by a trip to Denmark where 20% of the country’s renewable energy generators are owned by communities.

So he set about trying to do something similar back home in Oxfordshire. As one of the first wind farms in the area Westmill met with a lot of uncertainty with how to assess its planning application and also opposition, taking many years to get permission.

But the idea of a community owned wind farm captured the imagination of nearly two and half thousand people who opted to buy shares in the five proposed turbines.

This community involvement not only overcame opposition, but also means that people who live around the wind farm reap the financial rewards and feel they have ownership of energy production in their area.

Adam Twine, Westmill founder, “There was real community interest, because the wind farm is real. It’s a brilliant way of focusing on the realities of climate change and being able to engage with them in the here and now.  It’s not remote and distant as some of the climate issues can seem.”

Feasibility

Check your wind speed

Westmill Wind Farm is situated on an area of farm land with a flat open landscape, enabling the turbines to be exposed to the prevailing winds.  Wind studies showed that the site had a predicted annual wind speed of 6.3 metres per second at 49 m above ground level – which was forecast to enable the chosen turbines to produce on average 12 million kWh of electricity a year. 

Rates of return for wind projects vary according to wind speeds and the cost of development and build, so it is important to evaluate the site and turbines, plus as a Co-Operative what benefits there will be beyond profits.

Mike Blanch, Westmill Co-Operative founding member, “Fairly small increases in the size of a turbine’s rotor can give much more energy out.  At Westmill we were granted a variation to the planning permission to increase the rotor diameter by 20% from 52m to 62m which resulted in increasing the energy by 40%.  Where it makes little difference to the visibility of a turbine it is important to maximise height and rotor diameter within the constraints of the site, so you maximise energy generated.”

 

Funding model 

Westmill split fund raising between a share issue – enabling members of the local community to buy a stake in the wind farm - and a loan from the bank.

£4.6 million was obtained from the share scheme – the largest share issue that a co-op had undertaken at that time. Given there had been some local opposition expressed prior to the launch of the share scheme, the public response and resulting oversubscription was a huge success (and relief!) for the project’s founders. Westmill was then able to raise the remaining £3.8 million for the build through a loan from the Co-Operative Bank.

When launching their share issue, Westmill had to outline what they aimed to raise, how much would be raised from equity, and how much from the bank loan.  Along with predicated energy production, and sale prices for electricity this set the expected rate of return.

A share prospectus is prepared under rules governed by the FSA. This document sets how the co-operative will act and can only be changed by the agreement of the members. So even if an offer is oversubscribed the offer remains as set out in the share prospectus.

When making an offer groups should also consider what you have as a tangible asset, for Westmill this was planning permission, and the effect of equity versus loan money on your rate of return to shareholders.

 

Entity

The Co-operative that runs Westmill Wind Farm was set up as an Industrial and Provident Society, which offers the protection of limited liability. Being a Co-Operative society meant Westmill could raise equity finance, but also ensured it was established democratically for the benefit of its membership. Their rules allow one member one vote, so all investors have the same influence.

There are 7 elected board members, who run the Co-Op mostly on a voluntary basis with some tasks receiving expenses. Find out more about the benefits of operating as a Co-Operative.

 

Income generation

Westmill sells the electricity it generates to the national grid, creating an income of around £1 million a year.

After payments to the loan, this left a profit in their first financial year of £105,000, with a dividend of 2.3 pence per £1 share. In year two this increased to profits of £123,000 and a dividend of 2.7 pence.

Shareholders will continue to receive an annual interest payment from profits. In Westmill’s share prospectus this was forecast at 12% over the 25 year life of the project. Payments start off lower, as the Westmill Co-Op pays back the loan they have from the bank, with profits increasing once this is complete.

Westmill shareholders who invested more than £500 in one financial year were also eligible for the Government’s Enterprise Investment Scheme which offers tax relief to encourage investment in small companies.

The atmosphere at Westmill AGM’s says it all. One shareholder stood up and exclaimed, “I’ve never been to anything like this before and I think it’s fantastic.”

Note: Westmill was constructed before Feed in Tariffs were available, but benefit from the Renewables Obligation scheme.

 

Other benefits

Westmill also donate some of their income to a new charity they set up, the Westmill Sustainable Energy Trust, WeSET. Funded on an annual basis by 0.5% of the wind farms’ revenues, roughly £5000 - £6000 depending on how the wind blows that year!  

This enables WeSET to hold open days, and teach local children about the turbines, who in turn are as inspired as Adam was when he first had the idea for the wind farm.  Packed open days draw in the locals, who can get up close and personal with renewable energy. And even the critics are converted once they visit Westmill.

