thumbnail of E2 Energy Debenture 2

E2 Energy Debenture 2

Return 5.0% IRR
Term 16 years
Total Invested £295k
234  investors
Maturity date 30 Jun 2021
thumbnail of E2 Energy Debenture 2

A diversified portfolio of operational UK wind turbines

E2 Energy was a portfolio of eight medium wind turbines located on farms across the north of England. As well as selling some of the electricity to the farmers at a discounted rate, rent for the use of the land is helping diversify their income. The rest of the electricity is exported to the grid, increasing the UK’s supply of clean, home-grown energy. All of the turbines receive the Feed-in Tariff for the electricity generated and have proven operational track record, so investors will benefit from stable, long term returns backed by green power. The turbines were all installed and commissioned between August 2012 and March 2016.

Five of the turbines are smaller 80 kW Endurance E3120 models, which are located in Yorkshire. The other three turbines are Endurance X35 turbines which are larger with two of 225 kW and one of 180 kW. They are located in Derbyshire, Cumbria and Yorkshire. Each turbine is at an individual location with its own end-user and power distribution infrastructure. The benefit of this is that low wind in a particular area does not necessarily occur at all the turbines in the portfolio and also operating issues are isolated to the particular turbine experiencing a problem.

Who developed the wind turbines?

The turbines were owned and operated by Arena Capital Partners, a Dublin based developer and investor in renewable energy which owns more than 70 turbines in Northern Ireland, Great Britain and Italy. The funds raised in this offer were used to help Arena acquire more wind energy assets and to develop renewable energy projects in its pipeline.

The portfolio of wind turbines was sold to a new owner in 2021 and the owner, as allowed under the term of the investment, chose to make an early repayment of this investment. The investment was fully repaid on 30 June 2021.

Key terms

Issuer E2 Energy
Return 5.0% IRR
Term period 16 years
Start date 1 May 2019
Maturity date 30 June 2035
Capital repayment Regular instalments
Amount raised £295,000.00
Secured or unsecured Secured It is important to understand that security does not guarantee repayment of your investment or returns.

Documents

Debenture Deed
Download PDF The debenture deed sets out the legal agreement and terms for this investment.

Payment schedule

This table gives a breakdown of what was paid back on this investment, based on an example investment of £1,000.

Payment schedule table
Payment date Capital repayment Interest Total
31 December 2019 £31.25 £19.35 £50.60
30 June 2020 £31.25 £14.51 £45.76
31 December 2020 £31.25 £14.51 £45.76
30 June 2021 £906.25 £43.55 £949.80
Total £1,000.00 £91.92 £1,091.92

Updates

These updates tell the story of the investment over its life and include information reported to investors by the company or council behind the investment. The updates are provided for informational purposes only and do not constitute an inducement or invitation to invest. Information provided at the time of publishing may no longer be accurate.

The E2 Energy has been repaid in full, as per the notice to investors sent in early June, after the company and its wind turbines were bought by another company.

The final payment to investors was made up of:

  • The 6-monthly interest payment for January-June 2021;
  • The outstanding capital repaid in full;
  • A compensating early redemption payment, equivalent to two additional 6-monthly interest payments (as per Schedule 7 of the Debenture Deed).

Dear investors,

We wish to inform you that our owner, Arena Capital Partners Limited, will soon be selling its wind power assets, including E2 Energy, to a new owner who will be able to develop the business further in the future.

Under the terms of your investment, E2 Energy has the option of making an early repayment of your investment in full when there is a change in ownership of the company. The new owner has informed us that it does not wish to have debt outstanding on the companies it is buying, and therefore it is planning to repay your investment as part of the purchase of E2 Energy.

We expect to complete the sale of E2 Energy shortly and we are therefore giving you a Notice of Redemption (as referred to in clause 14 of the Debenture Deed) and we plan to repay your investment on 30 June 2021. In line with our obligations to you under the terms of the Debenture Deed, this means that on 30 June 2021 you will receive the following:

  • The interest payment that is due on 30 June 2021;
  • Your outstanding capital repaid in full;
  • A compensating early redemption payment, equivalent to two additional 6-monthly interest payments (as per Schedule 7 of the Debenture Deed).

