Table of
Contents


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, 2008





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 x   No o





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.  x





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




Large
      accelerated filer   o
                        Accelerated
      filer   o
                        Non-accelerated
      filer   o
                        Smaller
      reporting company   x(Do
      not check if a smaller reporting
company)





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
March 31, 2009 was 658.2067.












FORM
10-K




TABLE OF CONTENTS





PART
I


Page


Item 1.
                    Business
                    1Item 1A.
                    Risk Factors
                    5Item 1B.
                    Unresolved Staff Comments
                    8Item 2.
                    Properties
                    8Item 3.
                    Legal Proceedings
                    8Item 4.
                    Submission of Matters to a Vote of Security
      Holders
                    9PART
      IIItem 5.
                    Market for Registrant’s Common Equity, Related Security Holder
      Matters and Issuer
      Purchases of Equity Securities
                    9Item 6.
                    Selected Financial Data
                    9Item 7.
                    Management’s Discussion and Analysis of Financial Condition and
      Results of Operations
                    9Item 7A.
                    Quantitative and Qualitative Disclosures About Market
      Risk
                    14Item 8.
                    Financial Statements and Supplementary Data
                    14Item 9.
                    Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosure
                    14Item 9A.
                    Controls and Procedures
                    14Item 9B.
                    Other Information
                    15PART
      IIIItem 10.
                    Directors, Executive Officers and Corporate
      Governance
                    15Item 11.
                    Executive Compensation
                    17Item 12.
                    Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters
                    17Item 13.
                    Certain Relationships and Related Transactions, and Director
      Independence
                    17Item 14.
                    Principal Accounting Fees and Services
                    19PART
      IVItem 15.
                    Exhibits and Financial Statement Schedules
                    20SIGNATURES
                    22




Table of Contents





Forward-Looking
Statements




Certain
statements discussed in Item 1. “Business”, Item 3. “Legal
Proceedings” and 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 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 Item 1A. “Risk Factors” and
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, as a result of new information, future events
or otherwise, except as required by law.





PART
I




ITEM
1.  BUSINESS





Overview





The
Ridgewood Power Growth Fund (the “Fund”) is a Delaware trust formed on February
18, 1997 primarily 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.




Historically,
the Fund focused primarily on projects fueled by renewable sources of fuel and
on water treatment facilities in remote locations serving hotel resort
developments. These projects allowed 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, 2008, the projects in which the
Fund had investments were located in the United States 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”), and in projects in Egypt with the
capacity to produce approximately 38,650 cubic meters (approximately 10 million
gallons) of potable water per day and electricity generating capacity of
approximately 24MW. The Fund previously owned landfill gas-fired electric
projects located in the United Kingdom, which were sold in February
2007.




The
Managing Shareholder has announced its intention to market for sale the assets
of the Fund’s Egyptian and hydro-electric projects, which represents the only
remaining investments of the Fund. The Managing Shareholder cannot predict the
timing of the sale process or whether any sales will occur. It is anticipated
that a sale of its Egyptian projects will require shareholder consent and the
sale of its hydro-electric projects will not.





The Fund
initiated its private placement offering in February 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 after payment of offering fees, commissions and investment
fees, the Fund had $54.6 million available for investments and operating
expenses.





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. 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 invested
in by the Fund and the management and administrative services required for Fund
operations. Among other services, RRP administers the accounts, including
tax and other financial information, and handles relations with the
shareholders. RRP also provides the Fund with office space, equipment and
facilities and other services necessary for its operation.




1
 Table of Contents




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, such 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.





Projects
and Properties




The
following table is a summary of the Fund’s investment portfolio as of December
31, 2008 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
                    Structure2Ridgewood
      Egypt3
                    32
      locations
                    68.1%
                    Leased
                    1 –
      Power only
                      24
      – Water only
                      7 -
      Water & power
                    Block/slabUS
      Hydro4
                    7
      locations
                    70.8%
                    Leased
      and
                      owned
                    Hydro-electric
                      generation
                    Integral
      to river
                      dams





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





2
              Describes
      the type of structure in which the projects of the Fund are
      housed.





3
              All
      Egyptian sites are located on or near the Red
  Sea.





4
              Six
      US Hydro sites are located on the Eastern Seaboard of the United States
      and one in California.





