Project summary
- FG were instructed by their client to provide an informal opinion of value of 109.9ha of land forming an integral part of ScottishPower Renewables’ Black Law wind farm where all work was undertaken for financial and tax planning purposes
- The client entered into a Lease in 2004 and is one of a number of landlord’s across the site which was first developed in 2005-06 when 54 wind turbines were erected for a Total Installed Capacity of 124MW
- The initial aim of the project was to power 70,000 homes and save over 200,000 tonnes of CO2 emissions, but to complicate the valuation, the land is subject to a long-term Habitat Management Plan (HMP) designed to restore blanket bog previously drained for afforestation
Solution
- FG first assessed the contractual risk and security of rental income associated with the remainder of the operational term under the Lease and consideration was given to the potential ‘hope value’ of future re-powering of the wind
- We then prepared a Discounted Cash Flow (DCF) and used alternative investment types to determine a net initial yield the market would apply to the income due under the remainder of the Lease
- We subsequently reviewed Scottish Government regulation for Biodiversity Net Gain (BNG) and carbon sequestration and the merit of the HMP unlocking further, additional value through natural capital
- The results of our calculations and market research supported an opinion of value report that our client could use to assist their financial and tax planning
Benefits
- Our client was provided with a fully explained and justified report that they could rely on for financial and tax planning purposes
- Our client received a copy of the DCF with full financial projections and supporting assumptions, giving an indication of how their land value will change over the remaining life of the wind farm
- Our client had the benefit of Fisher German’s 20+ years’ experience advising clients on wind farms across the UK
