Fund variation for more security

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Companies offering the classic closed-end wind fund to finance German wind stations are bringing increasingly sophisticated variations on the basic fund model to pull in investors. Lower interest rates have reduced the advantage of closed-end funds over other forms of investment -- and the growing popularity of solar closed-end funds has attracted the attention of well-to-do private investors away from wind to the photovoltaic sector.

Lloyds Fonds' answer to rekindling investor interest in wind funds is "a profit-loss arrangement" added to what it describes as "an extensive security concept." This model is being used to finance the 18 MW Breberen wind plant in North Rhine Westfalia near the Dutch border.

As its name suggests, under the profit-loss arrangement, all project partners -- in this case Lloyds Fonds, project developer BMR Neue Energien and the technical services company -- receive a bonus for good performance, but get a cut in their remuneration if the wind farm underperforms. BMR gets part payment in a lump sum when the project is sold, with the rest paid out during the project's lifetime.

This arrangement, Lloyds says, adds an extra safety device on top of the 10% uncertainty margin (20% for the first year) factored in with technical and other uncertainties. "Investors get optimal security for wind station operation," says the company's Silke Iggesen.

The Breberen wind farm is due online at the end of July. The nine 2 MW turbines are being supplied by Vestas, which has also signed a ten year full service agreement for the project. A local company, Nature Power Service, will operate the plant.

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