Ridgewood
Egypt





In 1999,
the Fund and Ridgewood Electric Power Trust V (“Trust V”) jointly
formed and funded Ridgewood Near East Holdings LLC and its wholly-owned
subsidiary, RW Egyptian Holdings, LLC (collectively, “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 controls and owns all contractual rights to the
ownership of Ridgewood Egypt for Infrastructure LLC (Egypt) (“REFI”). In
2001, the Ridgewood/Egypt Fund (“Egypt Fund”), an affiliate of Trust V and the
Fund, made contributions to NEH in exchange for a minority
interest.





In 2001,
NEH, through REFI, formed a wholly-owned subsidiary and also purchased a 28%
equity interest in Sinai For Environmental Services S.A.E. (“Sinai”), which owns
a 5,750 cubic meters (approximately 1.5 million gallons) per day water
desalinization plant in Egypt. In February 2002, REFI made an additional
investment to increase its ownership to 53% and gain control of Sinai. During
2006, REFI was granted an additional interest in Sinai in return for having
provided Sinai with certain machinery and equipment. In June 2008, REFI
purchased an additional interest in Sinai, bringing its total ownership in Sinai
to 75.9%. The Fund owns 68.1%, Trust V owns 14.1% and Egypt Fund owns 17.8% of
NEH. The assets of REFI are located in Egypt.





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’ sites 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, 2008, REFI,
excluding Sinai, owns one project that supplies only electricity, twenty four
that provide only potable water and six that provide both water and electricity
generation. The projects generally sell their output under contracts and other
arrangements at prevailing market rates. REFI, excluding Sinai, has the capacity
to make 32,900 cubic meters (approximately 8.5 million gallons) of potable water
per day and electricity generating capacity of approximately 24MW. 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 REFI 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.




A portion
of the assets of Sinai are collateral for a Sinai bank term loan
facility.




2
 Table of Contents




During
2008, NEH entered into a sale and purchase agreement to sell REFI. The sale did
not close and the sale and purchase agreement was terminated without
liability.





US
Hydro





From
April 2000 through November 2002, the Fund and Trust V acquired seven
hydro-electric generating facilities with 15MW of generating capacity
and notes receivable from Synergics, Inc. Ridgewood US Hydro Corporation
(“US Hydro”) has since reached a settlement eliminating the notes
receivable. The Fund owns 70.8% and Trust V owns 29.2% of US
Hydro.





As of
December 31, 2008, three projects sold their electric output to local
utilities pursuant to electric power sales contracts and four sold
electrical output at open market prices. Of the three projects under a
long-term contract, one expires in July 2009, 2010 and 2014. Three projects are
located in Virginia, two are in New York and one each are in California and
Rhode Island. The projects are operated and maintained by RPM, on an at-cost
basis.





On
December 22, 2008, US Hydro met the criteria of being classified as assets held
for sale and therefore the results of its operations have been segregated from
the continuing operations of the Fund and reported as discontinued operations in
the Fund’s consolidated statements of operations.





Ridgewood
UK





In May
1999, Ridgewood UK, LLC (“RUK”) was formed as a New Jersey limited liability
company and was re-domiciled to Delaware in December 2002. Prior to February 22,
2007, RUK, through its subsidiary, CLPE Holdings Limited (“CLP”), was in the
business of 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 Fund owns 30.4% and Trust V owns 69.6% of
RUK.





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





On
February 22, 2007, RUK completed the sale of all of the issued and outstanding
shares of CLP (the “Shares”) to the Buyer. Under the Sale Agreement, the Buyer
acquired (i) 100% of the Shares from RUK and Arbutus, and (ii) substantially all
of the assets of the PowerBank Funds. The assets and the Shares constitute all
the landfill gas business located in the United Kingdom of the Fund, Trust V and
the PowerBank Funds.





Project
Raw Materials





The
Fund’s investments converts 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 processes 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 many 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, NEH 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
Fund’s hydro-electric projects are all located on, and are integral parts of,
dams on river ways. Of the seven US Hydro projects, 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 projects do not make payments for throughput water.




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 Table of Contents




Competition





The Egypt
projects are primarily in the market for providing potable water to hotel resort
developments, which is 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.





The
majority of the power generated from hydro-electric projects is sold pursuant to
long-term contracts, and as a result, these facilities do not face competition
in the sale of their finished product. Beginning in 2009, a majority of the
power generated by the hydro-electric projects is sold at prevailing market
rates.





