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Discussion: goring hydropower scheme
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Posted Anonymously |
1. RE: goring hydropower scheme
Oct 17 2008, 3:56 PM EDT
I'm also interested but this is hardly an economically attractive investment. Even if you take optimistic assumptions that the upfront capex stays at £1m, there are zero operating costs and the £110,000 of annual revenue is maintained (today's energy prices unlikely to remain that high in the longer term) the NPV of the project over its 50 year life is only £90k using a discount rate of 10%, I would seriously challenge the claim in GGN that the "rate of return will be very attractive"!
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Posted Anonymously |
2. RE: goring hydropower scheme
Oct 19 2008, 3:51 AM EDT
"I'm also interested but this is hardly an economically attractive investment. Even if you take optimistic assumptions that the upfront capex stays at £1m, there are zero operating costs and the £110,000 of annual revenue is maintained (today's energy prices unlikely to remain that high in the longer term) the NPV of the project over its 50 year life is only £90k using a discount rate of 10%, I would seriously challenge the claim in GGN that the "rate of return will be very attractive"!"how about the extra pollution caused by the coaches coming to view this scheme . 1 out of 1 found this valuable. Do you? |
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daveholt |
3. RE: goring hydropower scheme
Oct 21 2008, 4:12 AM EDT
"I'm also interested but this is hardly an economically attractive investment. Even if you take optimistic assumptions that the upfront capex stays at £1m, there are zero operating costs and the £110,000 of annual revenue is maintained (today's energy prices unlikely to remain that high in the longer term) the NPV of the project over its 50 year life is only £90k using a discount rate of 10%, I would seriously challenge the claim in GGN that the "rate of return will be very attractive"!"As I'm sure you're aware, energy prices are growing at greater than 15% per annum this Century. I'm not saying this will continue indefinitely but I believe prices will always exceed the RPI for ever (and of course strongly impact the RPI). Could you factor that into your calculations and let us know what the return will be like? We have included maintenance costs in the £110,000 income already. 50 years is a conservative figure. The only thing's to be replaced are the top and bottom bearings (each with an 11 year life) and the electrical equipment - perhaps every 25 years. Thanks for your interest and comments. Dave. Do you find this valuable? |
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daveholt |
4. RE: goring hydropower scheme
Oct 21 2008, 4:17 AM EDT
This, and tourists arriving by car do concern us but we believe the benefits of this scheme in terms of education and positive action far outweigh the extra CO2 produced by the additional trips. We will encourage schools to come by train and all other organisations by train. There is an upside and a downside to everything we do and we make decisions by considering as many aspects as we're aware of. Thanks for your interest and comment, Dave
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5. RE: goring hydropower scheme
Dec 21 2008, 5:03 PM EST
"As I'm sure you're aware, energy prices are growing at greater than 15% per annum this Century. I'm not saying this will continue indefinitely but I believe prices will always exceed the RPI for ever (and of course strongly impact the RPI). Could you factor that into your calculations and let us know what the return will be like? We have included maintenance costs in the £110,000 income already. 50 years is a conservative figure. The only thing's to be replaced are the top and bottom bearings (each with an 11 year life) and the electrical equipment - perhaps every 25 years. Thanks for your interest and comments. Dave."Dave, apologies for the delay in responding! It's certainly true that energy prices have increased over the last century and there are good structurally reasons for believing they will continue to be maintained at a level higher than that seen in the past (e.g. economic advancement in non-OECD countries is seeing around one billion people transitioning to a more developed way of life). The current global economic climate is of course depressing oil (and therefore energy prices) but many commentators would expect this to return to a range of between $60 and $90 / bbl over the medium term. OPEC itself has signalled a target price in the middle of this range. So, overall, I am agreeing with your view that energy prices will remain relatively high going forward. Nevertheless, in a standard business financial evaluation of a project like this the returns do not look compelling. Normally one would take a prudent approach by inflating costs and keeping revenues flat. You indicate that maintenance figures are already included in the £110,000 figure. That is reassuring. But even so, a basic financial analysis does not make this an investable scheme, at least not for me! This project is being considered for all the right reasons and I absolutely support it from that perspective. But for everyone's sake, I would strongly urge you to have someone familar with project economics look over the financials to make sure they truly do make good business sense. Hope this helps. Lloyd Jenkins 07810 856303 Do you find this valuable? |
