thumbnail of Upper Pitforthie Windgen Debenture 2

Upper Pitforthie Windgen Debenture 2

Return 7.3%-8.5% IRR (variable)
Term 17 years
Total Invested £2.3m
566  investors
Maturity date 31 Mar 2034
thumbnail of Upper Pitforthie Windgen Debenture 2

What does the company do?

Upper Pitforthie Windgen was set up to own, build and manage a 500kW Enercon E48 wind turbine at the Upper Pitforthie farm in Aberdeenshire. The wind turbine generates clean renewable electricity which it supplies to the grid and a wood chip and grain drying business on the same farm. The drying business supplies woodchip to local biomass boiler owners, bringing the green energy element full circle; it is one form of renewable energy supporting another.

The main local user of the electricity generated, North Eastern Fuels (NEF), is a wood chipping and drying business also set up on Upper Pitforthie Farm as a joint venture between John Alexander, the farmer, and John Fotheringham, one of Upper Pitforthie’s directors. NEF has a 999 kW biomass system and a 450 kW electric immersion heater, both of which can be used to provide heat to dry wood chip.

The wind turbine is accredited for the Feed-in Tariff scheme, which pays a fixed amount (rising annually with inflation) for each unit of electricity generated, plus an additional amount for the electricity exported to the grid. The company can choose to opt out of the export Feed-in tariff and instead agree a contract with an energy supplier when wholesale electricity prices are higher.

Why did the company raise money?

The company raised funding on Abundance in 2015 to fund the construction of the turbine. Once complete and operational, this second investment on Abundance refinanced the original construction finance.

How does the company expect to repay the investment?

The company expects to repay investors from revenues it earns over the life of the investment from the generation and sale of electricity from its wind turbine.

How is the company making an impact?

Upper Pitforthie Windgen is helping to increase the amount of renewable energy used in the UK’s electricity grid as we transition to a 100% low carbon energy future.

The 500kW turbine was installed in 2016
The 500kW turbine was installed in 2016

Key terms

Issuer Upper Pitforthie Windgen
Return 7.3% - 8.5% IRR (variable, based on performance)
Term period 17 years
Start date 1 April 2017
Maturity date 31 March 2034
Capital repayment Regular instalments
Amount raised £2,300,000.00
Return structure

Investment returns are paid every 6 months over the life of the investment (the first and last periods are shorter 3 months period).

The amount returned to investors in each period is linked to the performance of the company in the preceding 6 month period. In each period, the return paid goes first towards repaying an equal instalment of the original capital invested, and anything above that amount in each period will be paid as investment income.

Secured or unsecured Secured It is important to understand that security does not guarantee repayment of your investment or returns.
Early repayment options

The company can only make an early repayment of the investment in certain circumstances, such as a change of control of the company (for example, if some or all of the company was sold to a new owner) or a regulatory/tax requirement.

See the Debenture Deed for details of all circumstances in which the option for early repayment may be exercised.

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 has been paid back to date on this investment, based on an example investment of £1,000. The return on this investment is linked to the performance of the project during each return period.

Payment schedule table
Payment date Capital repayment Dividend Total
8 September 2017 £14.71 £1.48 £16.19
9 March 2018 £29.41 £1.32 £30.73
7 September 2018 £29.41 £0.16 £29.57
11 March 2019 £29.41 £14.35 £43.76
6 September 2019 £29.41 £10.24 £39.65
10 March 2020 £29.41 £15.61 £45.02
8 September 2020 £29.41 £12.08 £41.49
11 March 2021 £29.41 £1.23 £30.64
8 September 2021 £29.41 £12.19 £41.60
11 March 2022 £29.41 £0.00 £29.41
8 September 2022 £29.41 £6.05 £35.46
10 March 2023 £29.41 £53.56 £82.97
8 September 2023 £29.41 £69.30 £98.71
8 March 2024 £29.41 £24.31 £53.72
6 September 2024 Variable Variable Variable
11 March 2025 Variable Variable Variable
8 September 2025 Variable Variable Variable
11 March 2026 Variable Variable Variable
8 September 2026 Variable Variable Variable
11 March 2027 Variable Variable Variable
8 September 2027 Variable Variable Variable
10 March 2028 Variable Variable Variable
8 September 2028 Variable Variable Variable
9 March 2029 Variable Variable Variable
7 September 2029 Variable Variable Variable
11 March 2030 Variable Variable Variable
6 September 2030 Variable Variable Variable
11 March 2031 Variable Variable Variable
8 September 2031 Variable Variable Variable
10 March 2032 Variable Variable Variable
8 September 2032 Variable Variable Variable
11 March 2033 Variable Variable Variable
8 September 2033 Variable Variable Variable
10 March 2034 Variable Variable Variable
9 June 2034 Variable Variable Variable

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.