On 30 June 2021, your debentures will therefore mature and at that date all security relating to the debentures will be released and obligations between you, E2 Energy and Abundance will end.

We would like to take this opportunity to say thank you for supporting E2 Energy over the last few years. The investment you made enabled us to make a small but useful contribution to getting more wind powered electricity on the grid and so help the UK move a little closer to its Net Zero objectives.

We hope that you have found your investment in E2 Energy worthwhile and rewarding.

Yours sincerely,

Ian Greer & Barry Corcoran

Directors of E2 Energy plc

An investment return from E2 Energy Debenture 2 was paid today.

All turbines are fully operational. All the turbines within E2 and Wind Energy One are situated within 3 hours of our service & maintenance headquarters, therefore we expect very little disruption from Covid 19 and for ongoing maintenance work.

The E Series turbines have performed well in the second half of the year and have performed better than the same period last year (2019).

Maintenance costs are higher than normal due to:

  • Blade failure at Upper Midgeley (E3120) in July 2020. The remedial work was completed in August 2020. This resulted in 3 weeks where the turbine was out of operation.
  • Gearbox failure at Wiggonlea (X-Series) in January 2020 which resulted in us sending the nacelle to Multigear in Germany for a full gearbox rebuild. The turbine was out of operation for 8 months.
  • Gearbox failure at Poplar Farm (X-Series) in March 2020 which resulted in us sending the nacelle to Multigear in Germany for a part rebuild of the gearbox. The turbine was out of operation for 8 months.

Production/Generation:

  • Upper Midgeley (E-Series) down circa 5,000 units (using remote monitoring data) of production.
  • Wiggonlea (X-Series) down circa 54,000 units (using 2019 data) of production.
  • Poplar Farm (X-Series) down circa 71,000 units (using 2019 data) of production.

Future maintenance:

  • High Fields Farm is scheduled for pro-active maintenance work to be completed in the new year which will have minimal impact on production/generation due to using a “hot swap” nacelle.
  • All 3 X-Series have now had the gearbox remedial work completed so there are no known issues for the future.

An investment return from E2 Energy Debenture 2 was paid today.

The E Series turbines have performed extremely well in the first half of the year. Generation figures were bolstered by several storms in February and March. The 10 year average wind speed for February is measured at 9.3 knots, this year it was 14.0. This would most likely have been a record breaking 6 months had it not been for a gearbox issue with the X-Series turbines. Unfortunately, due to these issues and the X-Series turbines not being in full operation, for a 3rd 6-month period in a row generation is below forecast.

Through monitoring and investigation by Earthmill Maintenance, we have unfortunately discovered a mechanical weakness in the gearboxes across the X Series fleet which is caused by wear on the internals. We have two X Series Endurance turbines in the portfolio which appear to be affected by the issue – Poplar Farm and Wiggonlea.

Earthmill have worked closely with German company Multigear to devise two solutions – a full gearbox rebuild which involves sending the turbine head to Germany or an ‘uptower’ bearing upgrade. A further step to protect components is the introduction of condition monitoring, a new system comprising of a number of sensors and filtration systems installed by Earthmill which identifies operating anomalies indicating possible issues at an early stage. This allows investigation before failure occurs to reduce downtime and repair costs.

In the case of Poplar Farm the condition monitoring system detected metal particulate in the oil which is often a sign of wear in the gearbox, this prompted immediate boroscopic inspection which confirmed the case. Unfortunately, due to Covid-19 Multigear have been unable to fly to the UK to undertake the uptower fix, the gearbox is due to be taken down and sent to Germany in June. As a result, there has been loss of revenue while the turbines are down and higher costs are expected during the next 6 months.