Seasonality/Weather
Effects




Demand
for the output of the Egypt projects is largely driven by the occupancy levels
of the hotels 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 Fund’s hydro-electric projects is affected by seasonal weather
patterns including rainfall and snowpack runoff. These factors tend to
concentrate the output of these projects in the spring and fall with little or
no output in the winter and summer months. Management of these sites 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 these
projects, output can vary widely from year-to-year based on amounts of rain and
snowfall.





Government
Incentives and Regulation




Projects
of the Fund have been subject to energy and environmental laws and regulations
at the federal, state and local levels in connection with development,
ownership, operation, geographical location, zoning and land use of a project
and emissions and other substances produced by a project. These energy and
environmental laws and regulations generally require that a wide variety of
permits and other approvals be obtained before the commencement of construction
or operation of an energy-producing facility and that the facility then operates
in compliance with such permits and approvals.





At the
inception of the NEH business, there was little development 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 Qualifying Facility Certifications issued by the
Federal Energy Regulatory Commission. Even though US Hydro has no employees, it
is affected by general employment regulations in the jurisdictions of their
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.




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 and
political risk insurance, which the Fund believes to be
appropriate.




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.





4
 Table of Contents




ITEM
1A. RISK FACTORS




In
addition to the other information set forth elsewhere in this report, you should
carefully consider the factors discussed below.




RISKS
INHERENT IN THE BUSINESSES OF THE FUND




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 global 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, global 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
recent global economic crisis is expected to have an impact on discretionary
spending on tourism. The length and depth of this crisis could have a
significant impact on REFI’s operating results.





The
Fund’s hydro-electric business can be affected by adverse weather
conditions.




The US
Hydro projects 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.





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 a significant investment in Egypt, and as a result, the Fund is subject to
certain foreign-related risks, 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 business may be
successful when measured in its local currency. Also, fluctuations in foreign
currencies could reduce the value of or the ability of the Fund to make
distributions to its shareholders.





The
Fund relies on key Egyptian-based personnel for day-to-day operations of its
foreign business. If the Fund loses the services of these employees, it could
have an adverse impact on the business of the Fund.





The Fund
is dependent on locally-based employees for its foreign operations. The
departure of these employees would have a detrimental impact on the business
until such time they are replaced.





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 its 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 project.





The
operations of the Fund have limited capital and have limited access to new
capital.





The
Fund’s investments, but not the Fund itself, have in the past utilized debt
financing. Debt financing could increase the variability of results and
increases the financial risk of the Fund. In such cases, the rights of the
Fund to the cash flow of the projects would typically be subordinated to the
obligations of the projects under the debt facilities, which could limit the
Fund’s ability to receive cash distributions from its
investments.




5
 Table of Contents




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




As an
integral part of its Egyptian business, 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 projects and 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 and hydro-electric 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 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.





The
projects of the Fund are subject to regulatory changes (including changes in
environmental regulations) that could significantly reduce revenues or increase
expenses of the Fund.




Regulatory
changes, such as the ability of the Egyptian projects to discharge the reject
water that is a byproduct of the purification process and provision for fish
passage in US Hydro projects, could impact the operations of the Fund’s
projects. Such changes could increase their costs or prevent them 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 other projects. 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 is, and may in the future become, involved in litigation that may be
resolved unfavorably.




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, any such claims or proceedings, or any claim or proceeding
discussed herein under Item 3. “Legal Proceedings”, may be disposed of
unfavorably to the Fund. An unfavorable ruling could include money damages or
injunctive relief and could result in a material adverse impact on the Fund's
business or financial condition. Generally, for accounting purposes, the Fund’s
results of operations would be impacted for the period in which the matter is
ultimately resolved unfavorably to the Fund or an unfavorable outcome becomes
probable and reasonably estimable. 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.




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.




6
 Table of Contents




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. 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, subject to shareholder approvals as detailed in the Declaration of
Trust, 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 arising 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.





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 have been 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.




7
 Table of Contents




·
            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 fund 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 when it was established, 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.





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 returns.




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 Item 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
Fund (the “Plaintiff”), filed a Complaint in the Federal District Court in
Massachusetts, Paul
Bergeron v. Ridgewood Securities Corporation,et
al. (“Bergeron I”). The action was brought against, among others, the
Managing Shareholder and persons who are or were officers of the Managing
Shareholder and 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 affiliated
trusts managed by the Managing Shareholder or affiliates of the Managing
Shareholder which were sold in private offerings and the operation of the Fund
and affiliated trusts subsequent to the sale. The Plaintiff is seeking damages
of $900,000 plus interest and attorney fees. Neither the Fund nor trusts are
party to this litigation. Discovery has been completed and in March 2009 a
pending Motion for Summary Judgment filed by the Defendants was granted on
breach of fiduciary duty claims and partially granted on contract claims, but
otherwise denied, and a trial date of June 15, 2009 was set.


