10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

(Mark One)

x     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended December 31, 2006

or

o     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _______

Commission file number:  0-25935

THE RIDGEWOOD POWER GROWTH FUND

 (Exact Name of Registrant as Specified in Its Charter)

Delaware	22-3495594
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification Number)

1314 King Street, Wilmington, DE 19801

(Address of Principal Executive Offices, including Zip Code)

(302) 888-7444

(Registrant’s telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

Investor Shares of Beneficial Interest

 (Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes   o    No   x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.  Yes   o    No   x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes   o    No   x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer   o  Accelerated filer   o  Non-accelerated filer   x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.  Yes  o  No  x

There is no market for the Investor Shares. The number of Investor Shares outstanding at October 31, 2007 was 658.1067.

FORM 10-K

TABLE OF CONTENTS

PART I
Item 1.	Business	1
Item 1A.	Risk Factors	10
Item 1B.	Unresolved Staff Comments	15
Item 2.	Properties	15
Item 3.	Legal Proceedings	15
Item 4.	Submission of Matters to a Vote of Security Holders	16
PART II
Item 5.	Market for Registrant’s Common Equity, Related Security Holder Matters and
	Issuer Purchases of Equity Securities	16
Item 6.	Selected Financial Data	17
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 8.	Financial Statements and Supplementary Data	24
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	24
Item 9A.	Controls and Procedures	25
Item 9B.	Other Information	26
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	26
Item 11.	Executive Compensation	28
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	30
Item 13.	Certain Relationships and Related Transactions, and Director Independence	30
Item 14.	Principal Accountant Fees and Services	32
PART IV
Item 15.	Exhibits and Financial Statement Schedules	33
SIGNATURES		36

Forward-Looking Statements

Certain statements discussed in Part I, Item 1. “Business”, Part I, Item 3. “Legal Proceedings”, Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Annual Report on Form 10-K constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements generally relate to the Fund’s plans, objectives and expectations for future events and include statements about the Fund’s expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. These statements are based upon management’s opinions and estimates as of the date they are made. Although management believes that the expectations reflected in these forward-looking statements are reasonable, such forward-looking statements are subject to known and unknown risks and uncertainties that may be beyond the Fund’s control, which could cause actual results, performance and achievements to differ materially from results, performance and achievements projected, expected, expressed or implied by the forward-looking statements. Examples of events that could cause actual results to differ materially from historical results or those anticipated include the outcome of litigation, changes in political and economic conditions, federal or state regulatory structures, government mandates, the ability of customers to pay for energy received, supplies and prices of fuels, operational status of generating plants, mechanical breakdowns, volatility in the price for electric energy, natural gas, or renewable energy. Additional information concerning the factors that could cause actual results to differ materially from those in the forward-looking statements is contained in Part I, Item 1A. “Risk Factors” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and elsewhere in this Annual Report on Form 10-K. The Fund undertakes no obligation to publicly revise any forward-looking statements or cautionary factors, except as required by law.

PART I

ITEM 1.  BUSINESS

Overview

The Fund is a Delaware trust formed on February 18, 1997 to make investments in projects and businesses in the energy and infrastructure sectors both in the US and abroad. Ridgewood Renewable Power LLC (“RRP” or the “Managing Shareholder”), a New Jersey limited liability company, is the Managing Shareholder. As the Managing Shareholder, RRP has direct and exclusive control over the management and operations of the Fund.

The Fund has focused primarily on small-scale electricity generation projects using renewable sources of fuel and on water treatment facilities in remote locations serving hotel resort developments. These projects allow the Fund to develop secure long-term positions in attractive specialty markets for products and services provided by its projects and companies. As of December 31, 2006, the projects in which the Fund then had investments were located in the United States, the United Kingdom and Egypt. As of that date, the Fund had investments in hydro-electric generating projects in the US with total capacity of 15 megawatts (“MW”), in landfill gas-fired electric generating projects in the UK with total capacity of 59.1MW and in projects in Egypt with the capacity to produce approximately 24,500 cubic meters (approximately 6.5 million gallons) of potable water per day and electricity generating capacity of 29.7MW. In February 2007, the Fund sold its operations located in the United Kingdom.

The Fund initiated its private placement offering on February 9, 1998 selling whole and fractional investor shares of beneficial interests of $100,000 per share (“Investor Shares”). There is no public market for Investor Shares and one is not likely to develop. In addition, Investor Shares are subject to significant restrictions on transfer and resale and cannot be transferred or resold except in accordance with the Fund’s Declaration of Trust (“Declaration of Trust”) and applicable federal and state securities laws. The offering was concluded in April 2000 and raised approximately $65.8 million. After payment of offering fees, commissions and investment fees, the Fund had $54.6 million for investments and operating expenses. As of October 31, 2007, the Fund had 658.1067 Investor Shares outstanding, held by 1,343 shareholders.

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Managing Shareholder

RRP, via a predecessor corporation, was founded in 1991 by Robert E. Swanson. As the Managing Shareholder, RRP has direct and exclusive control over the management of the Fund’s operations. At the inception of the Fund, Ridgewood Power VI LLC (“Power VI”) was an additional managing shareholder but, effective January 1, 2001, Power VI assigned and delegated all of its rights and responsibilities to the Managing Shareholder and since that time has been an entity with only nominal activity. With respect to project investments, RRP locates potential projects, conducts appropriate due diligence and negotiates and completes the transactions in which the investments are made by the Fund.

In addition, RRP performs (or arranges for the performance of) the operation and maintenance of the projects owned by the Fund and the management and administrative services required for Fund operations. Among other services, RRP administers the accounts and handles relations with the shareholders, including tax and other financial information. RRP also provides the Fund with office space, equipment and facilities and other services necessary for its operation.

As compensation for its management services, the Managing Shareholder is entitled to (i) an annual management fee, payable monthly, equal to 2.5% of the total capital contributions made by the Fund’s shareholders and (ii) a 25% interest in the cash distributions made by the Fund in excess of certain threshold amounts expressed in terms of shareholder returns. The Managing Shareholder is also entitled to receive reimbursement from the Fund for operating expenses incurred by the Fund, or on behalf of the Fund and paid by RRP, as the Managing Shareholder. RRP has arranged for administrative functions required to be performed for the Fund to be performed by an affiliate, Ridgewood Power Management LLC (“RPM”), and at RPM’s costs, which costs are reimbursed to RPM by the Fund. RRP also serves as the managing shareholder (or managing member as appropriate) of a number of affiliated funds and investment vehicles similar to the Fund and, through RPM, provides services to those entities similar to those provided to the Fund.

Affiliates of RRP act on behalf of a number of investment vehicles in the oil and gas and venture capital sectors in a manner similar to that for which RRP serves on behalf of the Fund.

Business Strategy

The Fund’s primary investment objective is to generate cash flow for distribution to shareholders and capital appreciation from one or more of the acquisition, development, ownership and operation of interests in electricity generation and other infrastructure projects and companies. The Fund generally seeks to invest in projects and companies that provide products or services through a number of small facilities and that offer opportunities for expansion either through increasing production at existing sites or through the establishment of additional sites. These projects often involve development, construction and operating risk but, once established, may be able to effectively “lock-in” the customer (or customers) served by the project, which would prevent competitors from dislodging the Fund’s project. The Fund focuses on markets in which projects can be developed and built quickly and can be standardized as to their design, equipment and construction. By following this strategy, the Fund seeks to take advantage of attractive market opportunities while streamlining the development process and diversifying across a number of projects in order to contain the exposure of the Fund to the risks inherent in such projects. As of December 31, 2006, all of the Fund’s projects are owned through investment vehicles that the Fund co-owns with certain affiliated investment funds or are managed by the Managing Shareholder.

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Projects and Properties

The following table is a summary of the Fund’s investment portfolio as of December 31, 2006 detailing the nature of the business, the portion of the investment owned by the Fund and the number of projects in each investment.

Company	No. of Sites	Fund Interest	Leased/ Owned1	Purpose	Structure5
Ridgewood     Egypt2	17 locations	68.1%	Leased	1 – Power only 8 – Water only 8 – Water & Power	Block/slab
US Hydro3	7 locations	70.8%	Leased and  Owned	Hydroelectric Generation	Integral to river  dams
Ridgewood       UK4	23 locations	30.4%	Leased	Electricity Generation	Containerized

¹ Refers to the locations on which the Fund’s projects are located and not the projects themselves.

² Co-owned with Ridgewood Electric Power Trust V (“Trust V”) (14.1%) and the Ridgewood Egypt Fund (“Egypt Fund”)  (17.8%). All Egyptian sites are located on or near the Red Sea.

³ Co-owned with Trust V. Six US Hydro sites are located on the Eastern Seaboard of the United States and one in California.

⁴ These projects, which were co-owned with Trust V, were sold on February 22, 2007 to an entity not affiliated with the Fund or the Managing Shareholder, as disclosed on a Form 8-K filed by the Fund with the SEC on February 28, 2007.

⁵ Describes the type of structure in which the projects of the Fund are housed.

Ridgewood Egypt

In 1999, the Fund and Trust V jointly formed and funded Ridgewood Near East Holdings LLC (“NEH”) to develop electric power and water purification plants for resort hotels along the Red Sea in Egypt. In 2000, the Fund made additional investments and acquired majority ownership of NEH, which wholly owns Ridgewood Egypt For Infrastructure, LLC (Egypt) (“REFI”). In 2001, Egypt Fund, an affiliate of Trust V and the Fund, made contributions to NEH in exchange for a minority interest.

On December 30, 2001, NEH, through REFI, purchased a 28% equity interest in Sinai For Environmental Services S.A.E. (“Sinai”), which owns a 6,300 cubic meter (1.7 million gallon) per day water desalinization plant, for 5 million Egyptian pounds (approximately $1.1 million in 2001). In February of 2002, the Fund made an additional investment of 4.4 million Egyptian pounds (approximately $939,000 in 2002) to increase its ownership to 53% and gain control of Sinai. As of December 31, 2006, REFI was granted an additional interest of about 13.4% in Sinai in return for having provided Sinai with certain machinery and equipment.

The facilities of REFI source feedwater from shallow wells or directly from the Red Sea and use reverse osmosis filtration to produce potable water for sale. Certain of the facilities of REFI are located on or adjacent to their hotel customers while others are stand-alone facilities that deliver product water by pipeline. The facilities of REFI are modular and mobile and can be relocated to accommodate shifts in demand. As of December 31, 2006, REFI owns one project that supplies only electricity, eight that provide only potable water and eight that provide both water and electricity generation. The projects generally sell their output under contracts and other arrangements at prevailing market rates. REFI has the capacity to make approximately 6.5 million gallons per day of potable water and 29.7MW of electricity. As a matter of operational management, REFI has a practice of continual evaluation of its projects and relocates capacity between locations in order to meet changes in demand from its customers. The electricity generating capacity of REFI is used primarily by its own water treatment plants thereby displacing electricity the water plants would otherwise have to purchase from third parties. This arrangement helps the Fund control costs and increase reliability. The business of REFI is managed and operated by employees of REFI with its main office located in Cairo, Egypt.

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The Ridgewood Egypt operations have two debt facilities. A portion of the assets of Sinai are security for a Sinai bank term loan facility and certain REFI equipment secures a loan facility under which REFI is the borrower.

In October 2007, the Managing Shareholder announced that it intends to market the assets of NEH for sale.

US Hydro

Beginning in 1999, the Fund and Trust V began discussions with Synergics, Inc. (“Synergics”) to acquire certain of its hydroelectric generating plants. In the course of negotiations, the Fund and Trust V were presented with an opportunity to acquire certain debt obligations of Synergics from a lender to Synergics. The Fund and Trust V, through a joint venture (the “debt joint venture”), acquired debt obligations of Synergics from the lender on April 28, 2000 for a payment to the lender of approximately $17 million. The Fund supplied $12 million of the capital used by the debt joint venture to acquire the debt and Trust V supplied the remaining $5 million. The Fund and Trust V own the debt joint venture 70.8% and 29.2%, respectively, which is in proportion to the capital each supplied. Neither entity has preferred rights over the other.

On November 22, 2002, through another joint venture (the “acquisition joint venture”) owned in the same proportion as the debt joint venture that acquired the debt of Synergics, the Fund and Trust V completed the acquisition of Synergics and changed the name of the acquisition joint venture to Ridgewood US Hydro Corporation (“US Hydro”).

The aggregate acquisition price of US Hydro, including both the 2000 debt acquisition and the 2002 purchase of shares, was approximately $20.3 million. As a result of these transactions, the Fund and Trust V acquired seven hydroelectric generating facilities with an aggregate of 15MW of generating capacity and notes receivable to be repaid from the output of an additional project with 4MW of generating capacity. The Fund has since reached a settlement eliminating the notes receivable making the hydro project portfolio 15MW as of December 31, 2005. The Fund and Trust V also assumed approximately $7.5 million of other bank debt in connection with these transactions.

As of December 31, 2006, the output of five projects is sold to utility purchasers under long-term contacts at prices set out in those contracts while output for two of the projects is sold at open market prices. Three of the projects are located in Virginia, two are located in New York, one project is located in California and one project is located in Rhode Island. The projects are managed by RPM under an operations and maintenance agreement that provides for the Fund to pay the actual cost of project operations and maintenance along with an allocation of actual overhead to provide for administrative services.

Five of the east coast facilities are security for a term loan facility and the California facility is security for a lease obligation.

Ridgewood UK

On May 26, 1999, Ridgewood UK, LLC (“RUK”) was formed as a New Jersey limited liability company and was re-domiciled to Delaware on December 24, 2002. As of December 31, 2006, the business of RUK was the extraction of methane-containing gas from landfill sites in England, Scotland and Wales, the use of that gas as fuel for generating electricity and the sale of that electricity.

On June 30, 1999, Trust V contributed $16.7 million to RUK. RUK’s wholly owned subsidiary, Ridgewood UK Ltd. (“UK Ltd.”), a limited company registered in England and Wales, then borrowed funds from the Bank of Scotland and with a portion of these combined proceeds, purchased from CLP Envirogas, Ltd. (formerly Combined Landfill Projects, Ltd.) six landfill gas power plants with a combined electricity generation capacity of 15.1MW located in the United Kingdom. At the time of the purchase, UK Ltd. and CLP Envirogas, Ltd. also agreed to the terms on which UK Ltd. would purchase additional projects then under development by CLP Envirogas, Ltd. should such projects be successfully developed.

4

In 2001, the Fund contributed $5.8 million to RUK in return for an equity share of 30.4% of RUK. Using this contribution and portions of additional proceeds from Bank of Scotland borrowings, UK Ltd. purchased an additional four projects with combined generating capacity of 4.6MW. On October 16, 2001, UK Ltd., through the issuance of approximately 24% of its shares and the payment of $2 million cash, acquired certain of the assets and liabilities of CLP Services, Ltd., CLP Development, Ltd and CLP Envirogas, Ltd. (collectively the “Management and Development Companies”) and the equity and debt of certain landfill gas projects (the “UK Merger”). As a result of the UK Merger, UK Ltd. acquired the ability to develop and operate landfill gas-fueled electricity generating facilities in the UK as well as the development rights to a number of such projects. The seller in the UK Merger was Arbutus Energy Ltd. (Jersey) (“Arbutus”) which became the minority interest holder of UK Ltd. following the UK Merger. UK Ltd. was renamed CLPE Holdings Ltd. (“CLP”) in 2001.

RUK continued to develop and expand its projects, which resulted in installed capacity of 59.1MW, 48.7MW and 28MW as of December 31, 2006, 2005 and 2004, respectively. CLP owned 23 landfill methane gas-fired electric generating projects in the United Kingdom as of December 31, 2006. Projects representing approximately 26.5MW sell electricity under long-term contracts to the Non-Fossil Purchasing Agency (“NFPA”), a not-for-profit organization that purchases electricity generated by certain renewable power projects on behalf of large English electric utilities. Projects representing approximately 32.6MW qualify for the UK government’s Renewable Obligation incentive program (described in more detail below) and sell their output under short-term contracts.

As part of the UK Merger, RUK also acquired a 50% ownership in each of CLP Organogas SL, which owns a 2MW plant located in Seville, Spain and CLP Envirogas, SL, a management and development services company also located in Seville, Spain (collectively, the “Spanish Business”). Effective January 1, 2003, RUK transferred its interest in the Spanish Business to Arbutus in return for a portion of the minority interest in CLP then held by Arbutus. As a result of the transaction, RUK increased its ownership in CLP from 76% to 88%.

Beginning in 2002, RUK began to develop sites capable of qualifying for the UK’s Renewable Obligation incentive program (“RO”). The RO program requires electricity suppliers serving end-users in the UK to obtain renewable obligation certificates (“ROCs”) to demonstrate that a minimum portion of their electricity supplied was generated by producers meeting the qualifications of the RO. In order to fund the development and construction of these projects, RUK entered into a series of agreements with affiliated entities that agreed to provide financing. The affiliated entities providing this funding, Ridgewood Renewable PowerBank LLC, Ridgewood Renewable PowerBank II LLC, Ridgewood Renewable PowerBank III LLC and Ridgewood Renewable PowerBank IV LLC (each a “PowerBank Fund” and collectively the “PowerBank Funds”), are managed by RRP. Terms of the agreements between RUK and each of the PowerBank Funds are substantially the same and each provides for the PowerBank Funds to make construction advances to RUK in exchange for interest during construction and streams of fixed and variable lease payments once the financed projects go into operation (the “PowerBank Arrangements”).

On January 23, 2007, RUK entered into a sale agreement (the “Sale Agreement”) along with Arbutus, and Ridgewood ROC 2003 LLC (“ROC I”), Ridgewood ROC II 2003 LLC (“ROC II”), Ridgewood ROC III 2003 LLC (“ROC III”), Ridgewood ROC IV 2004 LLC (“ROC IV,” and together with ROC I, ROC II and ROC III, the “Ridgewood ROCs”), each of which is a wholly-owned subsidiary of a corresponding PowerBank Fund, as sellers (collectively, the “Sellers”), with MEIF LG Energy Limited (“Buyer”), as the purchaser.

Prior to the consummation of the Sale, RUK had owned 88% of the issued and outstanding shares of CLP and the remaining 12% of CLP had been owned by Arbutus.

On February 22, 2007, RUK completed the sale (the “Sale”) of all of the issued and outstanding shares of CLP. Under the Sale Agreement, Buyer acquired (i) 100% of the issued and outstanding shares of CLP (the “CLP Shares”) from RUK and Arbutus, and (ii) substantially all of the assets (the “Assets”) of the PowerBank Funds. The Assets and the CLP Shares constitute all the landfill gas business located in the United Kingdom of the Fund, Trust V and the PowerBank Funds. In accordance with the Sale Agreement, at closing, the Buyer paid an aggregate purchase price for the CLP Shares and the Assets of £117.8 million ($229.5 million), subject to a working capital adjustment that resulted in an increase to the purchase price of approximately £4.2 million ($8.2 million). After adjustment, the purchase price for the CLP Shares was approximately £25.1 million ($48.9 million), of which approximately £15.4 million ($30.0 million) was attributable to Trust V and approximately £6.7 million ($13.1 million) was attributable to the Fund, with Arbutus receiving the remaining balance. Taking into account payments made to RUK pursuant to certain sharing arrangements with the PowerBank Funds, the total gross sales proceeds to the Fund were approximately £8.4 million ($16.4 million).

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The Sellers gave a number of warranties and indemnities to the Buyer in connection with the Sale that it considers typical of such transactions. Should there be a breach of the warranties or should an indemnity event occur, the Buyer could make claims against the Sellers including the Fund. Management of the Fund does not believe there is a material likelihood that such a claim will arise or that, should such a claim arise, the Fund would incur a material liability. This belief is based, in part, on the Sellers having purchased warranty and indemnity insurance to minimize such risk. There are no current plans to reserve or provide an escrow for the contingent liabilities represented by these warranties and indemnities. As of the date of this filing, the Fund is not aware of any claims. In March 2007, the Fund distributed a portion of the Sale proceeds to the shareholders.

ZAP

In 1999, the Fund invested $2.1 million in the shares of ZAP (formerly ZAPWorld.COM, Inc. and ZAP Power Systems, Inc.). As part of the 678,808 share purchase, the Fund also received a warrant to purchase additional shares of ZAP’s common stock at a price between $3.50 and $4.50 per share. In June 1999, the Fund exercised the warrant and purchased 571,249 additional shares for approximately $2 million, or $3.50 per share. ZAP designs, assembles, manufactures and distributes electric vehicles, including automobiles, bicycle power kits, electric bicycles and tricycles, electric scooters, and other electric transportation vehicles. ZAP’s common stock is quoted on the OTC Bulletin Board under the symbol “ZAAP.OB”. In June 2001, the Fund agreed to sell to ZAP, and certain of its shareholders, the Fund’s interest in ZAP in return for a $1.5 million interest bearing promissory note (the “Ridgewood ZAP Note”).

In March 2002, ZAP filed a voluntary petition for reorganization under Chapter 11 of the U S Bankruptcy Code with the US Bankruptcy Court in Santa Rosa, California. In June 2002, the Second Amended Plan for Reorganization became effective and the Ridgewood ZAP Note was converted into 994,500 shares of ZAP common stock as reorganized (the “Reorganized ZAP Shares”). When issued, the Reorganized ZAP Shares were subject to restrictions on sales or transfers. As part of the reorganization, Ridgewood ZAP also received warrants to purchase ZAP shares of which a portion was exercised.

During the period between September 2003 and January 2006, after the lifting of the transfer restrictions on the Reorganized ZAP Shares, the Fund exercised a portion of the warrants and then liquidated its position in Reorganized ZAP Shares through a combination of share sales and distributions of Reorganized ZAP Shares to shareholders of the Fund.

Significant Customers

During 2006, the Fund’s largest customer, PacifiCorp, accounted for 22.1% of total revenues.  During 2005 and 2004, the Fund’s two largest customers, PacifiCorp and Dominion, accounted for 31.7% and 36.9%, respectively, of total revenues.

Business Segments

The Fund manages and evaluates its operations in two reportable business segments: power generation and water desalinization. These segments have been classified separately by the similarities in economic characteristics and customer base. Common services shared by the business segments are allocated on the basis of identifiable direct costs, time records or in proportion to amounts invested in projects managed by the Managing Shareholder. Included in the water desalinization segment is the Egyptian power generation because it is primarily a by-product of the water processing and is under common management control.

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For financial information regarding the Fund’s business segments, see Note 15 to the Fund’s consolidated financial statements which appear elsewhere in this Annual Report on Form 10-K.

Project Feedstock/Raw Materials

The projects of the Fund each convert a raw material into a finished product and the arrangements for obtaining these raw materials are a key element in the business of the Fund.

The Egyptian water projects rely on two feedstocks for their output. The first is feedwater which can come either from shallow wells along the Red Sea coast or from the Red Sea itself and, in all cases, from a source nearby the plant that is to process the feedwater. In the case of well water, the feedwater is typically brackish, meaning that it has a briny character but does not have as much in the way of impurities (primarily salts) as seawater. The feedwater is processed through reverse osmosis filtration so that a portion becomes fresh or “product” water, which is sold, and the remainder becomes reject water which must be disposed of either by returning it to the Red Sea or by injecting it into wells designed for the purpose. As a general matter, the more the feedwater is like fresh water, the lower the processing cost and the greater the portion that becomes product water. Though the quality varies depending on location, well water is generally preferred to seawater. Seawater must undergo pre-treatment before being processed using reverse osmosis. In order to obtain good quality feedwater wells and suitable reject water wells, the Fund must negotiate with parties owning water rights. A variety of payment arrangements exist as a result of these negotiations.

The Egyptian water projects also need electricity to run the high compression pumps that operate the reverse osmosis processing equipment. In most of its projects, REFI generates its own electricity using diesel-fired reciprocating engine generators. Diesel fuel and electricity are subsidized commodities in Egypt and are readily available. In other cases electricity is purchased either from the local electricity grid or from the on-site generation of REFI’s hotel customers. In cases where a project purchases electricity from a host hotel or customer, the value of the electricity is deducted from the price of water purchased by the customer. These are negotiated transactions that reflect prevailing market rates for the commodities involved. About 65% of the capacity of the REFI projects generate their own electricity and the remainder purchase electricity from third parties. The Egypt projects do not maintain material amounts of either raw materials or product water inventories.

The projects of US Hydro are all located on, and are integral parts of, dams on river ways. Of the seven projects of the Fund, five are considered run-of-river meaning that they generate such electricity as the natural flow of the river will produce with little or no ability to alter its flow rate or store water up-river of the dam. Output of these projects (and hence revenue) is characterized by high degrees of variability and seasonality. The other two projects of US Hydro are associated with dams used to create reservoirs that store water, which tends to make production from the generating facility more level. The capacity of the projects of US Hydro is split evenly between run-of-river and reservoir facilities. The projects do not make payments for throughput water.

Prior to the Sale, the UK projects of the Fund consisted of reciprocating engine generator sets that use methane-containing landfill gas as fuel. Each project location owned and operated a network of wells, pipes and fans that collected gas from the landfill as it was produced through natural anaerobic digestion of the waste. The UK projects did not own or operate any landfills but had arrangements with site owner/operators which gave the projects certain rights, including the right to build the project, occupy its compound, operate the gas collection system and use the gas from the landfill. These agreements were generally referred to as gas agreements, were long-term agreements that typically run for the life or expected life of the gas resource attributable to the landfill and typically included provisions for royalty payments from the project to the landfill operator as compensation for the granting of these rights. Royalty payments were typically calculated as a percent of revenue. RUK did not maintain material inventories of either raw materials or output products.

Competition

Competition in the market for providing potable water to hotel resort developments is primarily driven by obtaining supply agreements and the rights to locate on the site of a customer. Secondary competitive factors are price, service and reliability of supply. Once a supply relationship has been established with a customer, a supplier is very difficult for a competitor to dislodge.

