Private Equity Investing in Wind Power History
Wind power history has had its ups and downs like any other form of alternative energy. There have, however, been bright spots were large infusions of investment cash has promoted great changes and expansions in the industry. This cash comes from (mainly) private equity funding and while that is a huge positive to the area of research and development it has also provided some tumultuous areas of contention throughout wind power history.
The Basics of Private Equity
One of the difficulties that this type of alternate energy faced throughout wind power history is the fact that the research and development money required to expand the growth of the industry comes from high risk private equity funding. That is to say, those companies who have a vested interest in the development of wind power are often privately held companies that are not publicly traded. In such an investment, the investment is "paid off" in residual income via dividend payments over an extended period of time.
That is to say, if one invests $20,000 in a wind power company the investment will cover a seven year period. During this seven years as the company takes in money in the form of profits it will pay out dividends during this seven yea period. Hopefully, by the end of the seven years the payments will not only cover the initial investment, but also provides a percentage of interest that would exceed what one would earn in the stock market. Sounds like a reasonable investment strategy, correct?
So why has wind power history shown constant reluctance from investors to provide money? Well, it has little to do with any aversion to wind power or lack in faith in it as much as it is an aversion to a common bone of contention with private equity in general.
The Problem with Private Equity
Unlike publicly traded funds, private equity funds can not be sold or dumped. That is, if you purchase a publicly traded stock you can sell it anytime you want. With private equity, you are stuck for the whole duration of the investment as it is an illiquid investment into a business.
So, if you are not making any money from the investment, you can not get your money back. Sadly, throughout wind power history many people have felt uneasy in investing. This is a shame as many people who have invested in private equity alternative energy companies have made huge amounts of money. Ultimately, there are great rewards that may be found at great risk.