8
 Table of Contents


On
March 20, 2007, the Plaintiff in Bergeron I commenced a derivative action,
in Suffolk County Superior Court, Commonwealth of Massachusetts, Paul Bergeron v.TheRidgewoodPower Growth Fund,et
al. (“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. The Superior Court denied the
request by the Plaintiff for an injunction. On February 29, 2008, the
Plaintiff filed an amended complaint in Bergeron II adding two additional
investors, one in Trust V and one in the Fund, as additional plaintiffs.
Discovery is ongoing and no trial date has been set.





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 lawsuits 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 other plaintiffs by Perelson
Weiner. On October 20, 2006, Perelson Weiner filed a counterclaim against the
Fund and other plaintiffs, alleging breach of contract due to unpaid invoices
with a combined total of approximately $1.2 million. Discovery is ongoing and no
trial date has been set. The costs and expenses of this litigation,
including adverse judgments, if any, are being paid for by the Managing
Shareholder and affiliated management companies and not the underlying
investment funds.





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




During
the third quarter ended September 30, 2008, a consent solicitation for the
sale of NEH assets was submitted pursuant to Section 14(a) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). The results of such
solicitation are incorporated by reference to Part II, Item 4 of the
Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 12,
2008.





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
March 31, 2009, there were 1,344 holders of Investor Shares.





Dividends





Fund
distributions for the years ended December 31, 2008 and 2007 were as follows (in
thousands, except per share data):





2008
                  
                  
                  2007Distributions
      to Investors
                  
                  $
                  658
                  
                  
                  $
                  14,151Distributions
      per Investor Share
                  
                  
                  1,000
                  
                  
                  
                  21,500Distributions
      to Managing Shareholder
                  
                  
                  -
                  
                  
                  
                  3





ITEM
6.  SELECTED FINANCIAL DATA





Not
required.





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
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 primarily 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.




9
 Table of Contents




Historically,
the Fund focused primarily on small scale projects fueled by renewable
sources of fuel and on water treatment facilities in remote locations serving
hotel resort developments. These projects allowed 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, 2008, the projects in
which the Fund had investments were located in the United States and Egypt. As
of that date, the Fund had investments in hydro-electric generating projects in
the US with total capacity of 15MW, and in projects in Egypt with the capacity
to produce approximately 38,650 cubic meters (approximately 10 million gallons)
of potable water per day and electricity generating capacity of approximately
24MW.





The
Fund’s accompanying consolidated financial statements include the accounts of
the Fund and its majority-owned subsidiaries. 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 did not control the operating and financial policies
of the investment. The Fund previously owned landfill gas-fired electric
projects located in the United Kingdom, which were sold in February
2007.





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 a 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, and the minority interests of
Sinai, are presented as minority interests in the consolidated financial
statements.





The
Managing Shareholder has announced its intention to market for sale the assets
of NEH and US Hydro, which represents the only remaining investments of the
Fund. The Managing Shareholder can not predict the timing of the sale process or
whether any sales will occur. It is anticipated that the sale of NEH’s assets
will require shareholder consent and the sale of US Hydro’s will
not.





On
December 22, 2008, US Hydro met the criteria of being classified as assets held
for sale in accordance with Statement of Financial Accounting Standards (“SFAS”)
No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets (“SFAS 144”). The Fund
has reflected the results of US Hydro operations as discontinued operations in
the accompanying consolidated statements of operations for all years presented.
Accordingly, historical amounts in the consolidated statement of operations have
been restated to reflect the discontinued operations. The assets and liabilities
related to US Hydro were reflected as held for sale on the consolidated balance
sheets at December 31, 2008 and 2007. As a result of the reclassification, 100%
of the Fund’s reported revenues are generated in Egypt in its local
currency.





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 (“GAAP”). 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





Power
generation revenue is recorded in the month of delivery, based on the estimated
volumes sold to customers. Revenues generated from the sale of fresh water are
recorded in the month of delivery, based on actual 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 did 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 receivables will not be recovered.