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Competition in the UK landfill gas electricity generation industry is based on obtaining site rights by obtaining gas agreements. Once established on a site, there is little a competitor can do to affect the business of a project. The US Hydro projects generally sell their production pursuant to long-term power purchaser agreements with electric utilities or at prevailing market prices, and, as such, do not generally face competition in the sale of the electricity they generate.

Seasonality/Weather Effects

Demand for the output of the Egypt projects is largely driven by the occupancy levels of the hotel customers for the projects and the occupancy rates for hotels in the Red Sea tourist areas are subject to highly seasonal patterns. The high season for Red Sea tourism is, broadly, from late April to mid-September with a trough in occupancy rates in January and February. The volume and price of the output of REFI generally track these patterns and management of REFI takes advantage of the troughs in demand to perform maintenance of its projects.

The output of the US Hydro projects are affected by seasonal weather patterns including rainfall and snowpack runoff. These factors tend to concentrate the output of the US Hydro projects in the spring and fall with little or no output in the winter and summer months. Management of US Hydro takes advantage of these patterns to perform maintenance during periods of low output. Because river flows are the dominant factor in determining the output of the US Hydro projects, output can vary widely from year-to-year based on amounts of rain and snowfall.

Prior to the Sale, the RUK projects experienced minor fluctuations in response to seasonal weather patterns but these patterns were not believed to be material.

Government Incentives and Regulation

Certain of the projects of the Fund qualify for incentives because of their location or their use of renewable fuels.

At the time the Egyptian business of the Fund was begun, there was little development or development infrastructure along the Red Sea and parties making investments in these areas were eligible for 10-year income tax holidays. REFI qualified for such an income tax holiday which commenced on January 1, 2001 and will run through December 31, 2010. The projects of REFI are subject to routine regulatory oversight which is executed mostly at the local level and consists primarily of zoning and work-place safety regulations that the Fund does not consider onerous.

The US Hydro projects operate under the terms of the Federal Energy Regulatory Commission (“FERC”) licenses issued to them. Even though US Hydro has no employees, it is affected by general employment regulations in the jurisdictions of its facilities through the RPM operations and maintenance agreements. The Fund considers these regulations to be routine and does not consider the cost of compliance to be material.

Because the fuel used by the RUK projects is a renewable, non-fossil fuel source and because it is also an undesirable by-product of landfill operations, the projects of RUK qualified under two separate primary incentive regimes. The older of the two is the Non-Fossil Fuel Obligation (“NFFO”) which is a program that provided credit-worthy, long-term purchase contracts for qualifying electricity generators enacted in section 32 and 33 of the Electricity Act 1989. The program provided for a limited volume of such contracts and called for project developers to bid for portions of the limited volume. The NFPA was set up in connection with the NFFO program to act as administrator and counter-party to the NFFO contracts as well as to administer the contract bidding process. Prior to the investment by Trust V and the Fund in the UK business, CLP, the predecessor entity, entered a number of these auctions and won several contracts. A number of these projects were built by RUK and currently sell their electrical output pursuant to NFFO contracts. Because the contracts were credit-worthy, projects having the benefit of the contracts can readily obtain financing. The last NFFO contracts were granted in 1998 and no new NFFO contracts are expected to be granted in the future.

8

The subsequent incentive for which the projects of RUK qualified was also enacted through the Electricity Act 1989 and implemented through The Renewable Obligations Order 2002. Known as the RO, this incentive established targets for parties supplying electricity to final consumers in the UK with respect to the portion of their electricity supply generated from qualifying renewable facilities and imposed penalties on those parties to the extent they failed to meet the targets. As an owner of qualifying renewable facilities, RUK was able to sell the electricity generated by these facilities as well as certificates (“ROCs”) demonstrating that the electricity can be delivered in satisfaction of the Renewable Obligation. Both the electricity and the ROCs produced by the qualifying facilities were undifferentiated commodities and there are liquid markets for both albeit at fluctuating prices.

Prior to the Sale, the projects of RUK were subject to routine regulatory oversight which was executed mostly at the local level and consists primarily of zoning, noise and work-place safety regulations that the Fund did not consider onerous. In addition to these regulations, the RUK projects are also subject to the Integrated Pollution Prevention and Control (“IPPC”) regimes designed to control pollution from industrial sources. The IPPC regulations are contained in Statutory Instrument 2000 No. 1973; The Pollution Prevention and Control (England and Wales) Regulations 2000 and were introduced under the Pollution Prevention and Control Act 1999. Regulators set permit conditions that are based on the use of the “Best Available Techniques”, which balances the cost to the operator against benefits to the environment. The IPPC regulations are being phased in over an extended period and, while they represent an administrative burden in demonstrating initial compliance and a modest burden in demonstrating on-going compliance, the Fund did not believe the IPPC regulations would otherwise affect the business of RUK.

As a general matter, incentives and regulations affecting RUK were enacted and issued by the Parliament of England for England and Wales and separately by the Scottish Parliament for Scotland. Prior to the Sale, the Fund did not believe that the differences between the versions of the incentives and regulations issued by these two governments would have a material affect on the Fund.

Financing Arrangements

The Fund uses debt to finance certain of the acquisitions and the operation of certain of its investments. Such financing arrangements are specific to the investment financed and are made at the operating company level. These financing arrangements are non-recourse to the Fund and the Fund provides no guarantees of the amounts borrowed under such financing arrangements.

Insurance

The Fund has in place, either directly or through investee companies, insurance typical for activities such as those conducted by the Fund. These policies include property and casualty, business interruption, workman’s compensation, political risk and key executive life insurance, which the Fund believes to be appropriate. Certain of the insurance carried by the Fund is required by the lenders of certain investee companies.

Employees

The Fund does not have employees. The activities of the Fund are performed either by employees of the Managing Shareholder, its affiliates or those of the specific investments of the Fund.

Offices

The principal office of the Fund is located at 1314 King Street, Wilmington, Delaware, 19801 and its phone number is 302-888-7444. The Managing Shareholder’s principal office is located at 947 Linwood Avenue, Ridgewood, New Jersey, 07450 and its phone number is 201-447-9000.

Available Information

The Fund’s shares are registered under Section 12(g) of the Exchange Act. The Fund must therefore comply with, among other things, the periodic reporting requirements of Section 13(a) of the Exchange Act. As a result, the Fund prepares and files annual reports with the SEC on Form 10-K, quarterly reports on Form 10-Q and, from time to time, current reports on Form 8-K. Moreover, the Managing Shareholder maintains a website at http://www.ridgewoodpower.com that contains important information about the Managing Shareholder, including biographies of key management personnel, as well as information about the investments made by the Fund and the other investment programs managed by the Managing Shareholder. 

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Where You Can Get More Information

The Fund files annual, quarterly and current reports and certain other information with the SEC. Persons may read and copy any documents the Fund files at the SEC’s public reference room at 100 F Street, NE, Washington D.C. 20549. You may obtain information on the operation at the public reference room by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. A copy of any such filings will be provided free of charge to any shareholder upon written request to the Managing Shareholder at its business address - 947 Linwood Avenue, Ridgewood, New Jersey 07450, ATTN: General Counsel.

Reports to Shareholders

The Fund does not anticipate providing annual reports to shareholders but will make available upon request copies of the Fund’s periodic reports to the SEC on Form 10-K and on Form 10-Q.

ITEM 1A. RISK FACTORS

In addition to the other information set forth elsewhere in this report, you should carefully consider the following factors when evaluating the Fund:

RISKS INHERENT IN THE BUSINESSES OF THE FUND

The Fund has material weaknesses in its disclosure controls and procedures.

Material weaknesses in disclosure controls and procedures have been identified by management of the Fund. These weaknesses primarily relate to the Fund’s inability to complete its reporting obligations on a timely basis as a result of deficient disclosure controls and procedures. See Item 9A. “Controls and Procedures” in this report. The inability of the Fund to timely report its results could impact the ability of an investor to adequately understand its investment, restrict the Fund’s ability to conduct its activities and subject the Fund to fines and penalties. Upon further review, the Fund may also determine that it has material weaknesses in its internal control over financial reporting.

The Fund’s investment in the Egyptian water desalinization business depends on the willingness and ability of tourists to travel to the Egyptian Red Sea resort areas. Factors that reduce that tourism, including acts of terrorism, could have an adverse impact on the business of the Fund.

REFI serves remote hotel resort communities that depend on the willingness and ability of tourists to make discretionary journeys to the Egyptian Red Sea areas. Factors decreasing the willingness or ability of tourists to make these journeys will reduce the demand for the output of the water projects of the Fund. These factors include, but are not limited to, acts of terrorism, the cost of travel to the area and general tourism industry trends. The resort areas of Egypt have experienced acts of terrorism in the past and it is possible that such acts could result in dramatically reduced tourism to the area which would likely have an adverse impact on the output quantity and price of the Fund’s products. Material increases in the cost of travel to the area for reasons such as increases in airfares, taxes or accommodations or other, unrelated changes in traveler preferences can also adversely affect the demand for the products of REFI. The projects of REFI have no alternative markets for their products.

The Fund’s hydroelectric business can be affected by adverse weather conditions.

The US Hydro projects owned by the Fund rely on rainfall and snowfall to provide water flow for electricity production. Rainfall and snowfall vary from year-to-year and an extended period of below-normal rainfall and/or snowfall would significantly reduce electricity revenue. Each project is entirely dependent on the water flow through where it is located.

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The Fund has a significant portion of its investments located outside the United States that can be affected by events beyond the Fund’s control.

The Fund has significant investments in Egypt and, until the sale of its UK operations, significant investments in the UK. As a result, the Fund is subject to certain risks on a country-by-country basis, including changes in domestic and foreign government regulations, licensing requirements, tariffs or taxes and other trade barriers, exchange controls, expropriation, and political and economic instability, including fluctuations in the value of foreign currencies. Certain of these risks may be greater than those commonly experienced in the United States. The exchange rate from local currencies to US dollars may be so unfavorable that the Fund may experience negative net results, when measured in US dollars, even though the performance of the Egyptian or UK businesses may be successful when measured in their local currencies. Also, fluctuations of foreign currencies could reduce the value of, or the ability of, the Fund to make distributions to its shareholders.

The operations of the Fund have limited capital, limited access to new capital and have obligations to third parties for borrowed money.

The Fund’s investments, but not the Fund itself, utilize debt financing, which increases the variability of results and increases the financial risk of the Fund. The rights of the Fund to the cash flow of the projects are subordinated to the obligations of the projects under the debt facilities, which could limit the Fund’s ability to receive cash distributions from the investments. Also, the Fund does not maintain significant reserves for contingencies to offset this risk.

The operations of the Fund may experience competitive price pressure and competition for project development opportunities.

Competition for new project opportunities is based largely on price, service and reliability. While it is difficult to displace the existing projects of the Fund from their customers, competition exists for new projects and this competition may, in some circumstances, drive down the prices of the products and services offered by the Fund’s projects or drive up the costs of its feedstock resources.

The Fund may experience delays and cost overruns in the development of new projects.

As an integral part of its Egyptian businesses, and the UK business prior to its sale in 2007, the Fund identifies, develops and constructs new projects. These processes are inherently uncertain and prone to unforeseen delays and costs which can adversely impact the revenues, expenses and cash flow of the Fund by making completed projects less economically attractive than they were expected to be at the time a commitment was made to building the project. This can also result in the abandonment or liquidation of projects prior to completion.

The projects of the Fund depend on the near-continuous operation of their equipment. Should the productivity of some or all of this equipment be compromised or should the equipment fail altogether, the Fund would be adversely affected. The Fund may also experience difficulty in hiring qualified operating personnel.

The primary equipment of the Fund includes reverse osmosis water purification equipment, reciprocating engine generator sets, water pumping stations and hydroelectric generating equipment. This equipment is subject to mechanical failure that the Fund may not be able to predict and that can render specific projects inoperable for considerable periods of time. This risk also extends to failures of the electricity grid near the Fund’s projects that could prevent the affected project or projects from delivering its electricity. In addition, the Fund may experience price increases for, or difficulty in obtaining, spare parts for its projects and in identifying and hiring personnel qualified to operate, maintain and repair the specialized equipment that makes up parts of its projects.

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The projects of the Fund are subject to regulatory changes (including changes in environmental regulations) that may have an adverse impact on the Fund.

This area of risk is inherently difficult to predict but could include matters such as the ability of the Egyptian projects to discharge the reject water that is a byproduct of the purification process or requirements on the part of regulators for owners of dams or hydroelectric generators to provide for fish passages either upstream or downstream of the dams that affect US Hydro. Such changes could increase costs at affected projects or prevent certain projects from operating.

REFI must arrange for feedwater, for the disposal of reject water and for a supply of electricity to operate its projects.

REFI depends on third party owners of water rights to source feedwater for their facilities and for the discharge of reject water that is a byproduct of the reverse osmosis process. Should this be restricted, not possible or the price increases significantly, the profitability of the affected sites would be reduced. The REFI projects also depend on third party supply of diesel fuel for electricity generation at certain projects and third party supply of electricity at others. Restrictions of availability of these commodities or significant increases in prices would have a negative impact on the affected projects and the Fund.

The Fund may become involved in litigation.

The Fund faces an inherent business risk of exposure to various types of claims and lawsuits that may arise in the ordinary course of business. Although, it is not possible to predict the timing, nature or outcome of such claims or lawsuits should they arise, we believe the chances that any claims or lawsuits arising and resulting, individually or in the aggregate, in a material impact on the Fund to be remote. See Item 3. "Legal Proceedings" for a description of litigation in which the Fund is one of the defendants. However, the Fund could in the future incur judgments or enter into settlements of lawsuits and claims that could have a material adverse effect on the results of the Fund. In addition, while the Fund maintains insurance coverage with respect to certain claims, the Fund may not be able to obtain such insurance on acceptable terms in the future, if at all, and any such insurance may not provide adequate coverage against any such claims.

THE FOLLOWING RISK FACTORS RELATE TO THE FUND’S RUK ACTIVITIES, WHICH AS DISCUSSED ABOVE, WERE SOLD IN 2007:

The Fund’s UK landfill methane business depends on the production of landfill methane from the landfill sites on which they operate and access to that gas production.

The electricity production of the RUK projects is typically limited by the available amount of landfill methane gas used as fuel by these projects. A number of factors influence the amount of landfill methane gas produced by a landfill site including the quantity and makeup of the waste deposited into the site by the landfill operator, the manner and sequence of the waste deposition, the non-waste materials used to support the landfill structure and the amount of liquid in the landfill. A number of factors also influence the ability of the Fund’s UK personnel to gain access to gas that is being produced by a landfill including the landfilling strategy and practices of the landfill site operator. To the extent that these factors limit the production of landfill methane gas or the ability of the projects of the Fund to collect and use that gas at some or all of the landfill sites on which they operate, the affected project or projects may not achieve profitable output levels.

Certain of the RUK projects sell their electricity and ROC output at open market prices and could be adversely affected should prices fall substantially.

With respect to the projects of RUK not subject to NFFO contracts, the output is sold at open market power prices. These prices are fixed from time-to-time in one-year contracts. Should the price of electricity or ROCs fall substantially, the Fund would be adversely affected and it is possible that the projects affected could not be operated profitably.

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RISKS RELATED TO THE NATURE OF THE FUND’S SHARES

The Fund’s shares have severe restrictions on transferability and liquidity and shareholders are required to hold the shares indefinitely.

The Fund’s shares are illiquid investments. There is currently no market for these shares and one is not likely to develop. Because there may be only a limited number of persons who purchase shares and because there are significant restrictions on the transferability of such shares under the Fund’s Declaration of Trust and under applicable federal and state securities laws, it is expected that no public market will develop. Moreover, neither the Fund nor the Managing Shareholder will provide any market for the shares. Shareholders are generally prohibited from selling or transferring their shares except in the circumstances permitted under the Declaration of Trust and applicable law, and all such sales or transfers require the Fund’s consent, which it may withhold at its sole discretion. Accordingly, shareholders have no assurance that an investment can be transferred and must be prepared to bear the economic risk of the investment indefinitely.

Shareholders are not permitted to participate in the Fund’s management or operations and must rely exclusively on the Managing Shareholder.

Shareholders have no right, power or authority to participate in the Fund’s management or decision making or in the management of the Fund’s projects. The Managing Shareholder has the exclusive right to manage, control and operate the Fund’s affairs and business and to make all decisions relating to its operation.

The Fund’s assets are generally illiquid and any disposition of Fund assets is at the discretion of the Managing Shareholder.

The Fund’s interest in projects is illiquid. However, if the Fund were to attempt to sell any such interest, a successful sale would depend upon, among other things, the operating history and prospects for the project or interest being sold, the number of potential purchasers and the economics of any bids made by them. The Managing Shareholder has full discretion to determine whether any project, or any partial interest, should be sold and the terms and conditions under which such project would be sold. Consequently, shareholders will depend on the Managing Shareholder for the decision to sell all or a portion of an asset, or retain it, for the benefit of the shareholders and for negotiating and completing the sale transaction.

The Fund indemnifies its officers, as well as the Managing Shareholder and its employees, for certain actions taken on its behalf. Therefore, the Fund has limited recourse relative to these actions.

The Declaration of Trust provides that the Fund’s officers and agents, the Managing Shareholder, the affiliates of the Managing Shareholder and their respective directors, officers and agents when acting on behalf of the Managing Shareholder or its affiliates on the Fund’s behalf, will be indemnified and held harmless by the Fund from any and all claims rising out of the Fund’s management, except for claims arising out of bad faith, gross negligence or willful misconduct or a breach of the Declaration of Trust. Therefore, the Fund may have difficulty sustaining an action against the Managing Shareholder, or its affiliates and their officers based on breach of fiduciary responsibility or other obligations to the shareholders.

The Managing Shareholder is entitled to receive a management fee regardless of the Fund’s profitability and also receives cash distributions.

The Managing Shareholder is entitled to receive an annual management fee from the Fund regardless of whether the Fund is profitable in that year. The annual fee, payable monthly, is equal to 2.5% of total capital contributed by shareholders. In addition to its annual management fee, the Managing Shareholder, as compensation for its management services, will receive 25% of the Fund’s cash distributions to shareholders upon the shareholders having received a certain minimum level of distributions as set out in the Declaration of Trust, even though the Managing Shareholder has not contributed any cash to the Fund. Accordingly, shareholders contribute all of the cash utilized for the Fund’s investments and activities. If the Fund’s projects are unsuccessful, the shareholders may lose 100% of their investment while the Managing Shareholder will not suffer any investment losses because it did not contribute any capital. None of the compensation to be received by the Managing Shareholder has been derived as a result of arm’s length negotiations.

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Cash distributions are not guaranteed and may be less than anticipated or estimated.

Distributions depend primarily on available cash from project operations. At times, distributions may be delayed to repay the principal and interest on project or Fund borrowings, if any, or to fund other costs. The Fund’s taxable income will be taxable to the shareholders in the year earned, even if cash is not distributed.

Because the Managing Shareholder manages other electricity generation and infrastructure funds, it may have conflicts of interest in its management of the Fund’s operations.

Shareholders will not be involved in the management of the Fund’s operations. Accordingly, they must rely on the Managing Shareholder’s judgment in such matters. Inherent with the exercise of its judgment, the Managing Shareholder will be faced with conflicts of interest. While neither the Fund nor the Managing Shareholder have specific procedures in place in the event of any such conflicting responsibilities, the Managing Shareholder recognizes that it has fiduciary duties to the Fund in connection with its position and responsibilities as Managing Shareholder and it intends to abide by such fiduciary responsibilities in performing its duties. Therefore, the Managing Shareholder and its affiliates will attempt, in good faith, to resolve all conflicts of interest in a fair and equitable manner with respect to all parties affected by any such conflicts of interest. However, the Managing Shareholder is not liable to the Fund for how conflicts of interest are resolved unless it has acted in bad faith, or engaged in gross negligence or willful misconduct.

TAX RISKS ASSOCIATED WITH AN INVESTMENT IN SHARES

The Fund is organized as a Delaware trust and the Managing Shareholder has qualified the Fund as a partnership for federal tax purposes. The principal tax risks to shareholders are that:

· The Fund may recognize income taxable to the shareholders but may not distribute enough cash to cover the income taxes owed by shareholders on the Fund’s taxable income.

· The allocation of Fund items of income, gain, loss, and deduction may not be recognized for federal income tax purposes.

· All or a portion of the Fund’s expenses could be considered either investment expenses (which would be deductible by a shareholder only to the extent the aggregate of such expenses exceeded 2% of such shareholder’s adjusted gross income) or as nondeductible items that must be capitalized.

· All or a substantial portion of the Fund’s income could be deemed to constitute unrelated business taxable income, such that tax-exempt shareholders could be subject to tax on their respective portions of such income.

· If any Fund income is deemed to be unrelated business taxable income, a shareholder that is a charitable remainder trust could have all of its income from any source deemed to be taxable.

· All or a portion of the losses, if any, allocated to the shareholders will be passive losses and thus deductible by the shareholder only to the extent of passive income.

· The shareholders could have capital losses in excess of the amount that is allowable as a deduction in a particular year.

Although the Fund has obtained an opinion of counsel regarding the matters described in the preceding paragraph, it will not obtain a ruling from the IRS as to any aspect of the Fund’s tax status. The tax consequences of investing in the Fund could be altered at any time by legislative, judicial, or administrative action.

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If the IRS audits the Fund, it could require investors to amend or adjust their tax returns or result in an audit of their tax.

The IRS may audit the Fund’s tax returns. Any audit issues will be resolved at the Fund level by the Managing Shareholder. If adjustments are made by the IRS, corresponding adjustments will be required to be made to the federal income tax returns of the shareholders, which may require payment of additional taxes, interest, and penalties. An audit of the Fund’s tax return may result in the examination and audit of a shareholder’s return that otherwise might not have occurred, and such audit may result in adjustments to items in the shareholder’s return that are unrelated to the Fund’s operations. Each shareholder bears the expenses associated with an audit of that shareholder’s return.

In the event that an audit of the Fund by the IRS results in adjustments to the tax liability of a shareholder, such shareholder will be subject to interest on the underpayment and may be subject to substantial penalties.

The tax treatment of the Fund cannot be guaranteed for the life of the Fund. Changes in laws or regulations may adversely affect any such tax treatment.

Deductions, credits or other tax consequences may not be available to shareholders. Legislative or administrative changes or court decisions could be forthcoming which would significantly change the statements herein. In some instances, these changes could have substantial effect on the tax aspects of the Fund. Any future legislative changes may or may not be retroactive with respect to transactions prior to the effective date of such changes. Bills have been introduced in Congress in the past and may be introduced in the future which, if enacted, would adversely affect some of the tax consequences of the Fund.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2.  PROPERTIES

Information regarding the Fund’s properties is contained in 1. “Business”, under the heading “Projects and Properties”.

ITEM 3.  LEGAL PROCEEDINGS

On December 30, 2005, an investor in the Fund and entities affiliated with the Fund, Paul Bergeron, on behalf of himself and as Trustee for the Paul Bergeron Trust (the “Plaintiff”), filed a Complaint in Suffolk Superior Court, Commonwealth of Massachusetts, Paul Bergeron v. Ridgewood Electric Power Trust V, et al., Suffolk Superior Court, Docket No. 07-1205 BLS1 (“Bergeron I”). The action was brought against, among others, the Managing Shareholder and persons who are or were officers of the Managing Shareholder alleging violations of the Massachusetts Securities Act, as well as breach of fiduciary duty, fraud, breach of contract, negligent misrepresentation and unjust enrichment, all related to a set of alleged facts and allegations regarding the sale of securities of funds (including the Fund) managed by the Managing Shareholder or affiliates of the Managing Shareholder which were sold in private offerings and the operation of those funds subsequent to the sale. The Plaintiff is seeking damages of $900,000 plus interest and other damages to be determined at trial.

On January 27, 2006, the Plaintiff, on its own initiative, filed an Amended Complaint and Jury Demand in Massachusetts Superior Court, adding a non-diverse broker-dealer to the action. On February 22, 2006, the case was removed by the defendants to United States District Court for the District of Massachusetts on the basis of diversity jurisdiction, but the defendants alleged that the only non-diverse party had been fraudulently joined by the Plaintiff. On February 27, 2006, a motion to dismiss was filed by the defendants in the District Court. On April 12, 2006, the District Court affirmed its jurisdiction over the case, and dismissed the non-diverse party. On January 10, 2007, the District Court dismissed Plaintiff’s unjust enrichment case, but denied the motion of the defendants to dismiss as to the remaining claims. Presently, attorneys for the parties are involved in discovery, with a magistrate judge having decided motions to compel brought by the parties during the summer of 2007. A new scheduling  order is in the process of being developed by the parties for approval by the District Court. As of the filing of this report no trial date has been set by the court.

15

On March 20, 2007, the Plaintiff commenced a derivative action, in Suffolk Superior Court, Commonwealth of Massachusetts. Paul Bergeron v. Ridgewood Electric Power Trust V, et al., Suffolk Superior Court, Docket No. 07-1205 BLS1 (“Bergeron II”). The Plaintiff joined the Fund and affiliated entities, including the Managing Shareholder and a person who is an officer of the Managing Shareholder, alleging that the allocation of the proceeds from the sale of certain assets of the Fund and affiliated entities to an unaffiliated entity was unfair and sought an injunction prohibiting the distribution to shareholders of such proceeds. For a description of the sale transaction, see Item 1. “Business – Ridgewood UK.”  The Superior Court denied the request by the Plaintiff for an injunction. The case was then removed by the defendants to the same District Court as Bergeron I, but the District Court remanded the case to Massachusetts Superior Court on July 5, 2007, where it is presently pending.

All defendants in Bergeron I and Bergeron II deny the allegations and intend to defend both actions vigorously.

