This financial analysis assesses the Cape Clear Wind Project, a small-scale community wind installation designed to provide clean and affordable energy to Cape Clear Island, Ireland. The project feasibility was evaluated through a financial model based on three distinct scenarios reflecting different levels of technical and financial performance: P75 (best case), P90 (base case), and P95 (worst case).
The analysis considers a single wind turbine with an installed capacity of 0.25 MW and a project lifetime of twenty years. In the base case, total capital expenditure (CAPEX) is estimated at €720,000, financed through a combination of 45% equity, 35% grant, and 20% debt. Under these assumptions, the project achieves an Internal Rate of Return (IRR) of 6% and a Net Present Value (NPV) of -€39,854, with a minimum Debit Service Coverage Ratio (DSCR) of 1.13 and an average DSCR of 1.28. This means that the project manages to cover debt obligations while still not being a worthwhile investment due to the negative NPV. The levelized cost of electricity (LCOE) is calculated at €144.54/MWh, compared to a regulated electricity tariff of €90/MWh, which means the electricity tariff is too low to cover project expenses. These results indicate that while the project can cover its debt obligations, the financial benefits for the community are insufficient, and the project would benefit from either additional grant support or an improved sales price for electricity.
The results of the three scenarios highlight the strong sensitivity of small community projects to capital cost management, interest rates, and market price fluctuations. In all cases, community involvement remains central to the project’s structure, ensuring that local residents directly benefit from long-term returns on investment.