Electricity generated 92.3%
Cash Return 90.5%

The wind yield over the period was relatively poor, with a mild run up to Christmas. However the wind turbine has benefitted from a good PPA (Power Purchasing Agreement) price for part of the cash return period, which has helped support revenues over the period. Peak wind levels have been achieved since January until now, so we look forward to hopefully a positive 6-month period through to the September payment.

An investment return from Upper Pitforthie Windgen Debenture 2 was paid today.

Electricity generated 72.7%
Cash Return 155.5%

The wind turbine has benefitted from the continuing strong export price and so revenues are up for this cash return period. However we have seen the poorest wind yield for May and June for a while resulting in slightly lower figures than hoped. Management have secured a good contract for the forthcoming season and so revenues shall reflect that.

An investment return from Upper Pitforthie Windgen Debenture 2 was paid today.

An investment return from Upper Pitforthie Windgen Debenture 2 was paid today.

Electricity generated 100.4%
Cash Return 143.7%

This 6-month period saw a continuation of the strong wind yields and performance of the previous period. As well as receiving the Feed-in Tariff income from much of the electricity generated in the previous period to make up for the lower financial return, we are pleased to show that the Turbine at Pitforthie has performed well with minimal downtime which has helped in making the most of the current energy prices.

 

As mentioned previously, the Directors have worked hard to seal a good energy sales contract which is realized in the higher return to investors in this period and going forwards.

 

Management propose to draw a small proportion of the surplus in this period and the next toward maintaining the drying plant and switching gear which is required as part of the full-circle energy use at Pitforthie as part of the grain and biofuel technology system. This will set the group of companies in good stead for maximizing income for the life duration of the project.

 

The Feed-in Tariff, that we received for all the electricity we generate, increases in line with inflation (RPI) in April each year. Given the current level of inflation the FiT rates will increase by 10.5% in April and we will benefit from this in the next period when we receive the FiT income from the electricity generated since April, and going forwards.

An investment return from Upper Pitforthie Windgen Debenture 2 was paid today.

Electricity generated 94.7%
Cash Return* 57.5%

This 6-month period (January-June 2022) saw wind speeds back up towards where we expect which meant we generated 854,610 kWh – our highest 6 month period to date. The turbine did not have any downtime during this period.

With the payment terms we currently have, we will not receive the Feed-in Tariff income (the majority of our revenues for generating electricity) for this 6 month period until later in September, so the higher generation and associated higher income is not reflected in what we can pay out to investors in this period. Our costs are otherwise largely in line with forecasts and the increased generation should mean a higher return for investors in the next period.

The Feed-in Tariff, that we received for all the electricity we generate, increases in line with inflation (RPI) in April each year. Given the current level of inflation the FiT rates increased significantly in April and we will benefit from this in the next period when we receive the FiT income from the electricity generated since April, and going forwards.

Given the current market conditions, we have been able to secure a better yearly contract for the price we export our electricity for, and we plan on signing a further fixed contract to secure a higher price going forwards.

An investment return from Upper Pitforthie Windgen Debenture 2 was paid today.

Electricity generated 75.4%
Cash Return* 54.5%

This 6-month period (July-December 2021) unfortunately had the lowest wind yield we've experienced to date which significantly reduced the electricity we were able to generate. Wind speeds were low across the UK in 2021, particularly in Q3 with July being our lowest month of generation to date.

The turbine had another week of downtime in this period as the pitching motor was again impacted by a defect that Enercon (the turbine servicing provider) had to be called out to fix. The service from Enercon has generally been good, but it's disappointing that the turbine has been impacted by the same issue that Enercon resolved in the previous period so we will continue to monitor.

Overall we have been happy with the performance turbine in general however the low wind speeds have frustratingly impacted the electricity generated and therefore our revenues in this period.

Due to our lower revenues in this period, the amount available for distribution to our investors was due to be less than the capital repayment for this period. We have therefore used the cash reserve in place to top up this period's cash return to ensure we at least make the capital repayment to you, but unfortunately this means there is no return in this period. We hope we will endure a windier year in 2022, and so far a stormy January and February has contributed to higher wind speeds.

An investment return from Upper Pitforthie Windgen Debenture 2 was paid today.

