Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

What I am describing is an undated, un-geared futures contract. If you want gearing, then borrow to buy units, or buy call options on them (a market would develop soon enough).

No, a market will not develop, because the product is not standardized. That's why each project has a taylor-made financing today: because you must adjust to the specific conditions in each case (different technical constraints, different local partners, different wind potential, investors with different goal in each case - PR, return on investment, fulfilling regulatory obligations, power prices, etc...)

Operational risk you would probably build in to a leasing model, as I said.

Leasing is just a financial object, not a risk allocation technique. What I mea, is - who loses out if production is less than expected? What's your cash waterfall which describes exactly who gets what money in what order when revenue is generated?

And if the turbine manufacturer isn't up for it, because he's a Plc or debt funded, or both, then you buy him out, or start your own, again as a Community (or Federation of Communities) owned business.

Suddenly you jump from building a few MWs of wind power to becoming a manufacturer of wind turbines, a completely different business, in the heavy industry sector, where the investment requirements are of a total different scale. This is, quite simply, ridiculous. Are you also going to tell me that if Toyota does not want to take your units to pay for the pick up truck to go operate the turbine, you'll also go into "community-owned" pickup truck manufacturing?

It's your job as an investment banker to do the due diligence on projects to see that they appear viable and that no more units are to be sold than the project is capable of producing. A prospectus will be needed in the normal way, and there will be a minimum unit sale price below which a project will not happen.

I thought the whole point was to get rid of the evil investment bankers? If we're in the picture, why not stick with our existing solutions, which do not require anybody to step out of their normal professional position, allow risk allocation on a case-by-case basis in accordance with each entity's needs and priorities, and, you know, actually happen and work?

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sat Jan 19th, 2008 at 08:27:00 AM EST
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