On August 16, 2006, the Fund and several affiliated entities, including the Managing Shareholder, filed a lawsuit against the former independent registered public accounting firm for the Fund and several affiliated entities, Perelson Weiner LLP (“Perelson Weiner”), in New Jersey Superior Court. The suit alleged professional malpractice and breach of contract in connection with audit and accounting services performed for the Fund and the other plaintiffs by Perelson Weiner. On October 20, 2006, Perelson Weiner filed a counterclaim against the Fund and the other plaintiffs, alleging breach of contract due to unpaid invoices in the total amount of approximately $1,188,000. Discovery is ongoing and no trial date has been set.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SECURITY HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

There has never been an established public trading market for the Fund’s Investor Shares.

Holders

As of October 31, 2007 and December 31, 2006, there were 1,343 and 1,338 holders of Investor Shares, respectively.

Dividends

Fund distributions for the two years ended December 31, 2006 were as follows (in thousands, except per share data):

	2006		2005
Distributions to Investors	$	1,645	$	1,316
Distributions per Investor Share		2,500		2,000
Distributions to Managing Shareholder		17		13

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ITEM 6.  SELECTED FINANCIAL DATA

The following selected consolidated financial data should be read in conjunction with the Fund’s consolidated financial statements and related notes and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K.

The consolidated statement of operations data for the years ended December 31, 2006, 2005 and 2004 and the consolidated balance sheet data as of December 31, 2006 and 2005, are derived from audited financial statements included in this Form 10-K. The consolidated statement of operations data for the years ended December 31, 2003 and 2002 and the consolidated balance sheet data as of December 31, 2004, 2003 and 2002 are derived from audited consolidated financial statements not included in this Form 10-K. The consolidated statement of operations and the consolidated balance sheet data for the year ended December 31, 2002 are derived from audited consolidated financial statements that have not been restated, and as a result, may not be comparable to subsequent periods.

	December 31,
(in thousands, except per share data)	2006			2005			2004			2003			2002
Consolidated Statement of Operations Data (1):
Revenues	$	13,518		$	12,281		$	10,585		$	10,245		$	5,830
Net loss		(1,003	)		(3,959	)		(746	)		(11,026	)		(3331	)
Net loss per Investor Share		(1,509	)		(5,955	)		(1,123	)		(16,587	)		(5,011	)
Consolidated Balance Sheet Data:
Property, plant and equipment, net		19,189			20,812			20,171			22,121			32,992
Total assets		30,913			34,075			38,889			47,108			67,117
Long-term debt (less current portion)		1,774			2,609			1,502			2,476			8,002
Minority interest		6,371			6,855			8,204			8,327			14,387
Shareholders' equity		17,726			17,749			19,274			22,016			36,316

(1) Increase in revenue in 2003 is due to the acquisition of US Hydro in November 2002.

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the Fund’s consolidated financial statements and Notes which appear elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. The Fund’s actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Part I, Item 1A. “Risk Factors” and elsewhere in this Annual Report on Form 10-K.

Overview

The Fund is a Delaware trust formed on February 18, 1997 to make investments in projects and businesses in the energy and infrastructure sectors both in the US and abroad. RRP a New Jersey limited liability company, is the Managing Shareholder. As the Managing Shareholder, RRP has direct and exclusive control over the management and operations of the Fund. The business of the Fund is to engage in the acquisition, development and operation of infrastructure projects including electricity generation and water treatment projects in the US and abroad.

The Fund has focused primarily on small-scale electricity generation projects using renewable sources of fuel and on water treatment facilities in remote locations serving hotel resort developments. These projects allow the Fund to develop secure long-term positions in attractive specialty markets for products and services provided by its projects and companies.

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As of December 31, 2006, the projects in which the Fund has investments were located in the United States, the United Kingdom and Egypt. As of that date, the Fund had investments in electricity generating projects in the US with total capacity of 15 megawatts (“MW”), in electricity generating projects in the UK with total capacity of 59.1MW and in projects in Egypt with the capacity to produce approximately 24,500 cubic meters (approximately 6.5 million gallons) of potable water per day and electricity generating capacity of 29.7MW.

The Fund’s accompanying consolidated financial statements include the financial statements of US Hydro and NEH. The Fund’s consolidated financial statements also include the Fund’s 30.4% interest in RUK which is accounted for under the equity method of accounting as the Fund has the ability to exercise significant influence but does not control the operating and financial policies of RUK.

The Fund owns a 70.8% interest in US Hydro and the remaining 29.2% minority interest is owned by Trust V. In addition, the Fund owns 68.1% interest in NEH and the remaining minority interests are owned by Trust V (14.1%) and Egypt Fund (17.8%). The interests of Trust V and Egypt Fund are presented as minority interest in the consolidated financial statements of the Fund.

The Fund generates its revenues from the generation of electricity and the production of fresh water. For the years ended December 31, 2006 and 2005, 60% and 55% of its consolidated revenues, respectively, were derived from water production and the balance from electricity generation. Subject to a potential sale of the Fund's water business, management of the Fund expects the proportion of revenue generated from water production to continue to increase.

Critical Accounting Policies and Estimates

The discussion and analysis of the Fund’s financial condition and results of operations are based upon the Fund’s consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America. In preparing these financial statements, the Fund is required to make certain estimates, judgments and assumptions. These estimates, judgments and assumptions affect the reported amounts of the Fund’s assets and liabilities, including the disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of the Fund’s revenues and expenses during the periods presented. The Fund evaluates these estimates and assumptions on an ongoing basis. The Fund bases its estimates and assumptions on historical experience and on various other factors that the Fund believes to be reasonable at the time the estimates and assumptions are made. However, future events and their effects cannot be predicted with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results may differ from these estimates and assumptions under different circumstances or conditions, and such differences may be material to the financial statements. The Fund believes the following critical accounting policies affect the more significant estimates and judgments in the preparation of the Fund’s consolidated financial statements.

Revenue Recognition

Revenues generated from the sale of electric power and fresh water are recorded in the month of delivery, based on the estimated volumes sold to customers. Power generation revenue adjustments are made to reflect actual volumes delivered when the actual volumetric information subsequently becomes available. Billings to customers for power generation generally occurs during the month following delivery. Final billings do not vary significantly from estimates.

Accounts Receivable

Accounts receivable are recorded at invoice price in the period the related revenues are earned, and do not bear interest. The Fund maintains an allowance for doubtful accounts for estimated uncollectible accounts receivable. The allowance is based on the Fund’s assessment of aged accounts, historical experience, and other currently available evidence of the collectability and the aging of accounts receivable. Account balances are charged off against the allowance when the Fund believes it is probable that the receivable will not be recovered.

Property, Plant and Equipment

Property, plant and equipment, consisting of land, hydro-electric generation facilities, water desalinization facilities and office equipment are stated at cost less accumulated depreciation. Renewals and betterments that increase the useful lives of the assets are capitalized. Repair and maintenance expenditures are expensed as incurred. Upon retirement or disposal of assets, the cost and related accumulated depreciation are removed from the consolidated balance sheets. The difference, if any, between the net asset value and any proceeds from such retirement or disposal is recorded as a gain or loss in the statement of operations.

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Depreciation is recorded using the straight-line method over the useful lives of the assets, which ranges from 5 to 30 years.

Impairment of Goodwill, Intangibles and Long-Lived Assets

The Fund evaluates intangible assets and long-lived assets, such as property, plant and equipment, when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. The determination of whether impairment has occurred is made by comparing the carrying value of an asset to the estimated undiscounted cash flows attributable to that asset. If impairment has occurred, the impairment loss recognized is the amount by which the carrying value exceeds the estimated fair value of the asset, which is based on the estimated future cash flows discounted at the estimated cost of capital. The analysis requires estimates of the amount and timing of projected cash flows and, where applicable, judgments associated with, among other factors, the appropriate discount rate. Such estimates are critical in determining whether any impairment charge should be recorded and the amount of such charge if an impairment loss is deemed to be necessary.

The Fund evaluates goodwill, and intangible assets with indefinite useful lives, under Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets”. Under SFAS No. 142, goodwill and intangible assets with indefinite lives are subject to annual impairment tests through a comparison of fair value to carrying value. The two-step approach to assess a reporting unit’s goodwill impairment requires that the Fund first compare the estimated fair value of a reporting unit which has been assigned to goodwill to the carrying amount of the unit’s assets and liabilities, including its goodwill. If the fair value of a reporting unit is below its carrying amount, then the second step of the impairment test is performed, in which the current fair value of the unit’s assets and liabilities is used to determine the current implied fair value of the unit’s goodwill.

Income Taxes

The Fund’s Egyptian subsidiaries have a ten year income tax holiday that expires on December 31, 2010. Accordingly, no provision has been made for Egyptian income taxes in the Fund’s consolidated financial statements.

US Hydro, for federal income tax purposes, files on a consolidated basis with the Fund using the accrual method of accounting on a calendar year basis. For state income tax purposes, US Hydro files on an individual entity basis. US Hydro uses the liability method in accounting for income taxes. Deferred income taxes reflects, where required, the net tax effect of temporary differences arising between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for tax purposes.

Except for US Hydro, no provision is made for US income taxes in the Fund’s consolidated financial statements as the income or losses of the Fund are passed through and included in the income tax returns of the individual shareholders of the Fund.

Foreign Currency Translation

The Egyptian Pound and British Pound Sterling are the functional currencies of the Fund’s Egyptian and UK subsidiaries, respectively. The consolidated financial statements of the Fund’s non-United States subsidiaries are translated into United States dollars. Assets and liabilities are translated into US dollars using the current exchange rates in effect at the balance sheet date, while revenues and expenses are translated using the average exchange rates during the applicable reporting period. The cumulative foreign currency translation adjustment is a component of other comprehensive income included in shareholders’ equity.

Management Fee

The Fund is charged management fees from its Managing Shareholder. Unpaid management fees accrue interest at 10% per annum. The Managing Shareholder has periodically waived its right to receive a portion of the fees and related interest. Any waived management fees and interest are deemed capital contributions at the time of waiver.

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Results of Operations

Year ended December 31, 2006 compared to the year ended December 31, 2005

Revenues increased by approximately $1.2 million, or 10.1%, from $12.3 million in 2005 to $13.5 million in 2006. The increase was primarily due to an increase in revenues from NEH operations of $1.4 million attributable to an increase in water volume sales due to greater tourism in the NEH market area.

Cost of revenues for 2006 was $9 million compared to $8.7 million for 2005, an increase of approximately $0.3 million, or 3.2%. The cost of revenues for NEH increased by approximately $0.7 million to $6.3 million in 2006 primarily due to an increase in fuel and direct material costs resulting from the increase in water volumes processed. The cost of revenues for US Hydro was $2.7 million for 2006 compared to $3.1 million in 2005, a decrease of approximately $0.4 million primarily due to a decrease of amortization expense in 2006 resulting from the impairment of intangibles in the fourth quarter of 2005 and a decrease of repairs expense in 2006.

Gross profit increased by approximately $0.9 million, or 26.9%, to $4.5 million in 2006 from $3.6 million in 2005. The gross profit of NEH operations increased by approximately $0.7 million from $1.1 million in 2005 to $1.8 million in 2006, primarily due to the increase in revenues partially offset by higher fuel and direct material costs. US Hydro gross profit increased by approximately $0.2 million from $2.4 million in 2005 to $2.6 million in 2006, primarily due to a decrease in cost of revenues partially offset by a decrease in revenues.

General and administrative expenses decreased by approximately $0.4 million from $3.5 million in 2005 to $3.1 million in 2006. The decrease relating to NEH operations was primarily attributable to a decrease in bad debt expense due to improved recoverability of accounts receivable.

The management fee due to the Managing Shareholder of $1.6 million for 2006 was comparable to the 2005 management fee. The management fee was paid to the Managing Shareholder for certain management, administrative and advisory services, office space and other facilities provided to the Fund. In 2006 and 2005, the Managing Shareholder waived its right to receive the managment fee and any accrued interest.

Interest expense decreased by approximately $0.7 million from $1 million in 2005 to $0.3 million in 2006, primarily attributable to a decrease in outstanding borrowings of NEH operations and a decrease in interest expense on unpaid management fees payable to the Managing Shareholder.

In 2006, the Fund recorded an equity loss of $65,000 from its investment in RUK compared to a loss of $0.8 million in 2005. The decrease in equity loss of approximately $0.7 million was primarily the result of the increase in RUK revenues from higher production in 2006 compared to 2005.

The Fund recorded a gain on sale of ZAP securities of $3,000 in 2006 compared to a loss of $1 million in 2005. In 2005, the Fund sold 537,000 ZAP shares acquired through the exercise of the Series C Warrants at a loss.

The Fund recorded other expense of $61,000 in 2006 compared to other income of $0.6 million in 2005.  Other income in 2005 included a gain on recovery of advances related to the Fund’s Dubai operations.

In 2006, the Fund recorded income tax benefit of $77,000 compared to income tax expense of $0.1 million in 2005. The decrease in net income tax expense of $0.2 million was primarily attributable to the recognition of timing differences between book and tax basis resulting from depreciation and amortization expense of US Hydro assets.

Minority interest in the earnings of subsidiaries increased by approximately $0.5 million, from earnings of $35,000 in 2005 to $0.5 million in 2006. This was primarily due to the increase in gross profit of both US Hydro and NEH in 2006 as compared to 2005.

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Year ended December 31, 2005 compared to the year ended December 31, 2004

Revenues increased by approximately $1.7 million, or 16.0%, to $12.3 million in 2005 compared to $10.6 million in 2004. This increase was primarily due to increases in revenues from NEH operations of $1.3 million, primarily attributable to increases in water volume sales due to greater tourism in the Fund’s market area. Additionally, revenues from US Hydro operations increased by approximately $0.4 million, or 8.7%, in 2005 compared to 2004 due to higher outputs resulting from higher levels of precipitation.

Cost of revenues for 2005 was $8.7 million compared to $8.2 million for 2004, an increase of $0.5 million, or 6.7%. The cost of revenues for NEH increased by approximately $0.6 million to $5.6 million in 2005 primarily due to the increase in fuel, direct materials and wages resulting from the increase in water volumes processed. The cost of revenues for US Hydro was $3.1 million for 2005 and 2004 as its costs of revenues are substantially fixed and do not fluctuate directly with revenues.

Gross profit increased by approximately $1.2 million, or 47.7%, to $3.6 million in 2005 from $2.4 million in 2004. The gross profit of NEH operations increased by $0.7 million to $1.1 million in 2005 from $0.4 million in 2004, primarily due to the increase in revenues partially offset by higher fuel and direct material costs. US Hydro gross profit increased by $0.5 million to $2.4 million in 2005 from $1.9 million in 2004, primarily due to the increase in revenues.

General and administrative expenses increased by approximately $0.1 million to $3.5 million in 2005 from $3.4 million in 2004. The increase was primarily attributable to higher professional fees and travel expenses relating to the US Hydro operations.

The management fee due to the Managing Shareholder of $1.6 million for 2005 was comparable to the 2004 management fee. In 2005, the Managing Shareholder waived its right to receive the management fee and any accrued interest, and in 2004, waived its right to receive all but $0.3 million of the management fee.

Interest expense increased by approximately $0.1 million, from $0.9 million in 2004 to $1 million in 2005, primarily attributable to the increase in interest expense on unpaid management fees payable to the Managing Shareholder.

In 2005, the Fund recorded an equity loss of $0.8 million from its investment in RUK compared to an equity loss of $0.7 million in 2004. The increase in equity loss of approximately $0.1 million was the result of the increase in income tax expense and interest expense at RUK resulting from higher outstanding borrowings associated with the RUK expansion construction program. This was partially offset by the increase in gross profit resulting from higher production in 2005 compared to 2004.

The Fund recorded a loss on sale of ZAP securities of $1 million in 2005 compared to a gain of $2.1 million in 2004. In 2005, the Fund sold 537,000 ZAP shares at a loss. In 2004, the Fund recorded a gain of $0.3 million resulting from the sale of ZAP securities and a gain of $1.8 million resulting from distribution of 772,500 ZAP shares to the Fund’s shareholders.

In 2004, the Fund recorded a gain of $0.4 million on the termination of an electric power sales contract which represents $1.6 million in present value of payments to be recieved from NEP, less an impairment of the electric power sales contract of $1.2 million to write-down the carrying value of the pre-existing power purchase agreement to zero.

Other income increased by approximately $0.5 million from $0.1 million in 2004 to $0.6 million in 2005. Other income in 2005 included a gain of $0.6 million related to recovery of advances to the Fund’s Dubai operations. Other income in 2004 included a net gain on sale of US Hydro notes receivable of $0.2 million, representing $0.2 million on the sale of the Lahontan notes receivable, partially offset by legal fees of $25,000 incurred on the sale of the notes.

In 2005, the Fund recorded income tax expense of $0.1 million, compared to an income tax benefit of $0.8 million in 2004. The increase in net income tax expenses of $0.9 million was primarily attributable to the recognition of timing differences between book and tax basis resulting from the loss on the sale of the Lahontan notes receivable and depreciation and amortization expense of US Hydro assets.

Minority interests in the earnings of subsidiaries increased by approximately $0.2 million from an interest in a subsidiary loss of $0.2 million in 2004 to an interest in a subsidiary earning of $35,000 in 2005. This was primarily due to the increase in the net income of US Hydro projects in 2005 as compared to 2004.

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Liquidity and Capital Resources

Year ended December 31, 2006 compared to the year ended December 31, 2005

At December 31, 2006, the Fund had cash and cash equivalents of $2.6 million, an increase of approximately $0.7 million from December 31, 2005. The cash flows for 2006 were $5.1 million provided by operating activities, $0.5 million used in investing activities, $3.9 million used in financing activities and an $8,000 positive effect of foreign exchange on cash and cash equivalents.

In 2006, the Fund’s operating activities generated cash of $5.1 million compared to $6.3 million in 2005, a decrease of approximately $1.2 million, primarily due to an increase in prepaid expenses and other current assets and a decrease in accounts payable in 2006.

In 2006, investing activities used cash of $0.5 million compared to $1 million in 2005. In 2006, the Fund used $0.7 million of cash for capital expenditures and collected $0.2 million primarily on notes receivable. In 2005, the Fund used $2 million of cash for capital contributions, partially offset by $0.8 million in proceeds from the sale of ZAP securities and $0.1 million collected on notes receivable.

In 2006, the Fund used $3.9 million of cash in financing activities, which represents $1.2 million used for repayments under a bank loan and $2.7 million of cash distributions to shareholders and minority interest. In 2005, the Fund used $4.1 million of cash in financing activities, which represents $1.1 million used for repayments under bank loan and $3 million of cash distributions to shareholders and minority interest.

Year ended December 31, 2005 compared to the year ended December 31, 2004

At December 31, 2005, the Fund had cash and cash equivalents of $1.9 million, an increase of $1.1 million from December 31, 2004. The cash flows for the year 2005 were $6.3 million provided by operating activities, $1 million used in investing activities, $4.1 million used in financing activities and a $44,000 positive effect of foreign exchange on cash and cash equivalents.

In 2005, the Fund’s operating activities generated cash of $6.3 million compared to $3.4 million in 2004, an increase of $2.9 million, primarily due to the increase in profitability of NEH and US Hydro operations.

In 2005, investing activities used cash of $1 million, compared to providing cash of $2.8 million in 2004. The decrease was primarily due to increased capital expenditures of $1.7 million, a decrease in collection from notes receivable of $0.3 million, and a decrease in proceeds from the sale of ZAP securities of $0.6 million. In addition, a decrease in 2005 in cash provided by investing activities was also due to the $4 million in proceeds from the sale of US Hydro notes in 2004, partially offset by a decrease of $2.8 million in the Fund’s investment in ZAP securities when comparing 2005 to 2004.

In 2005, the Fund used $4.1 million of cash in financing activities, primarily as a result of $1.1 million used for bank loan repayments and $3 million of cash distributions to shareholders. In 2004, the Fund used $6.2 million of cash in financing activities, $4.9 million of which was used for bank loan repayments and $1.3 million used for distributions to shareholders.

Future Liquidity and Capital Resource Requirements

The Fund expects cash flows from operating activities, along with existing cash and cash equivalents will be sufficient to provide working capital and fund capital expenditures for the next 12 months.

Off-Balance Sheet Arrangements

The Fund has not entered into any off-balance sheet arrangements that either have, or are reasonable likely to have, a material adverse current or future effect on the Fund’s financial condition, revenues or expenses, result of operations, liquidity, capital expenditure or capital resources that are material to the Fund.

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Contractual Obligations and Commitments

The following table provides a summary of the Fund’s share of contractual obligations as of December 31, 2006 (in thousands).

	Payments due by period as of December 31, 2006
	Less than						More than
	1 Year		1-3 Years		3-5 Years		5 Years		Total
Long-term debt
Sinai (1)	$	287	$	1,469	$	305	$	-	$	2,061
REFI (2)		136		-		-		-		136
US Hydro (3)		432		-		-		-		432
Minimum lease payment (4)		700		2,163		766		3,998		7,627
Consulting agreement settlement (5)		83		305		364		553		1,305
Total	$	1,638	$	3,937	$	1,435	$	4,551	$	11,561

         1)         The Sinai loan bears interest at 11.0% per annum. The provision of the loan restricts Sinai from paying dividends to its shareholders or obtaining credit from other banks. At December 31, 2006, Sinai was in compliance with the terms of its loan.

2)         During the third quarter of 2002, REFI executed a term loan agreement with its principal bank. The bank provided a loan of 12.5 million Egyptian pounds (approximately $2 million at the then existing current exchange rate), maturing March 31, 2007. The loan is repayable in quarterly installments of 781,000 Egyptian pounds (approximately $126,000 at the then-existing exchange rate) starting June 2003. Outstanding borrowings bear interest at the bank’s medium term loan rate plus 0.5% (12.5% at December 31, 2006).

3)         Of the original eight US Hydro projects, six were financed by a single term loan. The borrower under the term loan is an intermediate, wholly-owned subsidiary of US Hydro whose only assets are the projects that were financed. The Fund has a choice of variable or fixed interest rates on the term loan. Variable rate is LIBOR (5.74% at December 31, 2006) plus 1.75% or the Lenders Corporate Base Rate (as defined). At the Fund’s option, a fixed interest rate can be selected, payable on any portion of the debt in excess of $1.0 million, for any period of time from two to seven years. Such fixed rate shall be based on the U.S. Treasury note rate at the date of election plus 2.75%. The variable rate of 7.49% was the effective interest rate at December 31, 2006. This credit facility is collateralized by the assets of the projects financed including, where appropriate, the interest in projects held in the form of notes receivable.

As additional compensation to the lender, the Fund is required to pay an additional amount equal to 10% of the cash flow, as defined, of the financed projects plus 10% of any net proceeds, as defined, from the sale or refinancing of any of the financed projects. The Fund is also required to make an additional annual payment of 50% of excess cash flow, as defined. No additional payments were required during 2006.

4)         The facility at Union Falls has leased the site at its facility under a non-cancelable long-term lease which terminates in 2024. Rent expense on a straight-line basis at this site was $295,000 for the years ended December 31, 2006. The facility of US Hydro at the Box Canyon dam in Siskiyou County, California is owned subject to a ground lease which the Fund treats for financial reporting purposes as an operating lease. The lease terminates on December 31, 2010, at which time the Fund is obligated to transfer the facility at the site to the Siskiyou County Flood Control and Water Conservation District. The lease payment for Box Canyon was $500,000 for the year ended December 31, 2006.

5)         In April 2005, NEH agreed to a settlement with a consultant, whereby NEH will make quarterly payments of $30,000 for so long as the Egypt projects remain operational. In the event that the Egypt projects are sold, an amount equal to the present value of the subsequent ten-years of payments would be made in settlement of the remaining obligation. In addition, in November 2003, NEH agreed to a settlement with a consultant, whereby, NEH made a single payment of $281,000 and will make monthly installment payments of $7,500, until June 2013. NEH recorded a total liability of $1,305,000 at December 31, 2006 to reflect these obligations.

23

Recent Accounting Pronouncements

FIN 48 

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”) an interpretation of FASB Statement No. 109, Accounting for Income Taxes. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS 109 and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 will be effective for the Fund beginning January 1, 2007. The Fund does not believe that the adoption of FIN 48 will have a material impact on its consolidated financial statements.

SFAS 157

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”), to define fair value, establish a framework for measuring fair value in accordance with generally accepted accounting principles (GAAP) and expand disclosures about fair value measurements. SFAS 157 requires quantitative disclosures using a tabular format in all periods (interim and annual) and qualitative disclosures about the valuation techniques used to measure fair value in all annual periods. SFAS 157 will be effective for the Fund beginning January 1, 2008. The Fund is currently evaluating the impact of adopting SFAS 157.

SAB 108

In September 2006, the SEC issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). SAB 108 requires analysis of misstatements using both an income statement (rollover) approach and a balance sheet (iron curtain) approach in assessing materiality and provides for a one-time cumulative effect transition adjustment. SAB 108 is effective for fiscal years ending on or after November 15, 2006. The adoption of this standard did not have a material impact on the Fund’s consolidated financial statements.

SFAS 159

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”). SFAS 159 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS 159 will be effective for the Fund on January 1, 2008. The Fund is currently evaluating the impact of adopting SFAS 159 on its consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The disclosure required by this Item is omitted pursuant to Item 305(e) of Regulation S-K.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements of the Fund, including the notes thereto and the report thereon, are presented beginning at page F-1 of this Form 10-K.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

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ITEM 9A.  CONTROLS AND PROCEDURES

In accordance with Rule 13a-15(b) under the Exchange Act, the Fund’s Chief Executive Officer and Chief Financial Officer evaluate the effectiveness of the Fund’s disclosure controls and procedures. A system of disclosure controls and procedures is designed to ensure that information required to be disclosed by a registrant in reports filed with the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms. This includes disclosure controls and procedures designed to ensure that information required to be disclosed by a registrant is accumulated and communicated to senior management so as to allow timely decisions regarding required disclosure. A review of these controls and procedures was done by the Fund as of December 31, 2006, which revealed that the following material weaknesses previously identified continue to exist:

(i)  a lack of sufficient personnel with relevant experience to develop, administer and monitor disclosure controls and procedures to enable the Fund to comply efficiently, or on a timely basis, with its financial reporting obligations,

(ii)  inadequate disclosure controls and procedures, including inadequate record retention and review policies, over both foreign and US operations, that would enable the Fund to meet its financial reporting and disclosure obligations in an efficient and timely manner.