Electricity generated 81.3%
Cash Return* 72.5%

The electricity yield from the turbine was below our forecast for the first half of 2021 with a particularly poor April when only 43,000 kWh generated. This was due to a pitching motor fault which took Enercon 2 weeks to source and mend, however they are usually very responsive and so we cannot complain about them too much from a service aspect. Wind speeds tends to be lower during this period anyway and so we have not lost too much - a neighbouring turbine also only produced 48,000 kWh over the same period. We are always optimistic as this usually balances out over the winter period so expect a stormy one ahead.

We have recently changed accountants, transitioning from JCCA to EQ, and they have been performing a full and thorough review of our accounts. This has unfortunately accrued a larger than average bill for this period, but we expect future bills from our accountants to fall back in line with our forecasts going forwards.

We can confirm that the outstanding FiT payment of around £30k has been re-couped and paid this period as payments from SSE have caught up.

The Operating Surplus share is now reduced to 92% as part of the Deed agreement. This is due to the restriction on our grid connection being lifted at this point, which allows us to now export substantially more electricity into the grid which should boost our revenues and increase the amount we can pay out to our investors.

An investment return from Upper Pitforthie Windgen Debenture 2 was paid today.

Electricity generated 90.1%
Cash Return* 73.5%

As mentioned in our last update, the transition of our FiT provider from SSE to OVO has resulted in a longer payment term of 90 days before we receive our FiT payments for the energy we generate each quarter. We have now received the FiT payments from Q2 which would previously have been included as part of the September Cash Return, however we have yet to receive the FiT amount for the electricity generated in Q4 (typically a windier period and expected to be about £20k) which was previously included in this March Cash Return. Going forwards, this will continue to shift the amount we can pay out in each period to investors, however it doesn’t affect the overall operating surplus, just when we receive our revenues.

Due to power prices dipping below the Government Export tariff guaranteed rates in August, we have decided to once again switch back to the export tariff contract which we have not been on since 2017.

Our new auditors have been carrying out a full and thorough review which is of course taking some time, however we are expecting an update from them. They are working on both the outstanding audit and also for the latest financial year. Overall, we are happy with the change of accountants.

An investment return from Upper Pitforthie Windgen Debenture 2 was paid today.

Electricity generated 98.2%
Cash Return* 95.6%

January through March have been excellent wind periods, it was our strongest quarter to date. Wind speeds dropped significantly from April to June, but the turbine has continued to perform well.

During this period OVO has taken over from SSE as our FiT provider. This has affected the time it takes for us to receive FiT payments as SSE used to pay us within 6 weeks after the end of each quarter (when FiT meter readings are submitted), but OVO’s payment terms are 90 days. This means our FiT payment for the period April-June has not arrived in time to be included for this Cash Return Period’s operating surplus. For the time being, this will shift the amount we can pay out in each period to investors, however it doesn’t affect the overall operating surplus, just when we receive our revenues. We will review our options to see if the FiT payments can be brought back on track to align with the Cash Return Periods.

We have recently changed to a new accounting firm, and so far we are happy with the progress we are making. We apologise for still not having the audited accounts completed on Companies House, we expect these to be finished imminently.

2020 was off to a strong start for Upper Pitforthie Windgen, January and February have been record breaking generation months for the turbine. March remained fairly windy but in April wind speeds have dropped significantly. Nevertheless, the turbine operations remain largely unaffected by the pandemic. Private wire sales to our sister company on site continue while the biomass business has kept steady as it adapts to changes in the biomass supply chains which are affected by COVID-19. We also continue to export to the grid, the pandemic has led to reduced wholesale power prices but we have an export agreement in place until October which is 2p per kW above the current spot price. We continue to put pressure on the auditor for our annual accounts, the auditor is facing some further delay due to COVID-19.

An investment return from Upper Pitforthie Windgen Debenture 2 was paid today.

Electricity generated 93.9%
Cash Return* 117.7%

The period July to December has continued to see relatively low average wind speeds and therefore the electricity generated by the turbine is lower than forecast. Despite this, we have been able to export more than originally forecast which has mitigated some of the impact on revenues from the lower electricity generation.

We have undergone a FiT audit by Ofgem, which included a site visit on 17 January 2019 and several months of email correspondence to respond to follow up questions. While this process was time consuming, all the evidence we have submitted have now proved satisfactory and Ofgem confirmed in December 2019 the FiT audit is now closed.

Regrettably, the audit for our annual accounts is taking longer than it should. We are checking in with the auditor on a regular basis so we can get it concluded and published on Companies House.