10
 Table of Contents




Property,
Plant and Equipment





Property,
plant and equipment, consisting principally of land and water desalinization
facilities, 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 sheet. 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 consolidated statement of operations.





Depreciation
is recorded using the straight-line method over the useful lives of the assets,
which ranges from 5 to 10 years. Following the classification of assets as held
for sale, no further depreciation is recorded on those
assets.





Impairment
of Goodwill, Intangibles and Long-Lived Assets





The Fund
evaluates intangibles 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 (“SFAS 142”). Under SFAS 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.





Assets
Held for Sale





SFAS 144
requires that in the period the operations are qualified to be classified as
“held for sale”, the assets and liabilities should be presented as assets held
for sale and liabilities related to assets held for sale. The results of
operations of the project that qualifies as “held for sale” are to be presented
as discontinued operations in all periods presented if the operations are
expected to be eliminated and the seller will not have significant continuing
involvement following the sale. As of December 22, 2008, US Hydro qualified to
be classified as held for sale.





Income
Taxes





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 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.





The
Fund’s Egyptian subsidiary has a ten year income tax holiday that expires on
December 31, 2010. The Fund records deferred tax liabilities for book to tax
differences that are scheduled to exist at the expiration of the tax
holiday.





Except
for the above, no provision is made for 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.  As a result, changes in the Fund’s pre-tax income (loss) do
not necessarily lead to changes in income tax expense, thereby resulting in
volatility of the effective tax rate.  US Hydro operates in several tax
jurisdictions and, as a result, the geographic mix of US Hydro’s pre-tax income
or loss can also impact the Fund’s overall effective tax rate.





Foreign
Currency Translation





The
Egyptian pound is the functional currency of the Fund’s Egyptian subsidiary. The
consolidated financial statements of the Fund’s foreign subsidiary are
translated into US dollars. Assets and liabilities are translated into US
dollars using the current exchange rate in effect at the balance sheet date,
while revenues and expenses are translated using the average exchange rate
during the applicable reporting period. The cumulative foreign currency
translation adjustment is a component of other comprehensive (loss) income
included in shareholders’ equity.





Results
of Operations





Results
of operations discussed below exclude the results of US Hydro, which are
presented as discontinued operations in the consolidated statements of
operations for all periods presented.




11
 Table of Contents




Revenues
increased $2.9 million, or 28.5%, from $10.3 million in 2007 to $13.2 million in
2008. Revenues increased primarily due to increases in water volume sales due to
greater tourism in the NEH market area as well as increased unit prices to
offset increased costs of production.





Cost of
revenues increased $1.9 million, or 29.8%, from $6.3 million in 2007 to $8.2
million in 2008. This increase was primarily due to an increase in consumables
resulting from higher fuel costs and production volumes and increased
depreciation expense as a result of capital expansion at NEH.





Gross
profit increased $1 million, or 26.6%, to $5 million in 2008 from
approximately $4 million in 2007. This increase was due to an increase in
NEH revenues, primarily resulting from NEH’s expanded capacity, partially offset
by increased cost of revenues.





General
and administrative expenses increased $0.5 million from $3.5 million in
2007 to $4 million in 2008. The increase was primarily attributable to an
increase in professional fees.





The
management fee due to the Managing Shareholder was $1.6 million for both
2008 and 2007.  The management fee to the Managing Shareholder is
for certain management, administrative and advisory services and office space
and other facilities provided to the Fund.





In 2007,
the Fund recorded equity income of $16.4 million from its investment in RUK.
During the first quarter of 2007, RUK completed the sale of all of the issued
and outstanding shares of CLP to MEIF LG Energy Limited.





The Fund recorded a minority interest
in the earnings of subsidiary of $0.5 million in 2008 compared to $0.3 million
in 2007. The increase in the earnings of $0.2 million was primarily due to
an increase in the net earnings of NEH in 2008 compared to 2007, as a result of
higher revenues.





Liquidity
and Capital Resources





At
December 31, 2008, the Fund had cash and cash equivalents of $1.1 million, a
decrease of $3 million from December 31, 2007. The cash flows for 2008 were $3.6
million provided by operating activities, approximately $6.9 million used in
investing activities, $0.2 million provided by financing activities and a $0.1
million positive effect of foreign exchange on cash and cash
equivalents.




In 2008,
the Fund’s operating activities generated cash of $3.6 million compared to $2.6
million in 2007, an increase of approximately $1 million. This increase was
primarily due to increased NEH gross profits.