As a result of these weaknesses, the Fund has not timely met its reporting obligations under the Exchange Act.

The Fund’s Chief Executive Officer and Chief Financial Officer have also concluded that there was no change in the Fund's internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act, as amended) that occurred during the quarter ended December 31, 2006 that has materially affected, or is reasonably likely to materially affect, the Fund's internal control over financial reporting.

Since December 31, 2006, the Fund has implemented the following to address the above weaknesses:

·        Increased the number of degreed accountants. Additional staff expansion is underway.

·        In May 2007, the Fund appointed a new Chief Financial Officer who is a Certified Public Accountant with approximately 29 years of professional accounting experience, including prior experiences as a financial officer of publicly traded companies.

The Fund believes that the completion of the expansion of the accounting and financial reporting staff and implementation of recommended procedures will mitigate the above weaknesses. However, due to the Fund’s delinquencies in meeting its filing deadlines under the Exchange Act, the Fund expects these deficiencies to continue to be material weaknesses at least until such time as the Fund is no longer delinquent in its Exchange Act filings.

The Fund’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Fund’s disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Exchange Act and concluded that, as of the end of the period covered by this report, because of the material weaknesses noted above, the Fund’s disclosure controls and procedures were not effective.

Because the Fund is not an “Accelerated Filer” as defined in Rule 12b-2 of the Exchange Act, the Fund is not presently required to file Management’s annual report on internal control over financial reporting and the Attestation report of the registered public accounting firm required by Item 308(a) and (b) of Regulation S-K promulgated under the Securities Act of 1933, as amended. Under current rules, because the Fund is neither a “large accelerated filer” nor an “accelerated filer”, the Fund is not required to provide management’s report on internal control over financial reporting until the Fund files its annual report for 2007 and compliance with the auditor’s attestation report requirement is not required until the Fund files its annual report for 2008. The Fund currently expects to comply with these requirements at such time as the Fund is required to do so.

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ITEM 9B.  OTHER INFORMATION

None.

PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The Fund’s Managing Shareholder, Ridgewood Renewable Power, LLC, was originally founded in 1991. The Managing Shareholder has very broad authority, including the authority to elect executive officers of the Fund.

Each of the executive officers of the Fund also serves as an executive officer of the Managing Shareholder. The executive officers of the Fund are as follows:

Name, Age and Position with Registrant	Officer Since
Randall D. Holmes, 60
President and Chief Executive Officer	2004
Robert E. Swanson, 60
Chairman	1997
Jeffrey H. Strasberg, 50
Executive Vice President and Chief Financial Officer (1)	2007
Daniel V. Gulino, 47
Senior Vice President, General Counsel and Secretary	2000
Douglas R. Wilson, 48
Executive Vice President and Chief Financial Officer (1)	2005

(1) Mr. Strasberg replaced Mr. Wilson as Executive Vice President and Chief Financial Officer on May 2, 2007.

Set forth below is the name of and certain biographical information regarding the executive officers of the Fund:

Randall D. Holmes has served as President and Chief Executive Officer of the Fund since January 2006 and served as Chief Operating Officer of the Fund from January 2004 until January 2006. Mr. Holmes has also served as the President and Chief Operating Officer of the Managing Shareholder, and affiliated Power Trusts and LLCs since January 2004. Prior to such time, Mr. Holmes served as the primary outside counsel to and has represented the Managing Shareholder and its affiliates since 1991. Immediately prior to being appointed Chief Operating Officer, Mr. Holmes was counsel to Downs Rachlin Martin PLLC (“DRM”). DRM is one of the primary outside counsel to the Fund, the Managing Shareholder and its affiliates. He has maintained a minor consulting relationship with DRM in which he may act as a paid advisor to DRM on certain matters that are unrelated to Ridgewood. Such relationship will not require a significant amount of Mr. Holmes’ time and it is expected that such relationship will not adversely affect his duties as President and Chief Executive Officer. Mr. Holmes is a graduate of Texas Tech University and the University of Michigan Law School. He is a member of the New York State bar.

Robert E. Swanson has served as Chairman of the Fund, the Managing Shareholder and affiliated Power Trusts and LLCs since their inception. From their inception until January 2006, Mr. Swanson also served as their Chief Executive Officer. Mr. Swanson is the controlling member of the Managing Shareholder, as well as Ridgewood Energy and Ridgewood Capital, affiliates of the Fund. Mr. Swanson has been President and registered principal of Ridgewood Securities since its formation in 1982, has served as the Chairman of the Board of Ridgewood Capital since its organization in 1998 and has served as President and Chief Executive Officer of Ridgewood Energy since its inception in 1982. Mr. Swanson is a member of the New York State and New Jersey State Bars, the Association of the Bar of the City of New York and the New York State Bar Association. He is a graduate of Amherst College and Fordham University Law School.

26

Jeffrey H. Strasberg has served as Executive Vice President of the Fund, the Managing Shareholder, and affiliated Power Trusts and LLCs since May 2007. Mr. Strasberg also serves as Senior Vice President and Chief Financial Officer of Ridgewood Capital and affiliated LLCs and Ridgewood Securities and has done so since April 2005. Mr. Strasberg joined Ridgewood Capital in 1998 where his initial responsibilities were to serve as interim Chief Financial Officer of various portfolio companies in which Ridgewood Capital Funds had interests. Mr. Strasberg is a Certified Public Accountant and a graduate of the University of Florida.

Daniel V. Gulino has served as Senior Vice President and General Counsel of the Fund, the Managing Shareholder and affiliated Power Trusts and LLCs since 2000 and was appointed Secretary in February 2007. Mr. Gulino also serves as Senior Vice President and General Counsel of Ridgewood Energy, Ridgewood Capital, Ridgewood Securities and affiliated Trusts and LLCs and has done so since 2000. Mr. Gulino is a member of the New Jersey State and Pennsylvania State Bars. He is a graduate of Fairleigh Dickinson University and Rutgers University School of Law.

Douglas R. Wilson served as Executive Vice President and Chief Financial Officer of the Fund, the Managing Shareholder and affiliated Power Trusts and LLCs from April 2005 until May 2007. Mr. Wilson continues to serve the Managing Shareholder as Executive Vice President and Chief Development Officer. Mr. Wilson has been associated with the Ridgewood group of companies as a consultant and advisor since 1996 performing investment evaluation, structuring and execution services for the trusts and entities managed by Ridgewood Capital LLC. From May of 2002, until its sale in 2007, Mr. Wilson has served as a Director, CEO and Finance Director for CLPE Holdings. Mr. Wilson is a graduate of the University of Texas at Arlington and has an MBA from the Wharton School at the University of Pennsylvania.

Board of Directors and Board Committees

The Fund does not have its own board of directors or any board committees. The Fund relies upon the Managing Shareholder to perform the function that a board of directors or its committees would otherwise perform. Officers of the Fund are generally not directly compensated by the Fund, and all compensation matters are addressed by the Managing Shareholder, as described in Item 11. “Executive Compensation”. Because the Fund does not maintain a board of directors and because officers of the Fund are compensated by the Managing Shareholder, the Managing Shareholder believes that it is appropriate for the Fund not to have a nominating or compensation committee.

Managing Shareholder

The Fund’s management agreement with the Managing Shareholder details how the Managing Shareholder is to render management, administrative and investment advisory services to the Fund (the “Management Agreement”). Specifically, the Managing Shareholder performs (or may arrange for the performance of) the management and administrative services required for the operation of the Fund. Among other services, the Managing Shareholder administers the accounts and handles relations with shareholders, provides the Fund with office space, equipment and facilities and other services necessary for its operation, and conducts the Fund’s relations with custodians, depositories, accountants, attorneys, brokers and dealers, corporate fiduciaries, insurers, banks and others, as required.

The Managing Shareholder is also responsible for making investment and divestment decisions, subject to the provisions of the Declaration of Trust. The Managing Shareholder is obligated to pay the compensation of the personnel and administrative and service expenses necessary to perform the foregoing obligations. The Fund pays all other expenses of the Fund, including transaction expenses, valuation costs, expenses of preparing and printing periodic reports for shareholders and the SEC, postage for Fund mailings, SEC fees, interest, taxes, legal, accounting and consulting fees, litigation expenses and other expenses properly payable by the Fund. The Fund reimburses the Managing Shareholder for all such Fund expenses paid by the Managing Shareholder.

As compensation for the Managing Shareholder’s performance under the Management Agreement, the Fund is obligated to pay the Managing Shareholder an annual management fee described below in Item 13. “Certain Relationships and Related Transactions and Director Independence”.

27

Each investor in the Fund consented to the terms and conditions of the Management Agreement by subscribing to acquire Investor Shares in the Fund. The Management Agreement is subject to termination at any time on 60 days prior notice by a majority in interest of the shareholders or the Managing Shareholder. The Management Agreement is subject to amendment by the parties upon the approval of a majority in interest of the investors.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Fund’s executive officers and directors, and persons who own more than 10% of a registered class of the Fund’s equity securities, to file reports of ownership and changes in ownership with the SEC. Based on a review of the copies of reports furnished or otherwise available to the Fund, the Fund believes that the filing requirements were not met by Robert E. Swanson due to his failure to timely file a Form 4; however, such required report has since been filed with the SEC.

Code of Ethics

In March 2004, the Managing Shareholder, for itself and for the Fund and its affiliates adopted a Code of Ethics applicable to the principal executive officer, principal financial officer, principal accounting officer or controller (or any persons performing similar functions), of each such entity. A copy of the Code of Ethics is filed as Exhibit 14 to the Annual Report on Form 10-K.

ITEM 11.  EXECUTIVE COMPENSATION

Except as noted below, the executive officers of the Fund do not receive compensation directly from the Fund or any of its subsidiaries. They provide managerial services to the Fund in accordance with the terms of the Fund’s Declaration of Trust. The Managing Shareholder, or affiliated management companies, determines and pays the compensation of these officers. Each of the executive officers of the Fund also serves as an executive officer of the Managing Shareholder and other funds managed by the Managing Shareholder and its affiliates.

Prior to becoming executive officers of the Fund, Randall D. Holmes and Douglas R. Wilson became vested participants in a CLP management incentive program. Additionally, Mr. Wilson continued serving as an officer with CLP after becoming an executive officer of the Fund. Bonus amounts presented below represent compensation received by Messrs. Holmes and Wilson from CLP during years in which they were also executive officers of the Fund. Bonus amounts represent formula-based payments under the CLP management incentive program. Mr. Wilson’s salary was paid pursuant to the terms of his Service Agreement with CLP, as discussed below. Compensation information for 2006 is described below, but does not include benefits generally available to other CLP salaried employees.

	2006 Summary Compensation Table
Name and Principal Position	Salary ($)		Bonus ($)		Total ($)
Randall D. Holmes		-		6,702		6,702
President and Chief Executive Officer (1)
Douglas R. Wilson		138,225		33,509		171,734
Former Executive Vice President and Chief Financial Officer (2)

(1)   Mr. Holmes became an executive officer of the Fund in January 2004.

(2)   Mr. Wilson served as an executive officer of the Fund from April 2005 to May 2007.

Upon the sale of CLP in February 2007 (as discussed under Item 1. “Business”), each of Mr. Wilson’s employment with CLP and Messrs. Holmes’ and Wilson’s participation in the CLP management plan was terminated.

28

Compensation Discussion and Analysis

The executive officers of the Fund, Mr. Holmes, Mr. Swanson, Mr. Strasberg, Mr. Gulino and Mr. Wilson, are employed by, and are executive officers of, the Managing Shareholder and provide managerial services to the Fund in accordance with the terms of the Fund’s Declaration of Trust. The Fund does not have any other executive officers. Except as described in the 2006 Summary Compensation Table above, the Managing Shareholder determines and pays the compensation of these officers. Each of the executive officers of the Fund also serves as an executive officer of each of the other investment funds managed by the Managing Shareholder. Messrs. Swanson, Strasberg and Gulino also serve in similar capacities for funds managed by affiliates of the Managing Shareholder. Because the executive officers are not employees of the Fund and provide managerial services to all of the funds managed by the Managing Shareholder and its affiliates in the course of such employment, they do not receive additional compensation for providing managerial services to the Fund.

Except as set forth in the 2006 Summary Compensation Table above, the Managing Shareholder is fully responsible for the payment of compensation to the executive officers, and the Fund does not pay any compensation to its executive officers and does not reimburse the Managing Shareholder for the compensation paid to executive officers. The Fund does, however, pay the Managing Shareholder a management fee and the Managing Shareholder may determine to use a portion of the proceeds from the management fee to pay compensation to executive officers of the Fund. See Item 13. “Certain Relationships and Related Transactions and Director Independence” for more information regarding Managing Shareholder compensation and payments to affiliated entities.

The payment reflected above to Messrs Holmes and Wilson were determined by board members of CLP that were not affiliated with the Fund or its affiliates, including the Managing Shareholder.  Mr. Holmes' bonus compensation was established prior to his becoming an executive officer of the Fund, and the non-affiliated board members of CLP decided it was appropriate to continue such eligibility to compensate Mr. Holmes for on-going services.  Mr. Wilson’s salary paid by CLP was also established by non-affiliated board members based on prevailing market conditions.  Upon his appointment as an executive officer of the Fund, Mr. Wilson continued to provide direct services to CLP, but at a reduced rate.

Report of the Managing Shareholder

Because the Fund is managed by the Managing Shareholder and does not have a Board of Directors or a Compensation Committee, the Managing Shareholder reviewed and discussed with management the Compensation Discussion and Analysis included in this Annual Report on Form 10-K. Based on such review and discussion, the Managing Shareholder determined that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K for filing with the Securities and Exchange Commission.

Submitted by the Managing Shareholder

Robert E. Swanson, Chairman

Employment Contracts, Termination of Employment and Change of Control Arrangements

 In October 2004, Douglas R. Wilson, who at such time was not serving as an executive officer of the Fund or of the Managing Shareholder but who subsequently served as the Chief Financial Officer of each of the Fund and the Managing Shareholder, entered into a Service Agreement with CLP pursuant to which Mr. Wilson served as Chief Executive Officer and Finance Director of CLP Envirogas Limited (“Envirogas”), a subsidiary of CLP. The Service Agreement provided for a term that was originally to expire on December 31, 2005, but was later extended until termination of the agreement in February 2007, as discussed below. The Services Agreement provided for Mr. Wilson to receive a base salary of £250,000, except that upon his appointment as an executive officer of the Fund, Mr. Wilson’s annual salary payable by CLP was reduced to £75,000 per annum.  Mr. Wilson entered into a Compromise Agreement with CLP, dated February 22, 2007, pursuant to which the Service Agreement and Mr. Wilson’s employment with Envirogas were terminated by mutual agreement as of such date. No termination payment were received by Mr. Wilson in connection with the Compromise Agreement or otherwise in connection with his termination of employment with CLP.

29

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information with respect to the beneficial ownership of the Fund’s Investor Shares as of December 31, 2006 (no person owns more than 5%) by:

· each executive officer of the Fund (there are no directors); and

· all of the executive officers of the Fund as a group.

Beneficial ownership is determined in accordance with SEC rules and includes voting or investment power with respect to the securities. Except as indicated by footnote, and subject to applicable community property laws, the persons named in the table below have sole voting and investment power with respect to all Investor Shares shown as beneficially owned by them. Percentage of beneficial ownership is based on 658.1067 Investor Shares outstanding at December 31, 2006. Other than as set forth below, no officer of the Fund owns any shares of the Fund.

Name of beneficial owner	Number of shares (1)	Percent
Ridgewood Renewable Power LLC (Managing Shareholder)        Robert E. Swanson,  controlling member	1.25	*
Executive officers as a group	1.25	*

   *   Represents less than one percent.

(1)Does not include a Management Share in the Fund representing the beneficial interests and management rights of the Managing Shareholder in its capacity as the Managing Shareholder. The management share owned by the Managing Shareholder is the only issued and outstanding management share of the Fund. The management rights of the Managing Shareholder are described in further detail in Item 1. “Business”. Its beneficial interest in cash distributions of the Fund and its allocable share of the Fund’s net profits and net losses and other items attributable to the Management Share are described in further detail below at Item 13. “Certain Relationships and Related Transactions, and Director Independence”.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Under the terms of the Fund’s Management Agreement, the Managing Shareholder provides certain management, administrative and advisory services, and office space to the Fund. In return, the Fund is obligated to pay the Managing Shareholder an annual management fee equal to 2.5% of the total contributed capital of the Fund, or approximately $1,645,000 annually, as compensation for such services. The management fee is to be paid in monthly installments and, to the extent that the Fund does not pay the management fee on a timely basis, the Fund accrues interest at an annual rate of 10% on the unpaid balance. The Managing Shareholder waived its right to receive its management fee for 2006. The Fund recorded the waived management fee as a deemed capital contribution. The shareholders of the Fund other than the Managing Shareholder were allocated 99% of the contribution and the Managing Shareholder was allocated 1% so that the amount of the contribution allocated offset the amount of the expense accrued.

Under the Management Agreement with the Managing Shareholder, RPM, an entity related to the Managing Shareholder through common ownership, provides management, purchasing, engineering, planning and administrative services to the projects operated by the Fund. RPM charges the projects at its cost for these services and for the allocable amount of certain overhead items. Allocations of costs are on the basis of identifiable direct costs or in proportion to amounts invested in projects managed by RPM. For the year ended December 31, 2006, RPM charged the US Hydro Projects $624,000 for overhead items allocated in proportion to the amount invested in projects managed. In addition, RPM charged the US Hydro projects $5,421,000 for all of the direct operating and non-operating expenses incurred during 2006.

30

Under the Declaration of Trust, the Managing Shareholder is entitled to receive, concurrently with the shareholders of the Fund other than the Managing Shareholder, 1% of all distributions from operations made by the Fund in a year until the shareholders have received distributions in that year equal to 12% of their equity contribution. Thereafter, the Managing Shareholder is entitled to receive 25% of the distributions for the remainder of the year. The Managing Shareholder is entitled to receive 1% of the proceeds from dispositions of Fund property until the shareholders other than the Managing Shareholder, have received cumulative distributions equal to their original investment (“Payout”). After Payout, the Managing Shareholder is entitled to receive 25% of all remaining distributions of the Fund. Distributions to the Managing Shareholder were $17,000 for the year ended December 31, 2006. The Fund has not yet reached Payout.

Income is allocated to the Managing Shareholder until the profits so allocated equal distributions to the Managing Shareholder. Thereafter, income is allocated among the shareholders other than the Managing Shareholder in proportion to their ownership of Investor Shares. If the Fund has net losses for a fiscal period, the losses are allocated 99% to the shareholders other than the Managing Shareholder and 1% to the Managing Shareholder, subject to certain limitations as set forth in the Declaration of Trust. Amounts allocated to shareholders other than the Managing Shareholder are apportioned among them in proportion to their capital contributions.

Under the terms of the Declaration of Trust, if the Adjusted Capital Account (as defined in the Declaration of Trust) of a shareholder other than the Managing Shareholder would become negative using General Allocations (as defined in the Declaration of Trust), losses and expenses will be allocated to the Managing Shareholder. Should the Managing Shareholder’s Adjusted Capital Account become negative and items of income or gain occur, then such items of income or gain will be allocated entirely to the Managing Shareholder until such time as the Managing Shareholder’s Adjusted Capital Account becomes positive. This mechanism does not change the allocation of cash, as discussed above.

On June 26, 2003, the Managing Shareholder entered into a Revolving Credit and Security Agreement with Wachovia Bank, National Association. The agreement, as amended, allows the Managing Shareholder to obtain loans and letters of credit of up to $6,000,000 for the benefit of the Fund and other Fund’s that it manages. As part of the agreement, the Fund agreed to limitations on its ability to incur indebtedness, liens and to provide guarantees.

As discussed in Item 1. “Business” under the heading “Ridgewood UK”, on January 23, 2007, RUK, which is owned approximately 70% by Trust V and 30% by the Fund, entered into the Sale Agreement pursuant to which RUK sold its 88% equity interest in CLP, and Arbutus sold its 12% equity interest in CLP, to the Buyer.  The Managing Shareholder was not a party to the Sale Agreement but received certain payments as a result of the Sale as a result of its service as the Managing Shareholder of each of the Ridgewood ROCs and each of the PowerBank Funds.  Because the Fund does not have its own board of directors or any board committees and the Fund relies upon the Managing Shareholder to perform the functions that a board of directors or its committees would otherwise perform, the Managing Shareholder is a related person of the Fund.

Under the Sale Agreement, Buyer agreed to buy (i) 100% of the issued and outstanding shares of CLP from RUK and Arbutus, and (ii) substantially all of the Assets of the Ridgewood ROCs. The Assets and the Shares constituted all the business of RUK and the Ridgewood ROCs.

The Sale was completed on February 22, 2007.  In accordance with the Sale Agreement, at closing, the Buyer paid an aggregate purchase price for the CLP Shares and the Assets of £117.8 million ($229.5 million), subject to a working capital adjustment that resulted in an increase to the purchase price of approximately £4.2 million ($8.2 million). After adjustment, the purchase price for the CLP Shares was approximately £25.1 million ($48.9 million), of which approximately £15.4 ($30.0 million) was attributable to Trust V and approximately £6.7 million ($13.1 million) was attributable to the Fund, with Arbutus receiving the remaining balance. Taking into account payments made to RUK pursuant to certain sharing arrangements with the PowerBank Funds, the total gross sales proceeds to the Fund were approximately £8.4 million ($16.4 million). The total dollar amount attributable to the Managing Shareholder as a result of the Sale was approximately $37 million, all of which was paid out of the proceeds of the Sale allocable to the PowerBank Funds.  The Managing Shareholder did not receive any payments from the Fund or Trust V as a result of the Sale.

31

As a result of the Sale, two executive officers of the Fund, who were also executive officers of RUK and were executive officers and/or directors of CLP prior to the Sale, were due an aggregate of $584,000 in cash from CLP under the terms of a CLP management incentive plan.  These officers waived their rights to receive such payments in favor of RUK, resulting in such portion of the proceeds of the Sale being allocated to RUK rather than to the officers.

The determination of the allocation of the purchase price among the Sellers was agreed to in the Sale Agreement as a result of negotiations among (i) the Sellers for which the Managing Shareholder acted as managing shareholder including RUK and the PowerBank entities, (ii) Arbutus and (iii) the Buyer.  The Directors, Managing Shareholder and Managing Member (as appropriate) of the Sellers received and relied in part on an opinion from an independent financial advisor engaged by the Sellers and the Managing Shareholder which concluded that, among other things, after giving effect to the proposed allocation of the consideration paid by the Buyer in the Sale, (i) such Sale consideration, in the aggregate, being paid for the assets purchased by the Buyer, including the Assets and the Shares,  taken as a whole (even if adjusted to reflect changes in interest rates pursuant to the Sale Agreement) was not less than fair value for those assets taken as a whole, (ii) the consideration being paid by the Buyer for the shares of  CLP in the Sale was fair to the shareholders of CLP from a financial point of view (without giving effect to any impacts of the Sale on any particular shareholder other than in its capacity as a shareholder), and (iii) the consideration being paid to each Ridgewood ROC in the Sale was fair to the members of such Ridgewood ROC from a financial point of view (without giving effect to any impacts of the Sale on any particular member other than in its capacity as a member).  Variations in the valuation of the assets or in the allocation of the purchase price paid in the transaction would have increased or decreased amounts to be received from the Sale by each of the Sellers and the Managing Shareholder, and the respective shareholders of the PowerBank Funds, Trust V, the Fund and Arbutus.

Related Person Transactions

The Fund relies upon the Managing Shareholder to review and approve all transactions with related persons required to be reported under the rules of the SEC (“related person transactions”). Prior to approving a related person transaction, the Managing Shareholder considers the relevant facts and circumstances, including, to the extent applicable, the relationships between all parties that would qualify as “related persons” under the rules of the SEC and such person’s or entity’s relationship to the Fund, such person’s or entity’s interest in the transaction, and the material facts and terms of the transaction. The Managing Shareholder approves those transactions that it determines are entered into in good faith and on fair and reasonable terms for, and in the best interests of, the Fund. The Fund does not maintain a written policy in connection with this process. Instead, the Managing Shareholder’s determinations regarding which related person transactions to enter into on behalf of the Fund are evidenced in the business records of the Fund and the Managing Shareholder.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table presents fees and services rendered by Grant Thornton LLP, the Fund’s principal accountant, for the years ended December 31, 2006 and 2005 (in thousands).

	2006		2005
Audit Fees*	$	691	$	664
Audit-Related Fees		-		-
Tax Fees		62		-
All Other Fees		-		-
Total	$	753	$	664
* The fees for 2005 were borne by the Managing Shareholder.

Audit Committee Pre-Approval Policy

The Managing Shareholder pre-approves on an annual basis all audit and permitted non-audit services that may be performed by the Fund’s independent registered public accounting firm, including the audit engagement terms and fees, and also pre-approves any detailed types of audit-related and permitted tax services to be performed during the year. The Managing Shareholder pre-approves permitted non-audit services on an engagement-by-engagement basis.

32

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)           Financial Statements

See the Index to Financial Statements in Page F-1 of this report.