Eoin Lees, a Westmill Board member says, “Open days are crucial because there is so much unthinking resistance to wind farms. We get people here and the first thing they say is they’re not as noisy as I thought they were going to be. Everyone says that to me.”

Plus WeSET helps communities with energy saving measures, such as paying for the insulation of a hall in a nearby village, so everyone can share the benefits of the turbine profits.

 

Set up costs

The 5 turbines at Westmill cost £7.3 million to install in 2008. These costs were split between:

• 5 turbines: £5.1 million
• Balance of Plant: £1.4 million
• Connection to electricity grid: £0.6 million
• Project Management: £0.2 million

There were additional costs such as planning permission, interest during construction, insurance, creating a decommissioning fund, bank covenants, and the cost of the shareholder launch.

In total the money to build and launch the wind farm was £8 million. The share offer and loan raised £8.4 million in total which included an additional reserve of funds which was a condition of the bank loan.

 

Ongoing costs

Westmill has an operation and maintenance contract with the turbine supplier, Siemens, who service the turbines twice a year and ensure they have an availability rate of at least 97% - this means the proportion of time the turbines are available to generate. In reality, the turbines exceed this level.

Servicing varies from site to site, but can be calculated at an average of £14 per kW for turbines of this size.

There are additional costs to running a wind farm, which can include land leasing, insurance, business rates and management fees if applicable. Including servicing, a helpful figure to estimate running costs is around £33 per kW installed.

In addition to the above, the wind farm pays a Transmission Network Use of System charge for connecting to the national grid. This varies depending on which area of the country you are in. Check zones and charges here.

 

Lessons learnt

Find a voice to support your project

Being one of the first to bring this model to the UK, Adam faced a long battle with planning, local opposition and changes in turbines suppliers, which meant that it took 10 years to get the project off the ground.

They discovered that often objectors are noisy and supporters are silent, so the group looked for ways to change this.

Enlisting the help of their supporters, Wind Over Westmill (WOW) was set up to give local support a voice, that could counter the nay Sayers. WOW held public meetings to talk about the plans, and answer questions.

The group made significant steps – and those that were visible - to engage people, such as flying helium balloons at the height the turbines would be erected and having open days before they had a wind farm.

Liz, Co-Operative member, “I think the thing we learned is always communicate, always be honest, never misrepresent, just say it how it is and keep saying it how it is and be prepared for the long haul.”

Although Westmill took 10 years to get off the ground, they were pioneers and today projects shouldn’t take this long – as the group’s next project proved.

 

Future plans

Following the success of Westmill Wind Farm, last year Adam set up Westmill Solar Co-operative. Installed in July 2011, the 33 acres of solar PV are expected to generate 4.4GWh of electricity per year. 

In stark comparison to the wind farm, the Solar Co-Operative did not receive a single objection at planning and was voted through unanimously.

Adam believes this is due in a large part to the impact the Wind Farm has had,  “Westmill caught people’s imagination, we are local people trying to do something.”

And once people see what can be achieved, they welcome more community energy projects.

 

Current contribution to the grid

Westmill Wind Farm generates around 12 million kWh of electricity per year, which is enough to provide electricity to around 3600 homes. 

For more information on how many homes can be powered click here.

 

Key tips on creating your own Westmill

 

Check the wind speed. 

Westmill checked the wind speed would be high enough to produce the amount of energy needed to give the group a return on their investment. You can get an estimation of wind speed in your area using this tool from the Energy Saving Trust.

Check land access and grid connection. 

Westmill were in the fortunate position of working directly with the land owner Adam Twine who initiated the project. However, groups can set up partnerships with landowners. You will also need to check the distance to connect the power produced to the grid, which will involve an additional cost.

Prioritise the local community

How will you handle an over-subscribed share offer? Westmill prioritisied those who lived in a 50 mile radius, who all received the shares they requested. People living outside this radius could still purchase shares, but may have had their entitlement reduced to cope with demand.

Launching a share issue

Energy4all who support communities setting up Co-operatives helped set up Westmill, and assisted with putting together a share prospectus under the FSA regulations. The cost of making the share offer, including legal, accountancy and marketing was £150,000. Plus Westmill set a minimum investment of £250 and a maximum £20,000.

Setting up a wind farm is a lot of work, but the rewards are worth it says Liz, “The day we first started putting up these turbines we were just beside ourselves with excitement.”

 

How to get started

The Westmill Co-Op has shown that it’s possible to raise funds from the local community, and reap the ecological and economic benefits.

Mike Blanch. Founding Co-Operative Member, 

“Rather than relying on the government to do something about green issues, we’ve shown you can club together and generate your own green electricity, which puts the power back in your hands and enables people to do something practical.”

If you’re inspired, start your own group and start building a support network on energyshare.

As Mike says, “Ordinary people can co-operate to achieve what politicians talk about.”