Covid-19 update

The impact of Covid-19 has been related to gearbox fix delays and the loss of revenue associated. The challenges have been travel bans put in place and Multigear being based in Germany, to mitigate this the decision has been made to ship the gearbox to Germany for work to be done. Although more costly than an Uptower fix, less loss of revenue. Export rates have also been affected with oil prices hitting record lows in Spring and gas reserves remaining largely unused due to the global slow down caused by Covid-19. The knock-on effect of this is recent quotes for exported electricity obtained by Earthmill Maintenance were as low as 3.8p per kWh. A government backed mechanism has therefore being utilised by Earthmill Maintenance when renewing power purchase agreements known as the FIT export tariff to guarantee a minimum payment of 5.5p per kWh.

Final Note

Tommy Costello resigned as a director of E2 Energy plc and its parent company Arena Capital Partners Limited (ACP) on 3rd June 2020 to pursue other opportunities. Tommy remains as a Shareholder in the Parent Company and will be available for strategic advice when necessary. He is optimistic about the company’s future and is supportive of his former fellow directors.

At this difficult time, we are pleased to report that wind and the wind turbines are two things not being affected by the virus. The turbines continue to generate as expected. From a maintenance and monitoring point of view, Earthmill are still running a full operation albeit with a skeleton staff in the office and everybody else working from home. Earthmill are still offering a full monitoring service and all our engineers are still working, so should turbines need site attendance this can be done, although some fixes may take slightly longer. We have a good stock of parts that will ensure we are protected against any issues in the supply chain, for at least the next 3 months.

All but one of the turbines have operationally been performing well during the period. The Petersburgh turbine underwent a gearbox investigation in the summer. This showed there had been an internal mechanical failure and the gearbox was required to be rebuilt. The turbine returned to full operations in mid-November, a slightly longer delay than we had hoped. Also, as a result, our maintenance costs for the period were larger than usual.

Wind levels have been below average during this 6 month period, as they have been for most of 2019, and this has also affected energy generation. The portfolio generated 655,076 kWh of renewable electricity, a lower figure than expected which means revenues were also down for the period.

The lower wind speed is not a cause for concern as wind speeds do fluctuate over time and our financial forecasting incorporates contingency for this. All the turbines are now operating well and will be able to take advantage of the windier winter months.

2019 Wind Update - published in the Earthmill Maintenance Newsletter Winter 2019/20

"New data published on the government website shows that wind levels have been below average this year. The exception was March, during which storm Freya and Gareth made it the windiest March in over 10 years. Afterward, levels sadly dropped below 10 year average and rarely rose above it into autumn.

Earthmill project manager Matthew Dowley commented ‘’the figures published by the Government are based on UK wide averages. Of course there will be geographical differences and some clients will have actually had a good year. The figures do however paint a general trend. Let’s hope the winter brings stronger winds."

An investment return from E2 Energy Debenture 2 was paid today.

We are pleased to report that there has been a good operational performance from the turbine portfolio over the 8-month period to June 2019. During this period we generated 1,222,510 kWh of renewable electricity. This is lower than our expected generation though as a result of lower wind speeds during the period. Every month, other than March, showed a negative deviation to its long-term average wind speed. This is not a cause for concern as wind speeds do fluctuate over time and our financial forecasting incorporates contingency for this.

The standard maintenance on the 8 turbines has been carried out as scheduled and the turbines are in good condition with the exception of the Petersburgh turbine. This is now offline following a recent health check and is undergoing a gearbox investigation. We anticipate this work will be completed no later than 3 months from now and so the turbine is likely to only forgo generation during the low wind summer months.

We are delighted to have also raised a further £295,000 via this second issue of Debentures through Abundance in June this year. This completes the refinance as the amount raised in the September 2018 offer was slightly lower than the target amount. These Debentures are under the same commercial terms (only the start date and maturity date are different) as the first issue of Debentures.

This investment closed today.

E2 Energy Debenture 2 opened for investment today.