(b)           Exhibits

Exhibits required by Section 601 of Regulation S-K:

Exhibit No.		Description
3	(i)(A)	Certificate of Trust of the Registrant (incorporated by reference to the Registrant’s Registration Statement on Form 10 filed with the SEC on April 30, 1999).
3	(i)(B)	Amendment No. 1 to Certificate of Trust (incorporated by reference to the Registrant’s Registration Statement on Form 10 filed with the SEC on April 30, 1999).
3	(i)(C)	Certificate of Amendment to the Certificate of Trust of the Registrant dated December 18, 2003 (incorporated by reference to the Registrant’s Annual Report on Form 10-K filed with the SEC on August 17, 2007).
3	(ii)(A)	Declaration of Trust of the Registrant (incorporated by reference to the Registrant’s Registration Statement on Form 10 filed with the SEC on April 30, 1999).
3	(ii)(B)	Amendment No. 1 to the Declaration of Trust (incorporated by reference to the Registrant’s definitive proxy statement filed with the SEC on November 5, 2001, SEC File No. 000-25935).
3	(ii)(C)	Amendment of the Declaration of Trust of the Registrant effective January 1, 2005 (incorporated by reference to the Registrant’s Annual Report on Form 10-K filed with the SEC on August 17, 2007).
10.1		Stock and Warrant Purchase Agreement for ZAP Power Systems, Inc., dated March 29, 1999 (incorporated by reference to the Registrant’s Registration Statement on Form 10 filed with the SEC on April 30, 1999).
10.2		Warrant for Purchase of Common Stock of ZAP Power Systems, Inc., dated March 29, 1999 (incorporated by reference to the Registrant’s Registration Statement on Form 10 filed with the SEC on April 30, 1999).

33

Exhibit No.		Description
10.3		Investors’ Rights Agreement with ZAP Power Systems, Inc., dated March 29, 1999 (incorporated by reference to the Registrant’s Registration Statement on Form 10 filed with the SEC on April 30, 1999).
10.4		Milestone letter agreement with ZAP Power Systems, Inc., dated March 29, 1999 (incorporated by reference to the Registrant’s Registration Statement on Form 10 filed with the SEC on April 30, 1999).
10.5		Letter agreement re board representation with ZAP Power Systems, Inc., dated March 29, 1999 (incorporated by reference to the Registrant’s Registration Statement on Form 10 filed with the SEC on April 30, 1999).
10.6	#	Management Agreement between the Fund and Managing Shareholders, dated February 9, 1998 (incorporated by reference to the Registrant’s Registration Statement on Form 10 filed with the SEC on April 30, 1999).
10.7	#	Key Employees’ Incentive Plan (incorporated by reference to the Registrant’s Registration Statement on Form 10 filed with the SEC on April 30, 1999).
10.8		Operating Agreement of Ridgewood Near East Holding LLC, dated September 30, 1999 (incorporated by reference to the Annual Report on Form 10-K filed by the Registrant with the SEC on March 1, 2006).
10.9		Form of contracts and agreements between affiliates of CLPE Holdings Ltd. and each of (i) Ridgewood Renewable PowerBank I, LLC, (ii) Ridgewood Renewable PowerBank II, LLC, (iii) Ridgewood Renewable PowerBank III, LLC and (iv) Ridgewood Renewable PowerBank IV, LLC (incorporated by reference to the Annual Report on Form 10-K filed by the Registrant with the SEC on March 1, 2006).
10.10	#	The CLPE Holdings Management Incentive Plan dated August 6, 2003 (incorporated by reference to the Registrant’s Annual Report on Form 10-K filed with the SEC on August 17, 2007).
10.11		Agreement made on January 23, 2007 by and among Ridgewood UK LLC, Arbutus Energy Limited, Ridgewood ROC 2003 LLC, Ridgewood ROC II 2003 LLC, Ridgewood ROC III 2003 LLC, Ridgewood ROC IV 2004 LLC, and MEIF LG Energy Limited (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the SEC on January 29, 2007).
10.12		Sellers Agreement entered into as of January 23, 2007 by and among Ridgewood UK, LLC, and Ridgewood ROC 2003 LLC, Ridgewood ROC II 2003 LLC, Ridgewood ROC III 2003 LLC, Ridgewood ROC IV 2004 LLC, Arbutus Energy Limited, Ridgewood Renewable PowerBank LLC, Ridgewood Renewable PowerBank II LLC, Ridgewood Renewable PowerBank III LLC, Ridgewood Renewable PowerBank IV LLC, Ridgewood Electric Power Trust V, The Ridgewood Power Growth Fund, Ridgewood Renewable Power LLC and Ridgewood Management Corporation (incorporated by reference to Exhibit 10.2 to the Form 8-K filed by the Registrant with the SEC on January 29, 2007).
10.13	#	Service Agreement dated October 1, 2004 between Douglas R. Wilson and CLPE Holdings Limited (incorporated by reference to the Registrant’s Annual Report on Form 10-K filed with the SEC on August 17, 2007).

34

Exhibit No.		Description
10.15	#	Deed of Waiver dated January 22, 2007 between Randall D. Holmes and CLPE Holdings Limited relating to a bonus entitlement under The CLPE Holdings Management Incentive Plan (incorporated by reference to the Registrant’s Annual Report on Form 10-K filed with the SEC on August 17, 2007).
10.16	#	Compromise Agreement dated February 22, 2007 between Douglas R. Wilson and CLPE Holdings Limited (incorporated by reference to the Registrant’s Annual Report on Form 10-K filed with the SEC on August 17, 2007).
14		Code of Ethics, adopted on March 1, 2004 (incorporated by reference to the Annual Report on Form 10-K filed by the Registrant with the SEC on March 1, 2006).
21	*	Subsidiaries of the Registrant.
31.1	*	Certification of Randall D. Holmes, Chief Executive Officer of the Registrant, pursuant to Securities Exchange Act Rule 13a-14(a).
31.2	*	Certification of Jeffrey H. Strasberg, Chief Financial Officer of the Registrant, pursuant to Securities Exchange Act Rule 13a-14(a).
32	*	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, signed by Randall D. Holmes, Chief Executive Officer of the Registrant, and Jeffrey H. Strasberg, Chief Financial Officer of the Registrant.
99.1	*	Financial statements of Ridgewood UK, LLC.

_____________________

* Filed herewith.

# A management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 15(a)(3) of Form 10-K.

(c)           Financial Statement Schedules

See Financial Statements and accompanying notes included in this report.

35

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	THE RIDGEWOOD POWER GROWTH FUND
Date:  December 14, 2007	By:	/s/  Randall D. Holmes
		Randall D. Holmes
		Chief Executive Officer
		(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Capacity	Date
/s/ Randall D. Holmes	Chief Executive Officer	December 14, 2007
Randall D. Holmes	(Principal Executive Officer)
/s/ Jeffrey H. Strasberg	Executive Vice President and Chief Financial Officer	December 14, 2007
Jeffrey H. Strasberg	(Principal Financial and Accounting Officer)
RIDGEWOOD RENEWABLE POWER LLC
(Managing Shareholder)
By: /s/ Randall D. Holmes	Chief Executive Officer of Managing Shareholder	December 14, 2007
Randall D. Holmes

36

THE RIDGEWOOD POWER GROWTH FUND

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets at December 31, 2006 and 2005	F-3
Consolidated Statements of Operations and Comprehensive Loss for the three years ended December 31, 2006	F-4
Consolidated Statements of Changes in Shareholders’ Equity (Deficit) for the three years ended December 31, 2006	F-5
Consolidated Statements of Cash Flows for the three years ended December 31, 2006	F-6
Notes to Consolidated Financial Statements	F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Managing Shareholder and Shareholders

The Ridgewood Power Growth Fund

We have audited the accompanying consolidated balance sheets of The Ridgewood Power Growth Fund (a Delaware trust) and subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2006. These consolidated financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Fund is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Ridgewood Power Growth Fund as of December 31, 2006 and 2005, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Edison, New Jersey

December 14, 2007

F-2

THE RIDGEWOOD POWER GROWTH FUND
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
	December 31,
	2006			2005
ASSETS
Current assets:
Cash and cash equivalents	$	2,588		$	1,906
Accounts receivable, net of allowance		1,237			1,367
Notes receivable - current portion		146			140
Due from affiliates		330			733
Deferred income taxes		-			429
Inventory		630			640
Prepaid expenses and other current assets		478			227
Total current assets		5,409			5,442
Notes receivable - noncurrent portion		1,364			1,500
Investments		50			192
Property, plant and equipment, net		19,189			20,812
Goodwill		227			227
Intangibles, net		4,626			5,897
Other assets		48			5
Total assets	$	30,913		$	34,075
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	571		$	1,311
Accrued expenses		337			230
Long-term debt - current portion		855			1,190
Due to affiliates		684			881
Total current liabilities		2,447			3,612
Long-term debt - noncurrent portion		1,774			2,609
Other liabilities		1,738			1,735
Deferred income taxes, net		857			1,515
Minority interest		6,371			6,855
Total liabilities		13,187			16,326
Commitments and contingencies
Shareholders’ equity (deficit):
Shareholders’ equity (658.1067 Investor Shares issued and
outstanding)		18,090			18,111
Managing Shareholder's accumulated deficit (1 management
share issued and outstanding)		(364	)		(362	)
Total shareholders’ equity		17,726			17,749
Total liabilities and shareholders’ equity	$	30,913		$	34,075

The accompanying notes are an integral part of these consolidated financial statements.

F-3

THE RIDGEWOOD POWER GROWTH FUND
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share data)
	Years Ended December 31,
	2006			2005			2004
Revenues	$	13,518		$	12,281		$	10,585
Cost of revenues		9,000			8,721			8,174
Gross profit		4,518			3,560			2,411
Operating expenses:
General and administrative expenses		3,094			3,484			3,403
Management fee to the Managing Shareholder		1,645			1,645			1,645
Impairment of property, plant and equipment		-			79			75
Impairment of intangibles		-			23			22
Total operating expenses		4,739			5,231			5,145
Loss from operations		(221	)		(1,671	)		(2,734	)
Other income (expense):
Interest income		96			96			20
Interest expense		(345	)		(995	)		(876	)
Equity in loss from RUK		(65	)		(833	)		(699	)
Gain (loss) on sale of ZAP securities		3			(956	)		2,111
Gain on termination of electric power sales contract		-			-			380
Other (expense) income, net		(61	)		573			125
Total other (expense) income, net		(372	)		(2,115	)		1,061
Loss before income tax and minority interest		(593	)		(3,786	)		(1,673	)
Income tax (benefit) expense		(77	)		138			(773	)
Loss before minority interest		(516	)		(3,924	)		(900	)
Minority interest in the (earnings) loss of subsidiaries		(487	)		(35	)		154
Net loss		(1,003	)		(3,959	)		(746	)
Foreign currency translation adjustment		87			483			292
Unrealized gain (loss) on ZAP securities		14			(251	)		111
Comprehensive loss	$	(902	)	$	(3,727	)	$	(343	)
Managing Shareholder - Net  loss	$	(10	)	$	(40	)	$	(7	)
Shareholders - Net loss		(993	)		(3,919	)		(739	)
Net loss per Investor Share		(1,509	)		(5,955	)		(1,123	)

The accompanying notes are an integral part of these consolidated financial statements.

F-4

THE RIDGEWOOD POWER GROWTH FUND
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(in thousands)
				Managing			Total
	Shareholders'			Shareholder			Shareholders'
	Equity			Deficit			Equity
Balance at January 1, 2004	$	22,356		$	(340	)	$	22,016
Net loss		(739	)		(7	)		(746	)
Foreign currency translation adjustment		288			4			292
Unrealized gain on investment in ZAP securities		110			1			111
Distribution of ZAP shares		(2,079	)		-			(2,079	)
Cash distributions		(1,316	)		(13	)		(1,329	)
Capital contribution		999			10			1,009
Balance at December 31, 2004		19,619			(345	)		19,274
Net loss		(3,919	)		(40	)		(3,959	)
Foreign currency translation adjustment		479			4			483
Unrealized loss on investment in ZAP securities		(248	)		(3	)		(251	)
Cash distributions		(1,316	)		(13	)		(1,329	)
Capital contribution		3,496			35			3,531
Balance at December 31, 2005		18,111			(362	)		17,749
Net loss		(993	)		(10	)		(1,003	)
Foreign currency translation adjustment		87			-			87
Unrealized gain on investment in ZAP securities		14			-			14
Cash distributions		(1,645	)		(17	)		(1,662	)
Capital contribution		2,516			25			2,541
Balance at December 31, 2006	$	18,090		$	(364	)	$	17,726

The accompanying notes are an integral part of these consolidated financial statements.

F-5

THE RIDGEWOOD POWER GROWTH FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
	Years Ended December 31,
	2006			2005			2004
Cash flows from operating activities:
Net loss	$	(1,003	)	$	(3,959	)	$	(746	)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization		3,609			3,770			3,731
Provision for bad debts		22			152			156
Management fees forgiveness		2,541			1,907			1,009
Impairment of property, plant and equipment, net		-			79			75
Impairment of intangibles		-			23			22
Equity interest in loss of RUK		65			833			699
Gain on sale of ZAP securities		(3	)		956			(2,111	)
Gain on termination of electric power sales contracts		-			-			(380	)
Loss (gain) on sale of equipment		37			(4	)		(6	)
Gain on sale of US Hydro note, net		-			-			(175	)
Deferred income taxes, net		(229	)		(168	)		(949	)
Minority interest in loss of subsidiaries		487			35			(154	)
Cash distributions from RUK		-			1,065			1,043
Changes in operating assets and liabilities
Accounts receivable		113			(447	)		(126	)
Inventory		13			(41	)		(76	)
Prepaid expenses and other current assets		(248	)		353			(370	)
Other assets		(42	)		55			(59	)
Accounts payable		(744	)		748			(12	)
Accrued expenses		106			(403	)		149
Due to/from affiliates, net		322			368			1,615
Other liabilities		4			928			84
Total adjustments		6,053			10,209			4,165
Net cash provided by operating activities		5,050			6,250			3,419
Cash flows from investing activities:
Capital expenditures		(708	)		(2,038	)		(372	)
Proceeds from sale of equipment		32			82			109
Collections from notes receivable		131			134			464
Proceeds from sale of notes receivable, net		-			-			3,975
Investment in ZAP securities		-			-			(2,814	)
Proceeds from sale of ZAP securities		45			806			1,404
Net cash (used in) provided by investing activities		(500	)		(1,016	)		2,766
Cash flows from financing activities:
Repayments under long-term debt		(1,177	)		(1,137	)		(4,892	)
Cash distributions to shareholders		(1,662	)		(1,330	)		(1,330	)
Cash distributions to minority interest		(1,037	)		(1,674	)		-
Net cash used in financing activities		(3,876	)		(4,141	)		(6,222	)
Effect of exchange rate on cash and cash equivalents		8			44			5
Net increase (decrease) in cash and cash equivalents		682			1,137			(32	)
Cash and cash equivalents, beginning of year		1,906			769			801
Cash and cash equivalents, end of year	$	2,588		$	1,906		$	769
Supplemental disclosure of cash flow information:
Interest paid	$	279		$	448		$	595
Income tax paid		252			271			102
Supplemental disclosure of noncash investing activities:
Distribution of ZAP securities to shareholders	$	-		$	-		$	2,079

The accompanying notes are an integral part of these consolidated financial statements.

F-6

The Ridgewood Power Growth Fund

Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)

1.  DESCRIPTION OF BUSINESS

The Ridgewood Power Growth Fund (the “Fund”) was formed as a Delaware trust in February 1997. The Fund began offering shares on February 9, 1998 and concluded its offering in April 2000. The objective of the Fund is to provide benefits to its shareholders through a combination of distributions of operating cash flow and capital appreciation. The Managing Shareholders of the Fund are Ridgewood Renewable Power LLC (“RRP”) and Ridgewood Power VI LLC (“Power VI”) (collectively, the “Managing Shareholder”). Effective January 1, 2001, Power VI assigned and delegated all of its rights and responsibilities to RRP and since that time has been an entity with only nominal activity.

The Fund has been organized to invest primarily in independent power generation facilities, water desalinization plants and other infrastructure projects both in the US and abroad. The projects to be owned by the Fund may have characteristics that qualify the projects for government incentives. Among the possible incentives are ancillary revenue opportunities related to the fuel used by the power plants or tax incentives provided to projects in remote locations.

The Fund’s accompanying consolidated financial statements include the financial statements of Ridgewood US Hydro Corporation (“US Hydro”) and Ridgewood Near East Holding LLC (“NEH”). The Fund’s consolidated financial statements also include the Fund’s 30.4% interest in Ridgewood UK (“RUK”) which is accounted for under the equity method of accounting as the Fund has the ability to exercise significant influence but does not control the operating and financial policies of RUK.

The Fund owns a 70.8% interest in US Hydro and the remaining 29.2% minority interest is owned by Ridgewood Electric Power Trust V (“Trust V”). In addition, the Fund owns a 68.1% interest in NEH and the remaining minority interest is owned by Trust V (14.1%) and Ridgewood Egypt Fund (“Egypt Fund”) (17.8%). The interests of Trust V and Egypt Fund are presented as minority interest in the consolidated balance sheets and statements of operations.

The Managing Shareholder performs (or arranges for the performance of) the operation and maintenance of the projects owned by the Fund and the management and administrative services required for Fund operations. Among other services, the Managing Shareholder administers the accounts and handles relations with the shareholders, including tax and other financial information. The Managing Shareholder also provides the Fund with office space, equipment and facilities and other services necessary for its operation.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a)  Principles of Consolidation

The consolidated financial statements include the accounts of the Fund and its majority-owned subsidiaries. Minority interests of majority-owned subsidiaries are calculated based upon the respective minority interest ownership percentages. All material intercompany transactions have been eliminated in consolidation.

The Fund uses the equity method of accounting for its investments in affiliates which are 50% or less owned as the Fund has the ability to exercise significant influence over the operating and financial policies of the affiliates but does not control the affiliate. The Fund’s share of the earnings or losses of the affiliates is included in the consolidated financial statements.

b)   Use of Estimates

The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires the Fund to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Fund evaluates its estimates, including bad debts, notes receivable, investments, recoverable value of property, plant and equipment, intangibles and recordable liabilities for litigation and other contingencies. The Fund bases its estimates on historical experience, current and expected conditions and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

F-7

The Ridgewood Power Growth Fund

Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)

c)    Reclassifications

Certain items in previously issued financial statements have been reclassified for comparative purposes. This had no effect on net loss

d)    Revenue Recognition

Revenues generated from the sale of electric power and fresh water are recorded in the month of delivery, based on the estimated volumes sold to customers. Power generation revenue adjustments are made to reflect actual volumes delivered when the actual volumetric information subsequently becomes available. Billings to customers for power generation generally occurs during the month following delivery. Final billings do not vary significantly from estimates.

e)    Cash and Cash Equivalents

The Fund considers all highly liquid investments with maturities, when purchased, of three months or less to be cash and cash equivalents. Cash and cash equivalents consist of commercial paper and funds deposited in bank accounts. As of December 31, 2006 and 2005, the Fund had cash deposits held in foreign banks of $1,236 and $893, respectively, which was in excess of the Egyptian insurance limits. Cash deposits held in US banks exceeded insured limits by $1,152 and $712 as of December 31, 2006 and 2005, respectively.

f)   Accounts Receivable

Accounts receivable are recorded at invoice price in the period the related revenues are earned, and do not bear interest. The Fund maintains an allowance for doubtful accounts for estimated uncollectible accounts receivable. The allowance is based on the Fund’s assessment of aged accounts, historical experience, and other currently available evidence of the collectability and the aging of accounts receivable. Account balances are charged off against the allowance when the Fund believes it is probable that the receivable will not be recovered.

g)    Inventory

Inventory primarily consists of spare parts and materials used in the Fund’s operation. Inventories are stated at the lower of cost and net realizable value. An allowance is established for slow moving items on the basis of management’s review and assessment of inventory movements.

h)    Investment in Securities

At certain times, the Fund has held as assets, marketable equity securities and the Fund classified these marketable equity securities as available-for-sale. These available-for-sale securities are carried at fair value with unrealized gains and losses, net of tax (if any), as part of comprehensive loss. Realized gains and losses and such declines in value judged to be other-than-temporary are included in other income.

i)    Property, Plant and Equipment

Property, plant and equipment, consisting of land, hydro-electric generation facilities (“HEGFs”), water desalinization facilities and office equipment are stated at cost less accumulated depreciation. Renewals and betterments that increase the useful lives of the assets are capitalized. Repair and maintenance expenditures are expensed as incurred. Upon retirement or disposal of assets, the cost and related accumulated depreciation are removed from the consolidated balance sheets. The difference, if any, between the net asset value and any proceeds from such retirement or disposal is recorded as a gain or loss in the statement of operations.

F-8

The Ridgewood Power Growth Fund

Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)

Depreciation is recorded using the straight-line method over the useful lives of the assets.

HEGFs	30 years
Water desalinization facilities	5-10 years
Office equipment	5 years

j)    Impairment of Goodwill, Intangibles and Long-Lived Assets

The Fund evaluates intangible assets and long-lived assets, such as property, plant and equipment, when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. The determination of whether impairment has occurred is made by comparing the carrying value of an asset to the estimated undiscounted cash flows attributable to that asset. If impairment has occurred, the impairment loss recognized is the amount by which the carrying value exceeds the estimated fair value of the asset, which is based on the estimated future cash flows discounted at the estimated cost of capital. The analysis requires estimates of the amount and timing of projected cash flows and, where applicable, judgments associated with, among other factors, the appropriate discount rate. Such estimates are critical in determining whether any impairment charge should be recorded and the amount of such charge if an impairment loss is deemed to be necessary.

The Fund evaluates goodwill, and intangible assets with indefinite useful lives, under SFAS No. 142, “Goodwill and Other Intangible Assets”. Under SFAS No. 142, goodwill and intangible assets with indefinite lives are subject to annual impairment tests through a comparison of fair value to carrying value. The two-step approach to assess a reporting unit’s goodwill impairment requires that the Fund first compare the estimated fair value of a reporting unit, which has been assigned goodwill, to the carrying amount of the unit’s assets and liabilities, including its goodwill. If the fair value of the reporting unit is below its carrying amount, then the second step of the impairment test is performed, in which the current fair value of the unit’s assets and liabilities is used to determine the current implied fair value of the unit’s goodwill.

k)    Income Taxes

The Fund’s Egyptian subsidiaries have a ten year income tax holiday that expires on December 31, 2010. Accordingly, no provision has been made for Egyptian income taxes in the accompanying consolidated financial statements.

US Hydro, for federal income tax purposes, files on a consolidated basis using the accrual method of accounting on a calendar year basis. For state income tax purposes, US Hydro files on an individual entity basis. US Hydro uses the liability method of accounting for income taxes. Deferred income taxes reflects, where required, the net tax effect of temporary differences arising between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for tax purposes.

Except for US Hydro, no provision is made for US income taxes in the accompanying consolidated financial statements as the income or losses of the Fund are passed through and included in the income tax returns of the individual shareholders of the Fund.

l)    Foreign Currency Translation

The Egyptian Pound and British Pound Sterling are the functional currencies of the Fund’s foreign operations. The consolidated financial statements of the Fund’s non-United States subsidiaries are translated into United States dollars. Assets and liabilities are translated into US dollars using the current exchange rates in effect at the balance sheet date, while revenues and expenses are translated using the average exchange rates during the applicable reporting period. The cumulative foreign currency translation adjustment is a component of comprehensive loss.

F-9

The Ridgewood Power Growth Fund

Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)

m)    Fair Value of Financial Instruments

At December 31, 2006 and 2005, the carrying value of the Fund’s cash and cash equivalents, accounts receivable, notes receivable, and accounts payable and accrued expenses approximates their fair value. The fair value of the long-term debt, calculated using current rates for loans with similar maturities, does not differ materially from its carrying value.

n)     Significant Customers

During 2006, the Fund’s one largest customer accounted for 22.1% of total revenue. During 2005 and 2004, the Fund’s two largest customers accounted for 31.7% and 36.9% of total revenue, respectively.

o)    Recent Accounting Pronouncements

FIN 48 

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”) an interpretation of SFAS No. 109, Accounting for Income Taxes. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS 109 and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 will be effective for the Fund beginning January 1, 2007. The Fund does not believe that the adoption of FIN 48 will have a material impact on its consolidated financial statements.

SFAS 157

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”), to define fair value, establish a framework for measuring fair value in accordance with generally accepted accounting principles (GAAP) and expand disclosures about fair value measurements. SFAS 157 requires quantitative disclosures using a tabular format in all periods (interim and annual) and qualitative disclosures about the valuation techniques used to measure fair value in all annual periods. SFAS 157 will be effective for the Fund beginning January 1, 2008. The Fund is currently evaluating the impact of adopting SFAS 157.

SAB 108

In September 2006, the SEC issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). SAB 108 requires analysis of misstatements using both an income statement (rollover) approach and a balance sheet (iron curtain) approach in assessing materiality and provides for a one-time cumulative effect transition adjustment. SAB 108 is effective for fiscal years ending on or after November 15, 2006. The adoption of this standard did not have a material impact on the Fund’s consolidated financial statements.

SFAS 159

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”). SFAS 159 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS 159 will be effective for the Fund on January 1, 2008. The Fund is currently evaluating the impact of adopting SFAS 159 on its consolidated financial statements.

F-10

The Ridgewood Power Growth Fund

Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)

3.    ACCOUNTS RECEIVABLE

Accounts receivable at December 31, 2006 and 2005 is as follows:

	2006			2005
Accounts receivable	$	1,364		$	1,704
Less: allowance for doubtful accounts		(127	)		(337	)
	$	1,237		$	1,367

The Fund records an allowance to account for potentially uncollectible accounts receivable. The allowance is determined based on management’s knowledge of the business, specific customers, review of aged accounts and a specific identification of accounts where collection is at risk. The following details the activity in the Fund’s allowance for doubtful accounts for the years ended December 31, 2006, 2005 and 2004:

		2006			2005			2004
Balance at beginning of  year	$	337		$	378		$	193
Additions charged to bad debt provision (1)		22			152			156
Deductions, net of recoveries (2)		(232	)		(193	)		29
Balance, end of year	$	127		$	337		$	378

(1) Bad debt provision relates to estimated losses due to collectability issues, which is included in general and administrative expenses in the statement of operations.

(2) Deductions, net of recoveries, primarily relate to receivable write-offs, but also include recoveries of previously written off receivables.

