Abundance Generation launches wind project predicting 9% returns

The renewable energy crowdfunder has opened a new wind turbine project up to investors.

Renewable energy crowdfunding company Abundance Generation has unveiled its latest project, promising an average return of 9% before tax.

It is looking to raise £1.5 million for a new wind turbine near the village of Pensilva in Cornwall. The project, named REG High Down, is being managed by Renewable Energy Generators.

The project is being incorporated as a public limited company (PLC), and investors will be buying debentures – essentially loaning money to the PLC.

The debentures are for the 20-year lifespan of the project, although they can potentially be sold off sooner via a bulletin board on the Abundance Generation website.

Find out more about this and other projects on the Abundance website

Where does your money go?

The turbine is already built and it’s expected to be generating electricity within the next few weeks.

The money being raised via these debentures is actually being used to repay the loan taken out to pay for the construction.

How you’ll earn money

There are two elements to earning money from a project such as this: firstly, your capital will be repaid over time and, secondly, you’ll hopefully receive investment income.

The project hopes to make a decent rate of return from the Government’s feed-in tariff, which pays an inflation-linked price for wind-generated electricity.

The actual return will be determined by how much electricity is generated, and what price the feed-in tariff offers over time.

In theory, payments will be made every six months, so long as the project hits its revenue targets.

There is also an early bird bonus of an extra 0.3% return if you invest in the project before 3rd March.

Risks

Any money you deposit into your Abundance account to buy debentures in a project is covered by the Financial Services Compensation Scheme, up to a maximum of £85,000. However, once you buy debentures it isn’t.

You may get a lower real rate of return if the project doesn’t hit its targets, and there is a risk that you’ll lose all your money if the project was to go under.

Tax treatment

The returns on your investment, beyond the repayment of your capital, are treated as dividends for tax purposes. So you will have to pay Income Tax on them as you would interest from a normal savings account.

However, as Corporation Tax has already been paid on the return, higher- and additional-rate taxpayers can claim a tax credit of 10% against their tax charges.

You may be able to hold your debentures within a self-invested personal pension (SIPP), depending on your provider. Debentures can't be held in an ISA.

Verdict

Despite being a relatively young company, Abundance already has a keen group of investors who have invested in five or more of its projects.

If you think this project has the wind in its sails, literally, and you’re prepared to tie up some money for the long haul, then the rate of return looks good.

Find out more about this and other projects on the Abundance website

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