Lease a wind plant and save money -- ABB tries new door into wind

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Interest in ABB's new leasing product for financing wind stations in Germany without any capital input has been "overwhelming," according to head of mid-market finance at ABB, Hans-Joachim Dörr. "We are getting at least ten emails and telephone enquiries daily, ranging from individuals to large developers and wind station operators," he enthuses. ABB announced its leasing program in late August.

ABB says its aim is to help small wind projects in particular, those which have not been able to move forward due to lack of capital or financial support from wind fund managers. Until now 95% of wind projects in Germany have been financed through project oriented wind funds (Windpower Monthly, September 2001), but over the next couple of years there will be no sites left for the large wind stations favoured by wind funds.

"The 10,0000 strong membership of the German wind energy association shows that there is still enormous interest amongst individuals to build small projects and this is our niche," says Dörr. "We aim at projects of one to five turbines, although our model can also be of interest to developers of larger projects," he adds.

The leasing contract usually runs for 15 or 16 years (although a shorter period is possible). It can be extended for up to 20 years, the period during which premium rates for electricity generated are payable under the rules of the national renewable energy law, Dörr says.

After expiry of the lease, operators have a choice between extending the contract, buying the turbines or selling them to ABB, which will then operate them, he adds. ABB has this year set aside EUR 200 million for investing in projects for subsequent leasing and the same sum for next year. Dörr admits that there is not enough time left for this year's entire budget to be used.


"A major attraction of ABB Windenergy Lease is that we shoulder 100% of the risk," says Dörr. ABB insists on two wind speed reports "of which one must be by a company on our positive list," he adds. "The other benefit is that leasing is cheaper compared with a wind fund," he points out. "You save the costs of publishing a prospectus and marketing the wind fund as well as the annual earnings of the wind fund company." These can add up to 7-10% of project costs.

The leasing model works where there is a fixed long term payment for wind generated electricity, Dörr says. Having launched the product in Germany, ABB's next target is France where a payment system for renewables similar to the German arrangement was launched in mid July. ABB will also look at offshore wind project financing. "But to be realistic, this won't be on the agenda until 2004 or 2005," Dörr says.

ABB says it is also a developer and general contractor for wind projects in Germany, Greece and Morocco, although none of these has yet been built.

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