4.    NOTES RECEIVABLE

Notes receivable at December 31, 2006 and 2005 is as follows:

	2006		2005
Blackstone	$	1,415	$	1,533
Other		95		107
Total notes receivable		1,510		1,640
Less: current portion		146		140
Notes receivable– long-term portion	$	1,364	$	1,500

Blackstone

In the fourth quarter of 2004, the US Hydro’s Blackstone Project (“Blackstone”) and New England Power (“NEP”) agreed to terminate their 1989 power purchase agreement. As per the terms of the Termination and Release Agreement, Blackstone now has the right to sell its production of electricity to any party it chooses. In addition, beginning January 2005, NEP began paying Blackstone $16 per month through February 2010. NEP has also agreed to make a lump-sum payment of $1,000 to Blackstone on February 15, 2010. These payments are being made to compensate Blackstone for the cancellation of the fifteen years remaining on the original agreement.

As a result of the new agreement, the Fund recorded a net gain of $380 in 2004, reflecting $1,642 in present value of payments to be received, less an impairment of electric power sales contracts of $1,262 to write-down the carrying value of the pre-existing power purchase agreement to zero. The Fund recorded interest income on notes receivable of $74 and $82 for the years ended December 31, 2006 and 2005, respectively, which is included in interest income in the consolidated statements of operations.

F-11

The Ridgewood Power Growth Fund

Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)

5.    IMPAIRMENT OF GOODWILL, INTANGIBLES AND LONG-LIVED ASSETS

US Hydro performed an annual review of goodwill in accordance with SFAS No. 142 and determined that no goodwill impairment was required for the years ended December 31, 2006, 2005 and 2004. For the year ended December 31, 2006, there were no triggering events and US Hydro did not perform an impairment assessment for property, plant and equipment and amortized intangibles. US Hydro performed an impairment test for each of the years ended December 31, 2005 and 2004 for property, plant and equipment and amortized intangibles and noted a decrease in the estimated future undiscounted cash flow of certain US Hydro Projects. Based on the results of the tests, the Fund recorded impairment expense of $79 and $75 for property, plant, and equipment for the years ended December 31, 2005 and 2004, respectively. In addition, the Fund recorded impairment expenses of $23 and $22 for amortized intangibles for the years ended December 31, 2005 and 2004, respectively.

6.    PROPERTY, PLANT AND EQUIPMENT

At December 31, 2006 and 2005, property, plant and equipment at cost and accumulated depreciation are as follows:

	2006			2005
Land	$	186		$	186
HEGF		1,110			1,082
Water desalinization facilities		28,516			27,545
Office equipment		518			754
		30,330			29,567
Less: accumulated depreciation		(11,141	)		(8,755	)
	$	19,189		$	20,812

For the years ended December 31, 2006, 2005 and 2004, depreciation expense was $2,337, $2,206 and $2,057, respectively, which is included in cost of revenues.

 7. GOODWILL AND INTANGIBLE ASSETS

At December 31, 2006 and 2005, the gross and net amounts of intangible assets and accumulated amortization are as follows:

	2006			2005
Electric power sales contracts - gross	$	10,754		$	10,754
Water rights - gross		321			321
		11,075			11,075
Less: accumulated amortization		(6,449	)		(5,178	)
Intangibles, net	$	4,626		$	5,897
Goodwill	$	227		$	227

Electric power sales contracts are being amortized over their duration on a straight-line basis. As of December 31, 2006, the weighted average remaining life of electric power sales contracts was 5 years with the shortest remaining duration being 1 year and the longest remaining duration being 18 years. For the years ended December 31, 2006, 2005 and 2004, amortization expense was $1,272, $1,564 and $1,674, respectively, which is included in cost of revenues.

F-12

The Ridgewood Power Growth Fund

Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)

The Fund expects to record amortization expense during the next five years as follows:
 

2007	$	1,177
2008		1,124
2009		962
2010		962
2011		23

8.     ACCUMULATED OTHER COMPREHENSIVE LOSS

The Fund’s other comprehensive loss, which is reported in the accompanying consolidated statement of operations consists of the net loss, foreign currency translation adjustments and unrealized gains and losses on ZAP securities.

The cumulative foreign currency translation loss was $7,685, $7,772 and $8,255 and cumulative unrealized (loss) gain on ZAP securities was ($1), ($15) and $236 as of December 31, 2006, 2005 and 2004, respectively.

9.   INVESTMENTS

The Fund’s investments include a 30.4% interest in RUK, which is accounted for under the equity method, and an investment in ZAP Inc. The investment in ZAP is accounted for as available-for-sale securities.

United Kingdom Landfill Gas Projects

On May 26, 1999, RUK was formed as a New Jersey limited liability company and was re-domiciled to Delaware on December 24, 2002. The business of RUK is the extraction of methane-containing gas from landfill sites in England, Scotland and Wales and the use of that gas as fuel to generate and sell electricity.

On June 30, 1999, Trust V contributed $16.7 million to RUK; and RUK’s wholly owned subsidiary, Ridgewood UK Ltd. (“UK Ltd.”), a limited company registered in England and Wales, purchased from CLP Envirogas, Ltd. (formerly Combined Landfill Projects, Ltd.) six landfill gas power plants located in the United Kingdom. At the time of the purchase, UK Ltd. and CLP Envirogas, Ltd. also agreed to the terms on which UK Ltd. would purchase additional projects then under development by CLP Envirogas, Ltd. should such projects be successfully developed.

In 2001, the Fund contributed $5.8 million to RUK in return for an equity share of 30.4% of RUK. During the three-month period ended March 31, 2001, UK Ltd. purchased an additional four projects. On October 16, 2001, UK Ltd., through the issuance of approximately 24% of its shares and the payment of $2,000 cash, acquired certain of the assets and liabilities of CLP Services, Ltd., CLP Development, Ltd and CLP Envirogas, Ltd. (collectively the "Management and Development Companies") and the equity and debt of certain landfill gas projects (the “UK Merger”). As a result of the UK Merger, UK Ltd. acquired the ability to develop and operate landfill gas-fueled electricity generating facilities in the UK as well as the development rights to a number of such projects. The seller in the UK Merger was Arbutus Energy Ltd. (Jersey) (“Arbutus”) which became the minority interest holder of UK Ltd. following the UK Merger. UK Ltd. was renamed CLPE Holdings Ltd. (“CLP”) in 2001.

In the UK Merger, UK Ltd. received plant and equipment valued at $4,200, a 50% equity interest in a landfill gas electricity generation business based in Spain valued at $744, cash of $454 and other assets of $1,000. UK Ltd. also assumed liabilities of $3,000. UK Ltd. assigned a value of $6,781 to the electricity sales contracts and other intangible assets acquired which are being amortized over the remaining life of the underlying electricity sales contracts.

As part of the UK Merger, RUK also acquired a 50% ownership in each of CLP Organogas SL located in Seville, Spain and CLP Envirogas, SL, a management and development services company also located in Seville, Spain (collectively, the “Spanish Business”). Effective January 1, 2003 RUK transferred its interest in the Spanish Business to Arbutus in return for a portion of the minority interest in CLP then held by Arbutus. As a result of the transaction, RUK increased its ownership in CLP from 76% to 88%.

F-13

The Ridgewood Power Growth Fund

Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)

Beginning in 2002, RUK began to develop sites capable of qualifying for the UK’s Renewable Obligation incentive program (“RO”). The RO program requires electricity suppliers serving end-users in the UK to obtain renewable obligation certificates (“ROCs”) to demonstrate that a minimum portion of their electricity supplied was generated by producers meeting the qualifications of the RO. In order to fund the development and construction of these projects, RUK entered into a series of agreements with affiliated entities that agreed to provide financing. The affiliated entities providing this funding, Ridgewood Renewable PowerBank LLC, Ridgewood Renewable PowerBank II LLC, Ridgewood Renewable PowerBank III LLC and Ridgewood Renewable PowerBank IV LLC (collectively the “PowerBank Funds”), are managed by RRP, which is also the managing member of RUK, Trust V and the Fund. Terms of the agreements between RUK and each of the PowerBank Funds are substantially the same and each provides for the PowerBank Funds to make construction advances to RUK in exchange for interest during construction and streams of fixed and variable lease payments once the financed projects go into operation (the “PowerBank Arrangements”). At December 31, 2004 and 2003, RUK had received construction advances of $12,100 and $41,474, respectively, from the PowerBank Funds for the purpose of developing additional projects.

Summarized balance sheet data for RUK at December 31, 2006 and 2005 is as follows:

	2006			2005
Current assets	$	25,631		$	18,632
Non-current assets		74,893			65,758
Total assets	$	100,524		$	84,390
Current liabilities	$	30,373		$	15,449
Non-current liabilities		71,220			68,204
Minority interest		-			362
Members’ (deficit) equity		(1,069	)		375
Liabilities and members’ equity	$	100,524		$	84,390
Fund share of RUK equity	$	-		$	114

Summarized statements of operations data for RUK for the years ended December 31, 2006, 2005 and 2004 is as follows:

	2006			2005			2004
Revenues	$	44,751		$	32,359		$	22,878
Cost of revenues		36,872			29,326			20,295
Other expenses		9,162			5,774			4,880
Total expenses		46,034			35,100			25,175
Net loss	$	(1,283	)	$	(2,741	)	$	(2,297	)
Fund share of losses in RUK	$	(65	)	$	(833	)	$	(699	)

ZAP

In 1999, the Fund invested $2,100 in the shares of ZAP (formerly ZAPWorld.COM, Inc. and ZAP Power Systems, Inc.). As part of the 678,808 share purchase, the Fund also received a warrant to purchase 571,249 shares of ZAP's common stock at a price between $3.50 and $4.50 per share. In June 1999, the Fund exercised the warrant and purchased 571,249 additional shares for $2,000. ZAP designs, assembles, manufactures and distributes personal electric vehicles. ZAP's common stock is quoted on the OTC Bulletin Board under the symbol "ZAAP.OB". In June 2001, the Fund agreed to sell to ZAP, and certain of its shareholders, the Fund's interest in ZAP in return for a $1,500 interest bearing promissory note (the "Ridgewood ZAP Note").

F-14

The Ridgewood Power Growth Fund

Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)

On March 1, 2002, ZAP filed a voluntary petition for reorganization under Chapter 11 of the US Bankruptcy Code with the US Bankruptcy Court in Santa Rosa, California. On or about July 1, 2002, the Second Amended Plan for Reorganization became effective and the Ridgewood ZAP Note was converted into 994,500 shares of ZAP common stock as reorganized (the "Reorganized ZAP Shares"). When issued, the Reorganized ZAP Shares were subject to restrictions on sales or transfers. As part of the reorganization, Ridgewood ZAP also received warrants to purchase ZAP shares of which a portion was exercised as reflected below:

Warrant Series	Maximum purchase		Initial expiration date	Warrant exercise shares		Exercise Price Per Share
B		994,500	6/30/2003		994,500	$	1.07
C		994,500	12/31/2004		538,462	$	3.25
D		994,500	6/30/2007		-	$	-

In September 2003, transfer restrictions were lifted on the first set of the Reorganized ZAP Shares, at which time Ridgewood ZAP sold approximately 118,000 of those shares to a private individual for $1.00 per share. During the second and third quarters of 2004, Ridgewood ZAP distributed approximately 772,300 shares of the Reorganized ZAP Shares with a market value of $2,100 to the Fund's shareholders and recorded a gain of $1,800. The transfer restrictions on approximately 104,200 Reorganized ZAP Shares were removed in 2005 and the shares were sold in the first quarter of 2006 for an average price of $0.54 per share.

The expiration date of the Series B Warrants was extended by ZAP and in May 2004, Ridgewood ZAP exercised its rights under the Series B warrants to purchase approximately 995,000 shares at $1.07 per share. The Fund sold the shares acquired through exercise of the Series B Warrants in a series of transactions between July 2004 and November 2004 at an average selling price (before transaction costs) of $1.50 per share. Ridgewood ZAP exercised a portion of the Series C warrants in December 2004, with the purchase of approximately 538,000 shares at $3.25 per share. The Fund sold the shares acquired through the exercise of the Series C Warrants in a series of transactions in 2005 at an average price (before transaction costs) of $1.36 per share. The remaining 457,000 of Series C warrants and 994,500 of Series D warrants outstanding at December 31, 2006 expired in June 2007.

The amount of net unrealized gain (loss) on available-for-sale securities included in other comprehensive loss for the years ended December 31, 2006, 2005 and 2004 was $14, ($251) and $111, respectively.  Other comprehensive loss reclassification adjustments for realized gains included in net income on the sale of available-for-sale securities for the years ended December 31, 2006, 2005 and 2004 was $14, $0 and $126, respectively.

In the fourth quarter of 2006, as a result of the losses recognized by the Fund from the disposition of ZAP shares, the Managing Shareholder waived a receivable from the Fund of $300 and contributed $315 in cash to the Fund.

10.  LONG-TERM DEBT

Following is a summary of long-term debt at December 31, 2006 and 2005:

	2006		2005
Total long-term debt	$	2,629	$	3,799
- Sinai		2,061		2,259
- REFI		136		676
- US Hydro		432		864

F-15

The Ridgewood Power Growth Fund

Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)

	2006		2005
Current maturity	$	855	$	1,190
- Sinai		287		217
- REFI		136		540
- US Hydro		432		433
Long-term portion	$	1,774	$	2,609
- Sinai		1,774		2,042
- REFI		-		136
- US Hydro		-		431

The Sinai Environmental Services S.A.E. (“Sinai”, a consolidated subsidiary of NEH) loan which is secured by a part of its assets bears interest at 11.0% per annum and is non-recourse to the Fund. A provision of the loan restricts Sinai from paying dividends to its shareholders or obtaining credit from other lenders. The loan was in default prior to the acquisition of Sinai by NEH and remained in default through the second quarter of 2005. In the second quarter of 2005, the lender and Sinai entered into a revised agreement that included in its terms a modified payment schedule. The revised terms provide for increasing monthly payments over six years starting at 172,000 Egyptian pounds and increasing to 357,000 Egyptian pounds (or approximately $29 to $61 at loan inception exchange rates), including interest, and having a final maturity date of May 1, 2011. As part of the 2005 settlement, the lender agreed to suspend, from the time of the settlement, the obligation of Sinai to repay 1 million Egyptian pounds (approximately $176 at the then settlement exchange rate) of the amount outstanding. If Sinai makes all the scheduled payments in accordance with the modified payment schedule, the suspension will become permanent and the 1 million Egyptian pounds forgiven. In case Sinai fails to make all scheduled payments on time, the suspension will be revoked and the total of the then remaining principal payments required will be increased by 1 million Egyptian pounds. As of the filling date, Sinai has been in compliance with the revised agreement since the inception of the agreement.

During the third quarter of 2002, Ridgewood Egypt For Infrastructure, LLC (Egypt) (“REFI”) executed a term loan agreement with its principal bank which is secured by certain plant assets of REFI. The bank provided a loan of 12,500,000 Egyptian pounds (approximately $2,688) that is being repaid in quarterly principal installments of 781,000 Egyptian pounds (approximately $168) starting June 2003 through final maturity at March 31, 2007. Outstanding borrowings bear interest at the bank’s medium term loan rate plus 0.5% (12.5% at December 31, 2006).

Five of US Hydro’ hydro-electric power plants are financed by a term loan containing rights for the borrower to re-set interest rates from time-to-time. The effective interest rate was 7.49% at December 31, 2006. This credit facility is collateralized by five hydroelectric plants and notes receivable owned by US Hydro. At December 31, 2006, the carrying value of hydroelectric plants and notes receivable was higher than the face value of the loan. As of the filing date, US Hydro is in compliance with all material provisions of the term loan. The Fund is required to pay an additional amount equal to 10% of the cash flow, as defined, of the financed projects plus 10% of any net proceeds, as defined, from the sale or refinancing of any of the financed projects. US Hydro is also required to make an additional annual payment of 50% of excess cash flow, as defined. No additional payments were required for the year ended December 31, 2006.

Scheduled principal repayments of the Fund’s long-term debt at December 31, 2006 are as follows:

2007	$	855
2008		374
2009		468
2010		627
2011		305
Total	$	2,629

F-16

The Ridgewood Power Growth Fund

Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)

11.  COMMITMENTS AND CONTINGENCIES

The facility at Union Falls has leased the site under a non-cancelable long-term lease which terminates in 2024. Rent expense on a straight-line basis at this site was $295 for each of the years ended December 31, 2006, 2005 and 2004. The facility of US Hydro at the Box Canyon dam in Siskiyou County, California is owned subject to a ground lease which US Hydro treats for financial reporting purposes as an operating lease. The lease terminates on December 31, 2010, at which time US Hydro is obligated to transfer the facility at the site to the Siskiyou County Flood Control and Water Conservation District. The lease payment for Box Canyon was $500 for each of the years ended December 31, 2006, 2005 and 2004, respectively.

Minimum lease payments at December 31, 2006 are as follows:

2007	$	700
2008		710
2009		721
2010		732
2011		243
Thereafter		4,521
Total	$	7,627

The Fund has certain other leases that require payments based upon a percentage of the annual gross revenue of the respective hydroelectric plant less any taxes or other fees paid to the lessors. There are no minimum rents required and these commitments are not included in the amounts presented above. Rent expense for these hydroelectric plants for the years ended December 31, 2006, 2005 and 2004 was $11, $10 and $6, respectively.

In accordance with Egyptian company law, the Egypt projects are required to record 5% of annual net profits to a statutory reserve which will cease when the reserve reaches 50% of issued capital. The statutory reserve is not eligible for distribution to members. The statutory reserve amounted to $223 and $97 at December 31, 2006 and 2005, respectively.

On December 31, 2005, an investor in the Fund and funds affiliated with the Fund filed an Amended Complaint and Jury Demand in Massachusetts Superior Court against, affiliated entities of the Fund including the Managing Shareholder and the Chairman of the Fund. The plaintiff alleges violations of the Massachusetts Securities Act, as well as breach of fiduciary duty, fraud, breach of contract, negligent misrepresentation and unjust enrichment all related to a set of alleged facts and allegations regarding the sale of securities of the Fund and funds affiliated with the Fund sold in private offerings and the operation of those funds and the Fund subsequent to the sale. The plaintiff is seeking damages of $900 with interest and other damages to be determined at trial. In February 2007, the plaintiff instituted a second lawsuit in Massachusetts state court against the Fund and affiliated entities alleging that the allocation of the proceeds from the sale of RUK assets was unfair and sought an injunction prohibiting the distribution to shareholders of such proceeds. The court denied  the injunction, and the matter is currently pending in Massachusetts state court and no trial date has been set. All defendants deny the allegations and intend to defend both actions vigorously.

On August 16, 2006, the Managing Shareholder of the Fund and affiliates of the Fund, filed lawsuits against the former independent registered public accounting firm for the Fund, Perelson Weiner, LLP (“Perelson Weiner”), in New Jersey Superior Court. The suits alleged professional malpractice and breach of contract in connection with audit and accounting services performed by Perelson Weiner. On October 26, 2006, Perelson Weiner filed a counterclaim against the Fund, and its affiliates alleging breach of contract due to unpaid invoices. Discovery is ongoing and no trial date has been set. The costs and expenses of the litigation are being paid for by the Managing Shareholder and affiliated management companies and not the underlying investment funds, including the Fund.

F-17

The Ridgewood Power Growth Fund

Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)

The Fund is subject to legal proceedings involving ordinary and routine claims related to its business. The ultimate legal and financial ability with respect to such matters cannot be estimated with certainty and requires the use of estimates in recording liabilities for potential litigation settlements. Estimates for losses from litigation are disclosed if considered reasonably possible and accrued if considered probable after consultation with outside counsel. If estimates of potential losses increase or the related facts and circumstances change in the future, the Fund may be required to record additional litigation expense.

12.  OTHER LIABILITIES

The Fund’s Egypt projects have an arrangement with a consultant that provides marketing, construction and management services in Egypt. The consultant receives, in total, a development fee of 3% of the capital cost of the completed projects, an annual management fee of the greater of 0.3% of the capital cost of completed projects and $180, plus reimbursement of out-of-pocket costs incurred in performing its duties under the agreement. The consultant may also receive incentive payments based on the performance of REFI. The agreement has a term of one year and is automatically renewed annually. The agreement may be terminated by either party upon written notice.

NEH had additional consulting arrangements with two individuals for services related to its investment in Egypt. In both cases, NEH has reached agreements with the individuals settling the obligations of the parties with respect to the consulting agreements by agreeing to terminate the arrangements in exchange for a series of payments. No future services are to be provided by the individuals involved.

In the case of the first settlement, on November 21, 2003, NEH agreed to make a single payment to the party of $281, and to make monthly installment payments of $8, until June 1, 2013. NEH had a liability of $429 at December 31, 2006 to reflect this obligation.

In the case of the second settlement, on April 7, 2005, NEH agreed with the party to make quarterly payments of $30 for so long as the Egypt projects remain operational. In the event that the Egypt projects are sold, an amount equal to the present value of the subsequent ten-years of payments would be made in settlement of the remaining obligation. NEH had a liability of $876 at December 31, 2006 to reflect this obligation.

Schedule of future discounted principal payments related to the settlements as of December 31, 2006 are as follows:

2007	$	83
2008		92
2009		101
2010		112
2011		123
Thereafter		794
Total	$	1,305

13.  INCOME TAXES

The components of loss before provision for income taxes for the years ended December 31, 2006, 2005 and 2004 are as follows:

	2006			2005			2004
United States	$	(1,226	)	$	(2,311	)	$	1,346
Foreign		146			(1,510	)		(2,865	)
	$	(1,080	)	$	(3,821	)	$	(1,519	)

The foreign component includes income of $211 from NEH for the year ended December 31, 2006 and losses from NEH of $677 and $2,166 for the years ended December 31, 2005 and 2004, respectively, that is subject to an Egyptian tax holiday. It also includes foreign losses of $65, $833 and $699, respectively, from RUK which is reported net of tax effect consistent with the equity method of accounting.

F-18

The Ridgewood Power Growth Fund

Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)

The provision for income taxes for the years ended December 31, 2006, 2005 and 2004 consists of:

	2006			2005			2004
Current
State	$	152		$	305		$	176
Deferred
Federal		(159	)		(85	)		(882	)
State		(70	)		(82	)		(67	)
Income tax (expense) benefit	$	(77	)	$	138		$	(773	)

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Components of the Fund’s deferred income tax assets and liabilities at December 31, 2006 and 2005 are as follows:

	2006			2005
Deferred tax asset
NOL carryforward - noncurrent	$	1,578		$	1,319
Notes receivable - current		-			429
		1,578			1,748
Less: valuation allowance		(406	)		(336	)
Total deferred tax asset		1,172			1,412
Deferred tax liabilities
Amortization and depreciation - noncurrent		(2,029	)		(2,498	)
Net deferred tax liabilities	$	(857	)	$	(1,086	)

The Fund’s effective tax rate differs from the statutory federal income tax rate for the years ended December 31, 2006, 2005 and 2004 as follows:

	2006		2005		2004
US federal income taxes at the statutory rate		0%		0%		0%
Income (loss) subject to tax at the US Hydro
level (at statutory rate)		18%		3%		44%
State taxes		-5%		-3%		-3%
Other		-		-4%		5%
Fund's effective tax rate		13%		-4%		46%

At December 31, 2006, the Fund had a Federal net operating loss (NOL) carryforward of $3,447, which will be expiring in 2023 through 2026. The Fund believes it is more likely than not that it will realize the benefit of its net operating losses. Accordingly, a valuation allowance has not been recorded against the related deferred tax asset. The Fund’s ability to realize the benefit of its net operating losses may be limited should the Fund undergo an ownership change within the meaning of IRC Section 382.

F-19

The Ridgewood Power Growth Fund

Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)

In addition, at December 31, 2006, the Fund had a state NOL carryforward of $8,779, which will be expiring in 2023 through 2026. The Fund does not believe it is more likely than not that it will realize the benefit of this NOL carryforward as it does not project there will be future taxable income in the entity and jurisdiction to which this NOL was generated. Accordingly, the Fund has recorded a valuation allowance against the full amount of the related deferred tax asset.

14.  TRANSACTIONS WITH MANAGING SHAREHOLDER AND AFFILIATES

The Fund operates pursuant to the terms of a management agreement (“Management Agreement”). Under the terms of the Management Agreement, the Managing Shareholder provides certain management, administrative and advisory services, and office space to the Fund. In return, the Fund is obligated to pay the Managing Shareholder an annual management fee equal to 2.5% of the total contributed capital of the Fund, or $1,645 annually, as compensation for such services. The management fee is to be paid in monthly installments and, to the extent that the Fund does not pay the management fee on a timely basis, the Fund accrues interest at an annual rate of 10% on the unpaid balance.

The Managing Shareholder waived its right to receive its management fee for 2006 and 2005. For 2004, the Managing Shareholder waived 50% of the management fee due of $823. The Fund recorded the waived management fees as deemed capital contributions in the periods in which the fees accrued. The shareholders of the Fund other than the Managing Shareholder were allocated 99% of each contribution and the Managing Shareholder was allocated 1% so that the amount of the contribution allocated offset the amount of the expense initially accrued. For the year ended December 31, 2004, the Fund made management fee payments to the Managing Shareholder of $317.

For the years ended December 31, 2006, 2005 and 2004, the Fund accrued interest expense of $92, $262 and $187, respectively, on accrued but unpaid management fees. All of the interest accrued has been waived by the Managing Shareholder and recorded as a deemed capital contribution as waived.

Under the Management Agreement with the Managing Shareholder, Ridgewood Power Management (“RPM”), an entity related to the Managing Shareholder through common ownership, provides management, purchasing, engineering, planning and administrative services to the projects operated by the Fund. RPM charges the projects at its cost for these services and for the allocable amount of certain overhead items. Allocations of costs are on the basis of identifiable direct costs or in proportion to amounts invested in projects managed by RPM. During the years ended December 31, 2006, 2005 and 2004, RPM charged US Hydro $624, $581 and $489, respectively, for overhead items allocated in proportion to the amount invested in projects managed. In addition, for the years ended December 31, 2006, 2005 and 2004 RPM charged US Hydro $5,421, $3,234 and $2,968, respectively, for all of the direct operating and non-operating expenses incurred. These charges may not be indicative of costs incurred if the Fund were not operated by RPM.

