Ripple Energy – Invest in your own Windfarm – Cut Your Bills – Go Green!

With your bills set to soar, what can you do to cut your bills? Why not invest in a share of a wind farm through Ripple?

I don’t know what’s worse, climate change or my bills soaring! But the two are connected and likely only to get worse. Purely from a family finances perspective, you need to do something to mitigate the high and rising cost of gas and electricity at home & petrol for your car. If you don’t do anything and then complain about your lot in life – shame on you for being so pathetic – but there are some simple things you can do to reduce the cost of your energy consumption.

These could be as simple as not idling your car, reducing the thermostat at home (or upgrading to a smarter one), insulating your home, reducing car mileage and driving at a sensible speed, upgrading to a heat pump tumble dryer (like me!)

Gone are the days when well-meaning Martin Lewis would tell you to swap from your old “big 6” provider’s standard rate for a cheaper deal elsewhere.

There will be no cheaper deal come April!

So when it comes to your own energy choices, it has an impact on both your wallet and the planet.

But it is very wrong to think that you are powerless in this situation. Here’s where Ripple’s innovative idea comes in – invest money today into reducing your electricity bill in future. It’s simple, ingenious and attractive.

What Is Ripple Offering?

Ripple Energy wants to help “Put people in control of their own green future” and this is by financing the building of wind farms – paid for by investors like you and I – which generate green energy. The owners of the wind farms (you and I) benefit from the profits of the wind farm over the 25 year lifespan (profits being the revenue of electricity produced less the operational cost).

They are currently raising funds for their third wind farm and are seeking to raise £24.075m for their Kirk Hill project.

£24m may sound like a lot of money but it’s only roughly the cost of a new build housing estate of 100 homes. This wind farm will generated enough power for 18,500 homes or 185 Barrett Box estates or the town of Loughborough.

It’s investment that is desperately needed if we wish to decarbonise our power grid and if you are unable to install solar on your roof this is a good proxy for generating your own green energy.
At that point I should add that DIYInvestorUK has written a good post and it’s worth reading that. He invests on the basis that he’s hedging his future energy costs and is set to benefit from the current spike in wholesale electricity costs.

How Does It Work?

You are probably best going to Ripple’s website. But here’s my take on it:

Your money goes to guying a fraction of the wind farm –  in my case our 2,250 kWh of electricity means we’d need 709 watts of wind farm to generate our needs over a year. (This assumes that the farm generates green electricity 36% of the year – the “load factor”. To buy this 709 watts I can pay £1,330 – either in one lump sum or 12 instalments for no extra. You can invest from as little as £25 up to 120% of your electricity bill (in our case £1,596) – although you could probably say that you use more if you want to invest more and nobody would stop you.

I’ll then save an estimated £97 on my electricity each year. This being the difference between the wholesale price for 2,250 kWh and what it costs to run the wind farm.

This £97 is very conservative since it’s based on government published estimated prices for electricity which don’t reflect the times that we are in. The annual return could easily be £200.

Under the prospectus the investment yields a 4.9% internal rate of return. I’ve done some modelling of potential returns under higher power prices and think that 4.9% is conservative and a figure of 7-9% may be more realistic – that 4.9% return is worth about 8.8% to a higher rate tax payer and for the higher 7-9% return it’s worth between 12-15%!

My calculations and not Ripple’s

All whilst you do nothing at all – just save money on your bills. This is passive income at its best and the return will probably beat you getting solar on your own roof as well.

I can share or go into the economics of this proposal in more detail if anyone likes – just comment below and I’ll put something together.

The £97 is given to you in the form of a reduction in your electricity bill. This is both in the form of a return on your initial capital (the windfarm is depreciated over its lifetime) and interest which is taxable but you have a (little know and I only just found out myself) allowance from the HMRC of £1,000 a year called “Tax-free allowances on property and trading income”.

If you want to sell, you can once the project is up and running but only for the remaining value of your investment (those familiar with Abundance will know that a secondary market would value it higher).

If you are interested, you should carefully read the share offer document before making any investment. 

Reasons To Invest

  • Your money will directly be used to generate low carbon electricity!
  • It helps cut your bills with a modest investment
  • Returns are free of tax for most, no self-assessment required
  • Doesn’t form part of your ISA or SIPP thresholds
  • Saves you money over 20-25 years
  • Mitigates the risk of rising electricity prices
  • The potential rate of return is good


Reasons Not To Invest

I hate to say that but I doubt that I’ll be investing myself. It’s a really ambitious project but follows on from two successful projects that Ripple have had. I genuinely believe that more projects like this are needed and the innovation that the investment returns are applied to your electricity bill is nice idea.

However it is this very prospect that rules me out. In 25 years’ time I’ll be 64. Will I still be in the UK? Or more precisely, will I still have an electricity bill in 2047? I don’t know but I would hate to think that I want to leave, then I’ll lose out on a valuable income stream.

You see, the fact that the capital is part repaid each year while the annual revenue stays roughly the same means that in Year 1-5 you’ll get approximately 3% interest and 5% capital each year on your investment. In years 20-25 you get just 8% interest as your capital has been repaid. If you sell later on, you will be surrendering an investment with little/no face value but which pays out a steady income. That’s what I don’t like.
There’s also the fact that your choice of provider and tariff is (somewhat) limited. But maybe I’m just a bit too like Don Draper and the idea of being tied into something until all my grey hair turns white gives me the creeps!

I have tried to invest sustainably for almost a decade now and despite wincing at the rise in our gas and electricity bill, I know that we already generate many times our actual energy demand through a range of investments
There’s also the fact that this wind farm is not yet built – that’s a risk.

A cynic may point to this proposal and say that you money is being used to run the risk of project overruns, delays, poor performance when working etc… all the while Ripple collect a generous payment for running the show.

What To Invest in Instead

I’ve got my series of the Jolly Green portfolio for some investment ideas but I think that investing in a renewable energy trust like GreenCoat Wind will do the same thing as Ripple but allow you to invest more money, can sell anytime you like (if liquidity is your thing) and receive dividends instead of money off your bills.

I have invested in projects like this one with Abundance but they’ve not had a conventional renewable energy project in a while. Speaking to them they said that for a competitive rate of return the project would need to be £10+m and that requires extra steps – following of regulations – so they aren’t doing these types.

If this investment was on Abundance and that meant that I could sell (even though I’m a bit of a buy and hold investor), I’d fill my boots (and IFISA).

If you are looking, Abundance investment has 3 different offers open at the moment – all in things that can reduce your carbon footprint from growing trees, growing food to rolling out EV charging stations. They even have a raffle (if that’s your thing) and a promotion of up to £100 if you open an account and transfer an ISA to them – before the end of March, just in time for your bills to sky rocket.

Current offers from Abundance

That’s about it from me. I wish Ripple success and you too if you invest.

Thanks, GFF

Note. I have investments in some of the companies mentioned. I don’t have any interest in Ripple, nor any referral bonus (or else I’d be much more positive about the investment case!) Climate change is not only real but a danger to your wealth. DYOR and comment below or sign-up to receive future posts.

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