An investment return from Upper Pitforthie Windgen Debenture 2 was paid today.

Electricity generated 82.4%
Cash Return* 90.0%

The period January to June 2019 has seen lower average wind speeds than forecast so the amount of electricity the turbine generated is also lower than expected.

Despite this, we have been able to export more than originally forecast which has mitigated some of the impact on revenues from the lower electricity generation.

An investment return from Upper Pitforthie Windgen Debenture 2 was paid today.

Electricity generated 98.0%
Cash Return* 118.1%

The additional invoices relating to the construction period have now been paid off and the turbine has continued to operate well. The amount of wind resource has been lower than forecast, but we have managed to export more than originally forecast which has a positive impact on the Operating Surplus for this Cash Return.

An investment return from Upper Pitforthie Windgen Debenture 2 was paid today.

Electricity generated 91.6%
Cash Return* 69.2%

During the last 6 month cash return period the overall performance of the turbine has been good. The amount of wind resource has been lower than forecast (mostly as a result of low wind speeds in June). However, revenues earned through the generation of electricity have nonetheless been close to the upper range of the modelled forecast, although with lower wind speeds not as strong as the last period.

As we have mentioned in the previous update, a significant proportion of the outstanding bill to the electrical contractor had to be paid during this period. This has now been settled (eventually at £10k less than previously indicated) and there is nothing further to pay.

The figures are summarised below (estimates shown are the upper end of the range). To reduce the impact on investors John, one of our two directors, and Abundance have both agreed to waive their management fees (£6,000 and £17,250 respectively) which has reduced the recurring costs to £8,131 leaving a total of £68,026 in Operating Surplus. This is comprised of £67,647 capital and £379 of dividend income.

ItemEstimateActual
Revenues£139,526£137,780
Recurring costs (including fees)£35,589£8,131
Operating Surplus£107,613£68,026

The past year has been very frustrating and we regret the impact this has had on investor returns. We have overcome some major hurdles now and keep our fingers crossed for a much smoother ride from here. The turbine continues to perform well although July and August have been below expectations. We hope the wind conditions will pick up during the remaining 4 months of this period.

Our annual accounts have taken longer than expected to prepare — our auditors assure us they will be filed with Companies House soon.

Separately, North Eastern Fuels has finally been accredited by Ofgem to receive the Renewable Heat Incentive in respect of its biomass boiler although no payment has yet been forthcoming.

An investment return from Upper Pitforthie Windgen Debenture 2 was paid today.

Electricity generated 102.3%
Cash Return* 87.5%

On 9 March, we paid out a total of £70,700 comprised of £67,647 capital and £3,053 of dividend income which is about £17,300 below our internal estimates for the period. Our expectations had been to pay around £85,000. The turbine has been running smoothly during the period and we have been achieving a higher amount of export than we expected giving us revenues of £155k, around £35k more than we had hoped for. Recurring operational and administrative costs were broadly in line with our expectations at £38,000 versus about £35,000.

However, we have had to settle a number of invoices relating to additional work and repairs by our electrical contractor at the time of construction. The amount we have agreed on (£120,000 overall) is £46,667 for the last cash return period with another £73,333 to be settled in the next cash return period (January — June 2018). The impact on investors’ return of the additional costs in this period has been mostly compensated for by the increased revenue. If nothing else changed from here relative to our internal estimates, the £46,667 costs reduce the effective rate of return across the life of the investment by 0.1% and another 0.25% as a result of the remaining £73,333 we have agreed to settle to avoid any further action.

Although we have done what we can to try to minimise the impact on our investors, we are frustrated that for various reasons we are not in a position to do more. In discussion with Abundance, they have agreed to waive their fees over future periods as needed so that the return to investors does not fall from here as a result of these additional costs.

An investment return from Upper Pitforthie Windgen Debenture 2 was paid today.

Electricity generated 107.1%
Cash Return* 110.1%

The first period was a short 3 month period but future Cash Returns are for 6 months. With the wind turbine installed in June 2016, this period represented the completion of its first year of operation. The turbine went through a successful process of testing and calibration to gradually ramp up electricity generation. With the turbine not expected to be generating at full capacity in this first shorter period, this first payment was estimated to only cover the repayment of capital. The turbine successfully passed through this period and Upper Pitforthie Windgen paid out an amount that covered the capital repayment and a small amount of investment income.

This investment closed today.

Upper Pitforthie Windgen Debenture 2 opened for investment today.