Under the Declaration of Trust, the Managing Shareholder is entitled to receive, concurrently with the shareholders of the Fund other than the Managing Shareholder, 1% of all distributions from operations made by the Fund in a year until the shareholders have received distributions in that year equal to 12% of their equity contribution. Thereafter, the Managing Shareholder is entitled to receive 25% of the distributions for the remainder of the year. The Managing Shareholders is entitled to receive 1% of the proceeds from dispositions of Fund property until the shareholders other than the Managing Shareholder, have received cumulative distributions equal to their original investment (“Payout”). After Payout, the Managing Shareholder is entitled to receive 25% of all remaining distributions of the Fund. For the years ended December 31, 2006, 2005 and 2004 the Managing Shareholder received a distribution of $17, $13 and $13, respectively.

Income is allocated to the Managing Shareholder until the profits so allocated equal distributions to the Managing Shareholder. Thereafter, income is allocated among the shareholders other than the Managing Shareholder in proportion to their ownership of Investor Shares. If the Fund has net losses for a fiscal period, the losses are allocated 99% to the shareholders other than the Managing Shareholder and 1% to the Managing Shareholder, subject to certain limitations as set forth in the Declaration of Trust. Amounts allocated to shareholders other than the Managing Shareholder are apportioned among them in proportion to their capital contributions.

F-20

The Ridgewood Power Growth Fund

Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)

Under the terms of the Declaration of Trust, if the Adjusted Capital Account (as defined in the Declaration of Trust) of a shareholder other than the Managing Shareholder would become negative using General Allocations (as defined in the Declaration of Trust), losses and expenses will be allocated to the Managing Shareholder. Should the Managing Shareholder’s Adjusted Capital Account become negative and items of income or gain occur, then such items of income or gain will be allocated entirely to the Managing Shareholder until such time as the Managing Shareholder’s Adjusted Capital Account becomes positive. This mechanism does not change the allocation of cash, as discussed above.

RRP owns one Investor Share of the Fund. The Fund granted the Managing Shareholder a single Management Share representing the Managing Shareholder’s management rights and rights to distributions of cash flow.

On June 26, 2003, the Managing Shareholder, entered into a Revolving Credit and Security Agreement with Wachovia Bank, National Association. The agreement, as amended, allows the Managing Shareholder to obtain loans and letters of credit of up to $6,000 for the benefit of the Trusts and Funds that it manages. As part of the agreement, the Fund agreed to limitations on its ability to incur indebtedness, and liens and to provide guarantees. The Managing Shareholder and Wachovia Bank agreed to extend the Managing Shareholder’s line of credit, through May 31, 2008.

The Fund records short-term payables to and receivables from other affiliates in the ordinary course of business. The amounts payable to and receivable from the other affiliates do not bear interest. At December 31, 2006 and 2005, the Fund had outstanding payables and receivables as follows:

	December 31,				December 31,
	2006		2005		2006		2005
	Due from				Due to
RPM	$	-	$	-	$	245	$	335
RRP		107		-		-		186
Trust V		211		538		-		-
Egypt Fund		-		-		127		207
RUK		-		195		312		-
Other Affiliates		12		-		-		153
Total	$	330	$	733	$	684	$	881

15.  FINANCIAL INFORMATION BY BUSINESS SEGMENT AND LOCATION

In 2006, 2005 and 2004, revenues were recorded from customers of US Hydro and Egypt projects. The financial statements of RUK and ZAP are not consolidated with those of the Fund and, accordingly, their revenues are not considered to be operating revenues. For the years ended December 31, 2006, 2005 and 2004, financial information by geographic location was as follows:

	2006				2005				2004
	US		Egypt		US		Egypt		US		Egypt
Total assets	$	9,810	$	21,103	$	12,141	$	21,934	$	17,670	$	21,219
Revenues		5,357		8,161		5,539		6,742		5,096		5,489

The Fund has two customers which accounted for 75.5%, 70.3% and 76.8% of US sourced revenue in 2006, 2005 and 2004, respectively. The Fund has two customers which accounted for 16.5%, 18.0% and 19.5% of Egypt sourced revenue in 2006, 2005 and 2004, respectively.

F-21

The Ridgewood Power Growth Fund

Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)

The Fund manages and evaluates its operations in two reportable business segments: power generation and water desalinization. These segments have been classified separately by the similarities in economic characteristics and customer base. Common services shared by the business segments are allocated on the basis of identifiable direct costs, time records or in proportion to amount invested in projects managed by Ridgewood Management.

The financial data for business segments for the years ended December 31, 2006, 2005 and 2004 are as follows (unaudited):

	Power
	2006			2005			2004
Revenues	$	5,357		$	5,539		$	5,096
Depreciation and amortization		1,302			1,597			1,709
Gross profit		2,629			2,440			1,968
Interest income		74			83			10
Interest expense		43			56			86
Income tax (benefit) expense		(77	)		138			(773	)
Total assets		8,373			10,785			17,221
Capital expenditures		28			-			2
Goodwill		227			227			227
	Water
	2006			2005			2004
Revenues	$	8,161		$	6,742		$	5,489
Depreciation and amortization		2,307			2,173			2,022
Gross profit		1,889			1,120			443
Interest income		10			7			9
Interest expense		209			677			604
Total assets		21,103			21,934			21,219
Capital expenditures		680			2,038			370
	Corporate
	2006			2005			2004
Interest income	$	12		$	6		$	1
Interest expense		93			262			186
Equity in loss from RUK		(65	)		(833	)		(699	)
Investment in RUK		-			114			2,149
Total assets		1,437			1,356			449
	Consolidated
	2006			2005			2004
Revenues	$	13,518		$	12,281		$	10,585
Depreciation and amortization		3,609			3,770			3,731
Gross profit		4,518			3,560			2,411
Interest income		96			96			20
Interest expense		345			995			876
Income tax (benefit) expense		(77	)		138			(773	)
Total assets		30,913			34,075			38,889
Capital expenditures		708			2,038			372
Goodwill		227			227			227
Equity in loss from RUK		(65	)		(833	)		(699	)
Investment in RUK		-			114			2,149

F-22

The Ridgewood Power Growth Fund

Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)

16.      SELECTED UNAUDITED QUARTERLY FINANCIAL DATA

	2006 Quarters
	1st			2nd			3rd			4th
Revenues	$	3,461		$	3,838		$	3,082		$	3,137
Gross profit		1,233			1,791			431			1,063
Income (loss) from operations		157			748			(742	)		(384	)
Net (loss) income		(221	)		134			(377	)		(539	)
Net (loss) income per Investor Share		(332	)		202			(567	)		(812	)
	2005 Quarters
	1st			2nd			3rd			4th
Revenues	$	2,915		$	3,514		$	2,875		$	2,977
Gross profit		975			1,397			421			767
(Loss) income from operations		(930	)		280			(582	)		(439	)
Net loss		(656	)		(241	)		(1,694	)		(1,368	)
Net loss per Investor Share		(987	)		(363	)		(2,548	)		(2,057	)

17.  SUBSEQUENT EVENTS

On January 23, 2007, RUK entered into an agreement (the "Sale Agreement") along with Arbutus and the PowerBank Funds (the “Sellers”), and MEIF LG Energy Limited (the "Buyer"). At that time, RUK owned 88% of the issued and outstanding shares of CLP and the remaining 12% of CLP was owned by Arbutus. On February 22, 2007, RUK completed the sale (the “Sale”) of all of the issued and outstanding shares of CLP.

Under the Sale Agreement, the Buyer agreed to buy (i) 100% of the issued and outstanding shares (the "Shares") of CLP from Ridgewood UK and Arbutus, and (ii) substantially all of the assets (the "Assets") of the PowerBanks. The Assets and the Shares constitute all the landfill gas business located in the United Kingdom of RUK and of the PowerBank Funds.

In accordance with the Sale Agreement, at closing, the Buyer paid an aggregate purchase price for the Shares and the Assets of £117.8 million ($229,500), subject to a working capital adjustment that resulted in an increase to the purchase price of £4.2 million ($8,200). After adjustment, the purchase price for the Shares was £25.1 million ($48,900), of which £22.1 million ($43,100) was attributable to the shares sold by RUK. Taking into account payments made to RUK pursuant to certain sharing arrangements with the PowerBanks, the total gross sales proceeds to RUK were £27.6 million ($53,800).

On February 23, 2007, the Manager caused a portion of the sales proceeds to be converted from sterling into US dollars which was done at the rate of 1.9483 U.S. dollars for each pound sterling. On March 27, 2007 a subsequent conversion took place at an exchange rate of 1.9604 US dollars for each pound sterling. While certain transactions remain to be made that will require dollar/sterling conversions, management of the Fund does not expect the exchange rates of these conversions to have a material effect on RUK.

The Sellers gave a number of warranties and indemnities to the Buyer in connection with the Sale that considers typical of such transactions. Should there be a breach or breaches of the warranties or should an indemnifiable event occur, the Buyer could make claims against the Sellers including RUK. Management of RUK does not believe there is a material likelihood that such a claim will arise or that, should such a claim arise, RUK would incur a material liability. This belief is based, in part, on the Sellers having purchased warranty and indemnity insurance to minimize such risk. There are no current plans to reserve or provide an escrow for the contingent liabilities represented by these warranties and indemnities. As of the date of this filing, the Fund is not aware of any claims. RUK has distributed all but a nominal amount of sale proceeds to its shareholders.

F-23

The Ridgewood Power Growth Fund

Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)

On December 30, 2005, an investor in the Fund and entities affiliated with the Fund, Paul Bergeron, on behalf of himself and as Trustee for the Paul Bergeron Trust (the “Plaintiff”), filed a Complaint in Suffolk Superior Court, Commonwealth of Massachusetts, Paul Bergeron v. Ridgewood Electric Power Trust V, et al., Suffolk Superior Court, Docket No. 07-1205 BLS1 (“Bergeron I”).  The action was brought against, among others, the Managing Shareholder and persons who are or were officers of the Managing Shareholder alleging violations of the Massachusetts Securities Act, as well as breach of fiduciary duty, fraud, breach of contract, negligent misrepresentation and unjust enrichment, all related to a set of alleged facts and allegations regarding the sale of securities of funds (including the Fund) managed by the Managing Shareholder or affiliates of the Managing Shareholder which were sold in private offerings and the operation of those funds subsequent to the sale.  The Plaintiff is seeking damages of $900 plus interest and other damages to be determined at trial.

On January 27, 2006, the Plaintiff, on its own initiative, filed an Amended Complaint and Jury Demand in Massachusetts Superior Court, adding a non-diverse broker-dealer to the action.  On February 22, 2006, the case was removed by the defendants to United States District Court for the District of Massachusetts on the basis of diversity jurisdiction, but the defendants alleged that the only non-diverse party had been fraudulently joined by the Plaintiff.  On February 27, 2006, a motion to dismiss was filed by the defendants in the District Court.  On April 12, 2006, the District Court affirmed its jurisdiction over the case, and dismissed the non-diverse party.  On January 10, 2007, the District Court dismissed Plaintiff’s unjust enrichment case, but denied the motion of the defendants to dismiss as to the remaining claims.  Presently, attorneys for the parties are involved in discovery, with a magistrate judge having decided motions to compel brought by the parties during the summer of 2007.  A new scheduling order is in the process of being developed by the parties for approval by the District Court.  As of the date of the filing, no trial date has been set.

On March 20, 2007, the Plaintiff commenced a derivative action, in Suffolk Superior Court, Commonwealth of Massachusetts.  Paul Bergeron v. Ridgewood Electric Power Trust V, et al., Suffolk Superior Court, Docket No. 07-1205 BLS1 (“Bergeron II”).  The Plaintiff joined the Fund and affiliated entities, including the Managing Shareholder and a person who is an officer of the Managing Shareholder, alleging that the allocation of the proceeds from the sale of certain assets of the Fund and affiliated entities to an unaffiliated entity was unfair and sought an injunction prohibiting the distribution to shareholders of such proceeds.  For a description of the sale transaction, see Item 1.  “Business – Ridgewood UK.”  The Superior Court denied the request by the Plaintiff for an injunction.  The case was then removed by the defendants to the same District Court as Bergeron I, but the District Court remanded the case to Massachusetts Superior Court on July 5, 2007, where it is presently pending.

All defendants in Bergeron I and Bergeron II deny the allegations and intend to defend both actions vigorously.

In October 2007, the Managing Shareholder announced that it will be marketing the assets of NEH for sale.

F-24

EX-21

Exhibit 21

SUBSIDIARIES OF THE REGISTRANT

Subsidiary	Jurisdiction of Organization
Ridgewood Near East Holdings LLC	Delaware
Ridgewood US Hydro Corporation	Delaware
Ridgewood UK LLC	Delaware
Ridgewood Zap LLC	Delaware

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Randall D. Holmes, certify that:

1.   I have reviewed this annual report on Form 10-K of The Ridgewood Power Growth Fund;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Randall D. Holmes
Name:	Randall D. Holmes
Title:	Chief Executive Officer
	(Principal Executive Officer)
Dated:	December 14, 2007

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Jeffrey H. Strasberg, certify that:

1.   I have reviewed this annual report on Form 10-K of The Ridgewood Power Growth Fund;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Jeffrey H. Strasberg
Name:	Jeffrey H. Strasberg
Title:	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)
Dated:	December 14, 2007

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Annual Report on Form 10-K of The Ridgewood Power Growth Fund (the “Fund”) for the fiscal year ended December 31, 2006, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Fund hereby certifies, pursuant to 18 U.S.C. (section) 1350, as adopted pursuant to (section) 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

(1)              The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)              The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund.

/s/ Randall D. Holmes
Name:	Randall D. Holmes
Title:	Chief Executive Officer
Dated:	December 14, 2007

/s/ Jeffrey H. Strasberg
Name:	Jeffrey H. Strasberg
Title:	Executive Vice President and
	Chief Financial Officer
Dated:	December 14, 2007

EX-99.1

Exhibit 99.1

CONSOLIDATED FINANCIAL STATEMENTS

AND REPORT OF INDEPENDENT CERTIFIED

PUBLIC ACCOUNTANTS

RIDGEWOOD UK, LLC

December 31, 2006 and 2005

C O N T E N T S

		Page
Report of Independent Certified Public Accountants		3
Consolidated Financial Statements
	Consolidated Balance Sheets	4
	Consolidated Statements of Operations and Comprehensive Loss	5
	Consolidated Statement of Changes in Members’ Equity (Deficit)	6
	Consolidated Statements of Cash Flows	7
	Notes to Consolidated Financial Statements	8 - 25

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Members

Ridgewood UK, LLC

We have audited the accompanying consolidated balance sheets of Ridgewood UK, LLC (a Delaware limited liability company) as of December 31, 2006 and 2005, and the related consolidated statements of operations and comprehensive loss, changes in members’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2006.  These consolidated financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America as established by the American Institute of Certified Public Accountants.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ridgewood UK, LLC as of December 31, 2006 and 2005, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2006 in conformity with accounting principles generally accepted in the United States of America.

/s/ GRANT THORTON LLP

Edison, New Jersey

October 31, 2007

- 3 -

Ridgewood UK, LLC
CONSOLIDATED BALANCE SHEETS
December 31,
	2006			2005
ASSETS
Current assets
Cash and cash equivalents	$	7,199,536		$	6,690,531
Restricted cash		2,483,982			3,152,526
Trade receivables		4,438,133			2,653,881
Unbilled receivables		7,641,807			4,752,530
Due from affiliates		2,593,616			363,610
Inventory		994,600			746,454
Other current assets		279,140			272,989
Total current assets		25,630,814			18,632,521
Plant and equipment, net		61,899,406			51,909,397
Electricity sales contracts, net		12,570,841			13,368,107
Deferred financing cost, net		422,590			480,840
Total assets	$	100,523,651		$	84,390,865
LIABILITIES AND MEMBERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	1,619,776		$	1,791,970
Accrued expenses		17,980,367			7,864,472
Long-term debt - current portion		2,300,056			1,878,494
Revolving credit facility		2,350,920			-
Capital lease obligations - current portion		5,406,987			2,897,264
Construction advances - current portion		589,493			577,807
Due to affiliates		125,319			439,113
Total current liabilities		30,372,918			15,449,120
Long-term debt - noncurrent portion		16,981,784			16,936,447
Capital lease obligations - noncurrent portion		43,454,636			26,897,522
Construction advances - noncurrent portion		9,235,393			23,263,877
Deferred income taxes		1,548,339			1,104,709
Other liabilities		-			1,380
Minority interest		-			362,279
Total liabilities		101,593,070			84,015,334
Commitments and contingencies
Members’ equity (deficit)		(1,069,419	)		375,531
Total liabilities and members’ equity (deficit)	$	100,523,651		$	84,390,865
The accompanying notes are an integral part of these consolidated financial statements.

- 4 -

Ridgewood UK, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Years ended December 31,
	2006			2005			2004
Power generation revenue	$	44,750,987		$	32,359,236		$	22,877,685
Cost of revenues		36,871,677			29,326,410			20,295,280
Gross profit		7,879,310			3,032,826			2,582,405
Operating expenses
General and administrative expenses		888,700			200,994			551,573
Impairment of plant and equipment		1,210,265			635,084			500,346
Total operating expenses		2,098,965			836,078			1,051,919
Income from operations		5,780,345			2,196,748			1,530,486
Other income (expense)
Interest income		420,140			328,498			373,337
Interest expense		(6,584,615	)		(5,188,353	)		(3,603,930	)
Loss on sale-leaseback		(191,291	)		(202,551	)		(880,387	)
Total other expense, net		(6,355,766	)		(5,062,406	)		(4,110,980	)
Loss before income taxes and minority interest		(575,421	)		(2,865,658	)		(2,580,494	)
Income tax expense		941,496			261,118			10,298
Net loss before minority interest		(1,516,917	)		(3,126,776	)		(2,590,792	)
Minority interest in loss of CLP		234,394			385,352			293,018
Net loss		(1,282,523	)		(2,741,424	)		(2,297,774	)
Foreign currency translation adjustment		(162,427	)		(448,341	)		710,511
Comprehensive loss	$	(1,444,950	)	$	(3,189,765	)	$	(1,587,263	)
The accompanying notes are an integral part of these consolidated financial statements.

- 5 -

Ridgewood UK, LLC
CONSOLIDATED STATEMENT OF CHANGES IN MEMBERS' EQUITY
Years ended December 31, 2006, 2005 and 2004
						Accumulated other			Total
	Members'		Retained			comprehensive			members'
	capital		deficit			income			equity (deficit)
Members' equity balance as of January 1, 2004	$	22,215,959	$	(11,541,307	)	$	1,455,010		$	12,129,662
Net loss		-		(2,297,774	)		-			(2,297,774	)
Foreign currency translation adjustment		-		-			710,511			710,511
Cash distributions		-		(3,472,720	)		-			(3,472,720	)
Members' equity balance as of December 31, 2004		22,215,959		(17,311,801	)		2,165,521			7,069,679
Net loss		-		(2,741,424	)		-			(2,741,424	)
Foreign currency translation adjustment		-					(448,341	)		(448,341	)
Cash distributions		-		(3,504,383	)		-			(3,504,383	)
Members' equity balance as of December 31, 2005		22,215,959		(23,557,608	)		1,717,180			375,531
Net loss		-		(1,282,523	)					(1,282,523	)
Foreign currency translation adjustment		-					(162,427	)		(162,427	)
Members' deficit balance as of December 31, 2006	$	22,215,959	$	(24,840,131	)	$	1,554,753		$	(1,069,419	)

The accompanying notes are an integral part of these consolidated financial statements.

- 6 -

Ridgewood UK, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31,
	2006			2005			2004
Cash flows from operating activities
Net loss	$	(1,282,523	)	$	(2,741,424	)	$	(2,297,774	)
Adjustments to reconcile net loss to net cash provided
by operating activities
Depreciation and amortization		7,853,465			6,232,599			5,291,820
Impairment of plant and equipment		1,210,265			635,084			500,346
Amortization of deferred financing costs		117,436			128,885			141,396
Loss on sale-leaseback		191,291			202,551			880,387
Deferred income taxes		273,416			261,118			10,298
Minority interest in CLP		(234,394	)		(385,352	)		(293,018	)
Changes in operating assets and liabilities
Trade receivables		(1,332,742	)		(527,783	)		(426,561	)
Unbilled receivables		(2,098,858	)		(1,450,897	)		(1,104,208	)
Inventory		(136,192	)		(1,324	)		(314,465	)
Other current assets		2,807,168			209,205			75,261
Accounts payable		(395,433	)		414,463			(1,905,881	)
Accrued expenses		5,713,770			4,440,555			467,786
Due to/from affiliates, net		(2,501,563	)		(585,762	)		41,860
Other liabilities		(1,478	)		(54,402	)		(464,200	)
Total adjustments		11,466,151			9,518,940			2,900,821
Net cash provided by operating activities		10,183,628			6,777,516			603,047
Cash flows from investing activities
Capital expenditures		(9,492,617	)		(11,179,552	)		(16,698,046	)
Cash flows from financing activities
Repayments of term loan		(2,011,840	)		(1,788,724	)		(1,610,669	)
Proceeds from construction advances		-			-			12,100,122
Repayments of capital lease obligations		(2,236,687	)		(1,498,570	)		(1,125,675	)
Restricted cash		1,039,593			(284,549	)		(340,931	)
Borrowings from revolving credit facility		2,211,540			-			-
Cash distributions to minority interest		(80,420	)		(556,137	)		(641,074	)
Cash distributions to members		-			(3,504,383	)		(4,615,239	)
Net cash (used in) provided by financing activities		(1,077,814	)		(7,632,363	)		3,766,534
Effect of exchange rate on cash and cash equivalents		895,808			(1,500,202	)		1,919,788
Net increase (decrease) in cash and cash equivalents		509,005			(13,534,601	)		(10,408,677	)
Cash and cash equivalents, beginning of year		6,690,531			20,225,132			30,633,809
Cash and cash equivalents, end of year	$	7,199,536		$	6,690,531		$	20,225,132
Supplemental disclosure of cash flow information:
Cash paid during the year for interest	$	5,643,380		$	5,601,353		$	4,319,839
Supplemental disclosures of noncash investing and financing activities:
Construction advances converted to capital leases	$	16,291,678		$	8,337,276		$	14,083,446
Equipment acquired under nonaffiliated capital leases		-			-			727,610
The accompanying notes are an integral part of these consolidated financial statements.

- 7 -

Ridgewood UK, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2006 and 2005

NOTE A - DESCRIPTION OF BUSINESS

On May 26, 1999, Ridgewood UK, LLC (the “Company”) was formed as a New Jersey limited liability company and was re-domiciled to Delaware on December 24, 2002.  The business of the Company is the extraction of methane-containing gas from landfill sites in England, Scotland and Wales, the use of that gas as fuel for generating electricity, and the sale of that electricity.  The Company has no predetermined life or end date.

On June 30, 1999, Ridgewood Electric Power Trust V (“Trust V”) contributed $16,667,567 to the Company; and the Company’s wholly-owned subsidiary, Ridgewood UK Ltd. (“UK Ltd.”), a limited company registered in England and Wales, purchased from CLP Envirogas, Ltd. (formerly Combined Landfill Projects, Ltd.) six landfill gas power plants with a combined electrical generation capacity of 15.1 megawatts (“MW”) located in the United Kingdom.  At the time of the purchase, UK Ltd. and CLP Envirogas, Ltd. also agreed to the terms on which UK Ltd. would purchase additional projects then under development by CLP Envirogas, Ltd., should such projects be successfully developed.

In 2001, The Ridgewood Power Growth Fund (“Growth Fund”) contributed $5,817,006 to the Company in return for an equity share of 30.4% of the Company.  Trust V and the Growth Fund (collectively, the “Trusts”) are Delaware trusts managed by Ridgewood Renewable Power LLC (“RRP”) as their Managing Shareholder.

During the three-month period ended March 31, 2001, UK Ltd. purchased an additional four projects with combined generating capacity of 4.6MW.  On October 16, 2001, UK Ltd., through the issuance of approximately 24% of its shares and the payment of $2,000,000 cash, acquired certain of the assets and liabilities of CLP Services, Ltd., CLP Development, Ltd. and CLP Envirogas, Ltd. (collectively, the “Management and Development Companies”) and the equity and debt of certain landfill gas projects (the “UK Merger”).  As a result of the UK Merger, UK Ltd. acquired the ability to develop and operate landfill gas-fueled electricity-generating facilities in the UK, as well as the development rights to a number of such projects.  The seller in the UK Merger was Arbutus Energy Ltd. (Jersey) (“Arbutus”), which became the minority interest holder of UK Ltd. following the UK Merger.  UK Ltd. was renamed CLPE Holdings Ltd. (“CLP”) in 2001.

In the UK Merger, UK Ltd. received plant and equipment valued at approximately $4,201,000, a 50% equity interest in a landfill gas electricity generation business based in Spain valued at approximately $744,000, cash of $454,000 and other assets with an approximate value of $1,000,000.  UK Ltd. also assumed liabilities of approximately $3,058,000.  UK Ltd. assigned a value of $6,781,000 to the electricity sales contracts and other intangibles acquired, which are being amortized over the remaining life of the underlying electricity sales contracts.

- 8 -

Ridgewood UK, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2006 and 2005

NOTE A (continued)

As part of the UK Merger, the Company also acquired a 50% ownership in each of CLP Organogas SL, which owns a 2MW plant located in Seville, Spain, and CLP Envirogas, SL, a management and development services company also located in Seville, Spain (collectively, the “Spanish Business”).  Effective January 1, 2003, the Company transferred its interest in the Spanish Business to Arbutus in return for a portion of the minority interest in CLP then held by Arbutus.  As a result of the transaction, the Company increased its ownership in CLP from 76% to 88%.

As of December 31, 2006, CLP owned landfill methane gas-fired electric generating projects in the United Kingdom with an installed capacity of approximately 59.1MW.  Projects representing approximately 26.5MW sell electricity under long-term contracts to the Non-Fossil Purchasing Agency (“NFPA”), a not-for-profit organization that purchases electricity generated by certain renewable power projects on behalf of large English electric utilities.  Projects representing approximately 32.6MW qualify for the UK government’s Renewable Obligation incentive program (“RO”) and sell their output under short-term contracts.

Beginning in 2002, the Company began to develop sites capable of qualifying for the UK’s RO.  The RO program requires electricity suppliers serving end-users in the UK to obtain Renewable Obligation Certificates (“ROCs”) to demonstrate that a minimum portion of their electricity supply portfolio was generated by producers meeting the qualifications of the RO.  In order to fund the development and construction of these projects, the Company entered into a series of agreements with affiliated entities that agreed to provide financing.  The affiliated entities providing this funding, Ridgewood Renewable PowerBank LLC, Ridgewood Renewable PowerBank II LLC, Ridgewood Renewable PowerBank III LLC and Ridgewood Renewable PowerBank IV LLC (collectively, the “PowerBank Funds”), are managed by RRP.  Terms of the agreements between the CLP and each of the PowerBank Funds are substantially the same and each provides for the PowerBank Funds to make construction advances to CLP in exchange for interest during construction and streams of fixed and variable lease payments once the financed projects go into operation (the “PowerBank Arrangements”) as discussed in Note H.

All projects subject to Non-Fossil Fuel Obligation (“NFFO”) are owned by the Company.  Each PowerBank Fund holds title to the electricity-generating equipment of the projects funded by that PowerBank Fund.

See Note P for discussion of the sale of CLP.

- 9 -

Ridgewood UK, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2006 and 2005

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.   Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.  All material intercompany transactions have been eliminated and the minority interest of Arbutus has been provided for in consolidation.

2.   Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.  On an ongoing basis, the Company evaluates its estimates, including bad debts, recoverable value of plant and equipment, intangible assets and recordable liabilities for litigation and other contingencies.  The Company bases its estimates on historical experience, current and expected conditions and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.

3.   Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities when purchased of three months or less to be cash and cash equivalents.  All cash deposits are held in foreign banks and cash balances with banks as of December 31, 2006 and 2005 exceed UK-insured limits by approximately $4,735,000 and $5,341,000, respectively.  Restricted cash (see Note G) as of December 31, 2006 and 2005 exceeded insured limits by approximately $2,422,000 and $3,098,000, respectively.

4.   Trade Receivables

Trade receivables are recorded at invoice price in the period in which the related revenues are earned, and do not bear interest.  No allowance for bad debt expense was provided based upon historical write-off experience, evaluation of customer credit condition and the general economic status of the customers.

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Ridgewood UK, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2006 and 2005

NOTE B (continued)

5.   Inventory

Inventory primarily consists of spare parts and materials used in the Company’s operations.  Inventories are stated at the lower of cost and net realizable value.  An allowance is established for slow moving items on the basis of management’s review and assessment of inventory movements.

6.   Revenue Recognition

Power generation revenue is recorded in the month of delivery, based on the estimated volumes sold to customers at rates stipulated in the electricity sales contracts.  Any adjustments needed to reflect actual volumes delivered are made when the actual volumetric information subsequently becomes available.  Final adjustments did not vary significantly from estimates.

7.   Unbilled Receivables

Unbilled receivables consist of revenue that has been earned but for which no invoices have been issued by the Company as the meter readings have not been certified by the customer or appropriate regulatory body.  Power generation revenue is recorded in the month of delivery and meter certification can require a period of two to four months in the case of certifications required for the issuance of ROCs.

8.   Foreign Currency Translation

The British pound sterling is the functional currency of the Company’s operating subsidiaries.  The consolidated financial statements of the Company’s operating subsidiaries are translated into United States dollars using current rates of exchange, with gains or losses included in the foreign currency translation adjustment account in the members’ equity section.  The cumulative foreign currency translation adjustment, which represents total accumulated other comprehensive income is included in members’ equity.

9.   Impairment of Long-Lived Assets and Intangibles

The Company evaluates amortizable intangibles and long-lived assets, such as plant and equipment, when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable.  The determination of whether an impairment has occurred is made by comparing the carrying value of an asset to the estimated undiscounted cash flows attributable to that asset.  If an impairment has occurred, the impairment loss recognized is the amount by which the carrying value exceeds the estimated fair value of the asset, which is based on the estimated future cash flows discounted at the estimated cost of capital.

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Ridgewood UK, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2006 and 2005

NOTE B (continued)

 10.  Deferred Financing Costs

The Company capitalizes financing costs and amortizes them using the effective rate method over the life of the related loan.  Amortization of deferred financing costs is included in interest expense in the consolidated statements of operations.  Accumulated amortization at December 31, 2006 and 2005 was $609,026 and $455,132, respectively.

 11.  Plant and Equipment

Plant and equipment are stated at cost less accumulated depreciation.  Renewals and betterments that increase the useful lives of the assets are capitalized.  Repair and maintenance expenditures are expensed as incurred.

The Company depreciates its plant and equipment using the straight-line method of depreciation over the estimated useful lives of the assets, which range from 4 - 15 years.

 12.  Sale and Leaseback Transactions

The Company accounts for the sale and leaseback of plant and equipment in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 98, “Accounting for Leases.”  Losses on sale-leaseback transactions are recognized at the time of sale if the fair value of the plant and equipment sold is less than the undepreciated cost of the plant and equipment.  Gains on sale and leaseback transactions are deferred and amortized over the remaining lease term.

 13.  Fair Value of Financial Instruments

For the years ended December 31, 2006 and 2005, the carrying value of the Company’s cash and cash equivalents, trade receivables, unbilled receivables, inventory, accounts payable and accrued expenses approximates their fair value.  The fair value of the Company’s long-term debt, calculated using current rates for loans with similar maturities, does not differ materially from its carrying value.

 14.  Significant Customers

The Company sells all of the electricity it produces from the project that it owns to the Non-Fossil Purchasing Agency (“NFPA”), a nonprofit organization that purchases electricity generated by

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Ridgewood UK, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2006 and 2005

NOTE B (continued)

renewable sources (such as landfill gas power plants) on behalf of all British utilities, in order to meet British environmental protection goals.  Projects subject to PowerBank lease financing arrangements sell their output of electricity and ROCs under short-term contracts entered into from time to time.

 15.  Income Taxes

The Company uses the liability method in accounting for income taxes.  Deferred income tax reflects, where required, the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for tax purposes.  The provision in the accompanying consolidated financial statements is made for UK income taxes and no provision is made for United States income taxes as the income or loss of the Company is passed through and included in the income tax returns of the members.

 16.  Comprehensive Loss

The Company’s comprehensive loss consists of net loss and foreign currency translation adjustments.

 17.  Reclassifications

Certain items in previously issued financial statements have been reclassified for comparative purposes. This had no effect on net loss.

 18.  New Accounting Standards

FIN 48 

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB   Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109.”  FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109 and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on

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Ridgewood UK, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2006 and 2005

NOTE B (continued)

derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 will be effective for the Company beginning January 1, 2007. The Company does not believe that the adoption of FIN 48 will have a material impact on its consolidated financial statements.

SFAS No. 157

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” to define fair value, establish a framework for measuring fair value in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and expand disclosures about fair value measurements.  SFAS No. 157 requires quantitative disclosures using a tabular format in all periods (interim and annual) and qualitative disclosures about the valuation techniques used to measure fair value in all annual periods. SFAS No. 157 will be effective for the Company beginning January 1, 2008. The Company is currently evaluating the impact of adopting SFAS No. 157 on its consolidated financial statements.

SFAS No. 159

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.”  SFAS No. 159 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 will be effective for the Company on January 1, 2008. The Company is currently evaluating the impact of adopting SFAS No. 159 on its consolidated financial statements.

NOTE C - IMPAIRMENT OF LONG-LIVED ASSETS

The Company performed impairment assessments for each of the years ended December 31, 2006, 2005 and 2004 by comparing the cash flows of the related assets to their undiscounted cash flows and noted that the carrying value exceeded the undiscounted cash flows estimated from such assets as of December 31, 2006, 2005 and 2004.  The Company then measured the impairments using a discounted cash flow valuation methodology.  As a result, the Company recorded impairments of plant and equipment of $1,210,265, $635,084 and $500,346 for the years ended December 31, 2006, 2005 and 2004, respectively.

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Ridgewood UK, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2006 and 2005

NOTE D - PLANT AND EQUIPMENT

At December 31, 2006 and 2005, plant and equipment at cost and accumulated depreciation were:

	2006			2005
Property, plant and equipment	$	74,218,627		$	51,876,483
Construction in process		10,515,887			14,264,150
		84,734,514			66,140,633
Less accumulated depreciation		(22,835,108	)		(14,231,236	)
	$	61,899,406		$	51,909,397

For the years ended December 31, 2006, 2005 and 2004, the Company recorded depreciation expense of $6,219,530, $4,486,103 and $3,502,046, respectively, which is included in cost of revenues.

NOTE E - ELECTRICITY SALES CONTRACTS

At December 31, 2006 and 2005, the gross and net amounts of electricity sales contracts were:

	2006			2005
Electricity sales contracts - gross	$	24,400,986		$	22,255,445
Less accumulated amortization		(11,830,145	)		(8,887,338	)
Electricity sales contracts - net	$	12,570,841		$	13,368,107

A portion of the purchase price of the landfill gas power plants was assigned to electricity sales contracts and is being amortized over the duration of the contracts on a straight-line basis.  As of December 31, 2006, the weighted-average remaining life of the contracts was 8 years, with the shortest remaining duration being 0.6 years and the longest remaining duration being 12.6 years.  Electricity sales contracts are more fully described in Note J.  During the years ended December 31, 2006, 2005

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Ridgewood UK, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2006 and 2005

NOTE E (continued)

and 2004, the Company recorded amortization expense of $1,633,935, $1,746,496 and $1,789,774, respectively, which is included in cost of revenues.  The Company expects to record amortization expense during the next five years as follows:

Year ended
December 31,
2007	$	1,611,676
2008		1,580,513
2009		1,573,015
2010		1,556,332
2011		1,447,238

NOTE F - ACCRUED EXPENSES

Accrued expenses consist of the following at December 31, 2006 and 2005:

	2006		2005
PowerBank variable payment	$	9,527,673	$	2,803,804
Accrued royalty expense		2,713,354		1,725,962
General accrued expenses		2,713,322		1,798,723
Accrued interest		1,050,078		941,278
Payroll tax and benefit accrual		1,975,940		594,705
	$	17,980,367	$	7,864,472

NOTE G - LONG-TERM DEBT

The Company entered into a revolving credit facility of £1,200,000 in 2006 for the purpose of providing working capital to the business.  Such facility is collateralized by all trade receivables of the Company.  The credit facility bears interest at LIBOR (5.23% at December 31, 2006) plus 1.5%, with a maturity date of March 31, 2007.  At December 31, 2006, the amount outstanding under this facility was £1,200,000 ($2,350,920).

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Ridgewood UK, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2006 and 2005

NOTE G (continued)

The Company also has a term loan facility (the “Term Loan”) for the purpose of financing certain of its power generation projects.  Payments under the Term Loan are made semiannually on March 31 and September 30 of each year.  A portion of the Term Loan bears interest at a fixed rate, with the remaining portion bearing interest at rates set from time to time based on a premium over widely recognized indices.  Payments under the Term Loan include amounts of principal and interest such that the Term Loan will be fully repaid by March 31, 2014, its final maturity.

Following is a summary of long-term debt obligations of the Company as of December 31, 2006 and 2005:

	2006			2005
Term loan	$	19,281,840		$	18,814,941
Revolving credit facility		2,350,920			-
Total debt		21,632,760			18,814,941
Less current portion		(4,650,976	)		(1,878,494	)
Total long-term portion	$	16,981,784		$	16,936,447

At December 31, 2006, the interest rate applicable to portions of the Term Loan ranged from 7.08% to 7.73%. Amounts outstanding under the Term Loan are collateralized by substantially all of the assets of the projects owned by the Company and the underlying Term Loan agreement requires certain of the Company’s subsidiaries to maintain a debt service coverage ratio (as defined in the Term Loan agreement) of 1.35 to 1, as well as certain other ratios.

Remaining scheduled principal repayments of long-term debt as of December 31, 2006 are as follows:

2007	$	4,650,976
2008		2,333,243
2009		2,522,395
2010		2,722,460
2011		2,667,669
Thereafter		6,736,017
	$	21,632,760

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Ridgewood UK, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2006 and 2005

NOTE G (continued)

The terms of the Term Loan provide for the Company to maintain certain cash balances with the lending bank for the purpose of providing for debt service and operations and maintenance reserves equal to six months of such expenses, which is included as restricted cash.

NOTE H - CAPITAL LEASE OBLIGATIONS AND CONSTRUCTION ADVANCES

The Company entered into PowerBank Arrangements with Ridgewood Renewable PowerBank LLC on September 12, 2003 and with Ridgewood Renewable PowerBank II LLC, Ridgewood Renewable PowerBank III LLC and Ridgewood Renewable PowerBank IV LLC on September 30, 2004.

Under the terms of the PowerBank Arrangements (see Note A), each PowerBank Fund committed to providing £850,000 per MW of capacity, with each PowerBank Fund committing for a specified amount of capacity.  The PowerBank Arrangements are denominated entirely in British pounds sterling and provide for funds to be advanced to the Company, initially for development and construction financing and, after the project reaches commercial operations, as permanent financing.  During the construction period, the Company pays to the PowerBank Funds providing financing a prorated amount equal to 10% per annum of the advances attributable to projects that have not yet reached commercial operation.  When a project reaches commercial operation, title to the project passes from the Company to the PowerBank Funds that provided the financing for that project and the advances convert from construction advances to long-term financing.

Under the long-term financing provisions of the PowerBank Arrangements the Company is obligated to make regular fixed payments and formula-based variable payments, the amounts of which are determined by a combination of (i) the output of each plant and (ii) the price received for such output during the periods for which the payments are made.  The PowerBank Arrangements provide for a minimum period of ten years for the permanent financing and can be extended on a project-by-project basis indefinitely by the PowerBank Fund providing the financing.  There are no purchase options or residual guarantee provisions in the PowerBank Arrangements.

The Company accounts for its obligations under the PowerBank Arrangements as either long-term or current (as appropriate) construction advance obligations and, in the case of the permanent financing, as capital lease obligations with a 10-year minimum term and an initial lease obligation of £850,000 per MW.  Should the cost of developing a given project be greater than or less than £850,000 per MW, then the Company will experience a gain or loss on the sale of the project.  Such gains are deferred and taken into cost of revenues over the ten-year minimum lease period, while losses are realized and taken into other income at the time when such losses are considered to be probable.

- 18 -

Ridgewood UK, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2006 and 2005

NOTE H (continued)

As of December 31, 2006, the Company had commissioned projects with total capacity of 32.6MW.  The following table reflects the construction advances and anticipated capacity development associated with each PowerBank Fund as of December 31, 2006:

	Net funds		Anticipated
	available for		capacity
Fund	construction*		(MW)
PBI	$	9,618,503		7
PBII		16,227,833		11.6
PBIII		18,880,696		13
PBIV		9,182,995		6
	$	53,910,027		37.6
* In original $US, not impacted by currency translation.

For the years ended December 31, 2006, 2005 and 2004, the Company paid to the PowerBank Funds construction period interest of $1,493,162, $2,805,415 and $3,448,064, respectively.  The Company capitalized all of the construction period interest charges incurred during construction.  The interest expense component of the capital lease payments made by the Company under the PowerBank Arrangements and included in interest expense was $4,486,034, $3,400,773 and $2,026,720 for the years ended December 31, 2006, 2005 and 2004, respectively.

As of December 31, 2006, the Company’s capital lease obligations and construction advances outstanding with the respective PowerBank Funds are as follows:

	2006
	MW		Capital lease		Construction
	Commissioned		obligation		advances
PBI		7	$	9,418,553	$	-
PBII		10.3		15,850,193		1,498,712
PBIII		4		17,793,943		3,330,482
PBIV		-		4,980,769		4,995,692
		21.3	$	48,043,458	$	9,824,886

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Ridgewood UK, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2006 and 2005

NOTE H (continued)

In addition to the PowerBank capital lease arrangements, the Company leases certain vehicles and equipment under multiple lease agreements which vary in terms and rates ranging from 7.4% to 8.9%.  At December 31, 2006 and 2005, the capital lease obligations for these assets were $818,165 and $899,929, respectively.

Following is a summary of all capital lease obligations at December 31, 2006 and 2005:

	2006			2005
Gross payments	$	75,918,834		$	48,173,727
Less imputed interest		(27,057,211	)		(18,378,941	)
Total capital lease obligation		48,861,623			29,794,786
Less current maturity		(5,406,987	)		(2,897,264	)
Capital lease obligation - long-term       portion	$	43,454,636		$	26,897,522

At December 31, 2006, remaining scheduled repayments of capital lease obligation principal are as follows:

2007	$	5,406,987
2008		4,340,639
2009		4,904,447
2010		5,490,579
2011		6,062,111
Thereafter		22,656,860
	$	48,861,623

Included in plant and equipment are assets under capital lease obligation with a cost of $45,572,584 and $27,587,866 and accumulated depreciation of $9,164,670 and $4,283,158 at December 31, 2006 and 2005, respectively.

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Ridgewood UK, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2006 and 2005

NOTE I - PURCHASE COMMITMENTS

On November 10, 2003, the Company entered into an equipment purchase agreement with its main supplier for the purchase of the electricity generation equipment constituting the primary element of the projects making up the Company’s future expansion.  The sales price of the equipment was negotiated in euros and the contract allowed the Company to fix the euro price for a substantial portion of its future construction costs.  Foreign currency transaction losses for the years ended December 31, 2006, 2005 and 2004 were $8,269, $208,984 and $21,658, respectively, and are included in cost of revenues.  As of December 31, 2006, all of the units provided for in the equipment purchase agreement had either been delivered or had been ordered with delivery pending.  A portion of the required payments with respect to the engine/generator sets remains outstanding pending full performance by the equipment supplier.  The total of these payment obligations is approximately $48,677 at December 31, 2006 and payments are subject to and contingent on supplier performance in subsequent periods.  The Company anticipates that its purchase commitments will be fulfilled during 2007.  The engines acquired are to be used in the Company’s continued expansion under the RO program pursuant to the PowerBank Fund Arrangements described in Note H.

NOTE J - ELECTRIC POWER SALES CONTRACTS

The Company is committed to sell all of the output from certain of its projects, representing 26.5MWs at December 31, 2006, to the NFPA, a not-for-profit organization that purchases electricity generated by certain renewable power projects on behalf of large British electric utilities.  The electricity prices provided for in these contracts were set at an initial level and are adjusted annually based on general inflation in the UK.  Each contract is specific to a certain project site with contract terms being typically 15 years from the start of commercial operation of the project under contract.  Contracts for certain projects have shorter durations to match expected project life.  Contracts with the NFPA cannot be transferred from their original site.  The Company’s remaining projects are subject to the PowerBank Arrangements and the output from these projects is sold under one-year contracts renegotiated by the PowerBank Funds from time to time.  The pricing, terms and counterparties of these contracts are subject to change and reflect market conditions at the time they are entered into.

NOTE K - LANDFILL GAS AGREEMENTS

Projects of the Company are located on the sites of landfills owned and operated by third parties.  In each case the Company has entered into agreements with the landfill site operators (each a “Gas Agreement”) that give the Company certain rights including the right to occupy the portion of the landfill site required for its electricity generation project (or projects), to build the project to

- 21 -

Ridgewood UK, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2006 and 2005

NOTE K (continued)

specifications agreed with the landfill site operator, to have access to the project compound, to install, own, operate and maintain a landfill gas collection system and to use the methane-containing gas produced by the landfill site for the purpose of generating electricity.  In exchange, the Company agrees to use its efforts to control the escaping of gas from the landfill and to pay a royalty to the landfill operator.  The landfill gas royalty is typically a percentage of the revenue of the project and may have a fixed payment component.  For the years ended December 31, 2006, 2005 and 2004, royalty expense was $5,730,702, $4,278,250 and $2,360,640, respectively.  The terms of the Gas Agreements to which the Company is a party vary but are long-term agreements approximating the expected life of the project to be located on a site.

NOTE L - PROJECT DEVELOPMENT AND OPERATION

The Company develops, operates and maintains all of the projects that it owns, whether outright or subject to the PowerBank Arrangements.  In order to perform these functions the Company employs personnel in a number of functions including site operations, electrical operations, gas collection, site acquisition and administrative functions.  The Company is also responsible for the procurement of spare parts and supplies and for both routine and major maintenance of its facilities.

NOTE M - TRANSACTIONS WITH AFFILIATES

The Company records short-term payables and receivables from other affiliates in the ordinary course of business.  The amounts payable and receivable with the other affiliates do not bear interest.  At December 31, 2006 and 2005, the Company had outstanding receivables and payables with the following affiliates:

	Due From				Due To
	2006		2005		2006		2005
Trust V	$	934,324	$	-	$	-	$	244,342
Growth Fund		316,768		-		-		194,771
PowerBank Funds		1,257,038		363,610		-		-
Ridgewood Power Management		-		-		125,319		-
Other		85,486		-		-		-
	$	2,593,616	$	363,610	$	125,319	$	439,113

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Ridgewood UK, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2006 and 2005

NOTE N - INCOME TAXES

The Company is not subject to U.S. income tax as it is treated as a fiscally transparent entity for U.S. income tax purposes. For the years ended December 31, 2006, 2005 and 2004, the provision for income taxes consists of:

	2006		2005		2004
Current
Foreign	$	668,080	$	-	$	-
Deferred
Foreign		273,416		261,118		10,298
Income tax expense	$	941,496	$	261,118	$	10,298

Components of the Company’s deferred income tax assets and liabilities as of December 31, 2006 and 2005 are as follows:

	2006			2005
Deferred tax assets
Net operating losses - noncurrent	$	210,218		$	287,852
Less valuation allowance		(210,218	)		(287,852	)
	$	-		$	-
Deferred tax liabilities
Depreciation - noncurrent	$	1,548,339		$	1,104,709
Net deferred tax liability	$	1,548,339		$	1,104,709

At December 31, 2006 and 2005, CLP group had approximately £358,000 and £558,000, respectively, of loss carryforward, all of which may be carried forward indefinitely.  However, the Company’s ability to utilize its NOL’s may be limited due the tax structure in the United Kingdom.  Accordingly, the Company has determined that it is not more likely than not that it will realize the benefit of these NOL’s and, as such, has recorded a full valuation allowance against the related deferred tax asset.

- 23 -

Ridgewood UK, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2006 and 2005

NOTE O - CONTINGENCIES

The Company is subject to legal proceedings involving ordinary and routine claims related to its business.  The ultimate legal and financial liability with respect to such matters cannot be estimated with certainty and requires the use of estimates in recording liabilities for potential litigation settlements.  Estimates for losses from litigation are disclosed if considered reasonably possible and accrued if considered probable after consultation with outside counsel.  If estimates of potential losses increase or the related facts and circumstances change in the future, the Company may be required to record additional litigation expense.

NOTE P - SUBSEQUENT EVENTS

On January 23, 2007, the Company entered into an agreement (the “Sale Agreement”) along with Arbutus and the PowerBank Funds (the “Sellers”), and MEIF LG Energy Limited (the “Buyer”) as buyer.  At that time, the Company owned 88% of the issued and outstanding shares of CLP and the remaining 12% of CLP was owned by Arbutus.  On February 22, 2007, the Company completed the sale (the “Sale”) of all of the issued and outstanding shares of CLP.

Under the Sale Agreement, the Buyer agreed to buy (i) 100% of the issued and outstanding shares (the “Shares”) of CLP from Ridgewood UK and Arbutus, and (ii) substantially all of the assets (the “Assets”) of the PowerBanks.  The Assets and the Shares constitute all the landfill gas business located in the United Kingdom of the Company and of the PowerBank Funds.

In accordance with the Sale Agreement, at closing, the Buyer paid an aggregate purchase price for the Shares and the Assets of £117.8 million ($229.5 million), subject to a working capital adjustment that resulted in an increase to the purchase price of approximately £4.2 million ($8.2 million).  After adjustment, the purchase price for the Shares was approximately £25.1 million ($48.9 million), of which approximately £22.1 million ($43.1 million) was attributable to the shares sold by the Company.  Taking into account payments made to the Company pursuant to certain sharing arrangements with the PowerBanks, the total gross sales proceeds to the Company were approximately £27.6 million ($53.8 million).

On February 23, 2007, the Manager caused a portion of the sales proceeds to be converted from sterling into U.S. dollars, which was done at the rate of 1.9483 U.S.  dollars for each pound sterling.  On March 27, 2007, a subsequent conversion took place at an exchange rate of 1.9604 U.S. dollars for each pound sterling.  While certain transactions remain to be made that will require dollar/sterling conversions, management of the Fund does not expect the exchange rates of these conversions to have a material effect on the Company.

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Ridgewood UK, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2006 and 2005

NOTE P (continued)

The Sellers gave a number of warrantees and indemnities to the Buyer in connection with the Sale that are typical of such transactions.  Should there be a breach or breaches of the warrantees or should an indemnifiable event occur, the Buyer could make claims against the Sellers including the Company.  Management of the Company does not believe there is a material likelihood that such a claim will arise or that, should such a claim arise, the Company would incur a material liability.  This belief is based, in part, on the Sellers having purchased warrantee and indemnity insurance to minimize such risk and no reserves or escrow will be provided for the contingent liability represented by these warrantees and indemnities.  As of October 31, 2007, the Company is not aware of any claims.  The Company has distributed all but a nominal amount of the sale proceeds to its members.

- 25 -