In 2008,
investing activities used cash of approximately $6.9 million compared to cash
provided of $14.1 million in 2007, an increase in cash used of approximately $21
million. This increase was primarily due to $15.7 million in distributions from
RUK relating to the sale of CLP in 2007 and an increase in capital expenditures
of $5.3 million in 2008.





In 2008,
the Fund’s financing activities provided cash of $0.2 million, which represents
$2 million of loan proceeds received by REFI, partially offset by $0.7 million
used for loan repayments and $1.1 million used for cash distributions to
shareholders and minority interest.In 2007, the
Fund used $15 million of cash in financing activities, which represents $14.2
million used for cash distributions to shareholders and approximately $0.8
million used for repayments under a bank loan.





Future
Liquidity and Capital Resource Requirements




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





Off-Balance
Sheet Arrangements





None.





12
 Table of Contents




Contractual
Obligations and Commitments





The
following table provides a summary of the Fund’s share of contractual
obligations at December 31, 2008 (in thousands).




Payments
      due by period at December 31, 2008Less
      than
              
              
              1-3
              
              
              3-5
              
              
              More
      thanTotal
              
              
              1
      Year
              
              
              Years
              
              
              Years
              
              
              5
      YearsLong-term
      debt – Sinai 1
              $
              1,436
              
              
              $
              480
              
              
              $
              956
              
              
              $
              -
              
              
              $
              -Long-term
      debt – REFI 2
              
              1,651
              
              
              
              1,323
              
              
              
              328
              
              
              
              -
              
              
              
              -Minimum
      lease payment 3
              
              6,216
              
              
              
              720
              
              
              
              975
              
              
              
              523
              
              
              
              3,998Consulting
      agreement settlement 4
              
              1,130
              
              
              
              101
              
              
              
              235
              
              
              
              241
              
              
              
              553Total
              $
              10,433
              
              
              $
              2,624
              
              
              $
              2,494
              
              
              $
              764
              
              
              $
              4,551







1 The
Sinai loan, which is secured by a part of its assets, bears interest at 11.5%
per annum and is denominated in Egyptian pounds. The provision of the loan
restricts Sinai from paying dividends to its shareholders or obtaining credit
from other banks. At December 31, 2008, Sinai was in compliance with the terms
of its loan.





2Concurrent with the NEH sale and purchase agreement, which was
subsequently terminated, the prospective buyer entered into a loan agreement,
dated June 5, 2008, with REFI pursuant to which the buyer loaned $2 million
to REFI, at an interest rate of 10% per annum on an unsecured basis, for the
purpose of financing general corporate operations, including the purchase of
equipment, and providing REFI with working capital. The loan is to be repaid in
US dollars by REFI commencing 120 days after the making of the loan and is
payable on a monthly basis over the successive 17 months. The loan did not
provide for acceleration of the loan in the event of the termination of the sale
and purchase agreement, which has since occured.





3 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 for the year ended December 31, 2008.
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 for the year ended
December 31, 2008.





4 In April
2005, NEH agreed to a settlement with a consultant, whereby NEH will make
quarterly payments of $30 for as 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 and will make
monthly installment payments of $8 until June 2013.





Recent
Accounting Pronouncements





FIN
48




In June
2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation
No. 48,Accounting for
Uncertainty in Income Taxes (“FIN 48”), an interpretation of SFAS No.
109, Accounting for Income
Taxes(“SFAS 109”). 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. In February 2008, the
FASB issued FASB Staff Position FIN 48-2,Effective Date of FASB
Interpretation No. 48 for Certain Nonpublic Enterprises, which deferred
the effective date of FIN 48 for non-public companies to fiscal
years beginning after December 15, 2007. In December 2008, the
FASB issued FASB Staff Position FIN 48-3,Effective Date of FASB
Interpretation No. 48 for Certain Nonpublic Enterprises, which further
deferred the effective date of FIN 48 for non-public companies to
fiscal years beginning after December 15, 2008. The Fund has concluded that it
is eligible for this deferral and therefore, FIN 48 will become effective for
the Fund beginning January 1, 2009. The Fund is currently evaluating the impact
of adopting FIN 48 on its consolidated financial statements. The Fund evaluates
uncertain tax positions, if any, using SFAS No. 5, Accounting for Contingencies.
If applicable, a loss contingency is recognized when, in the opinion of
management, it is probable that a tax liability has been incurred as of the
date of the financial statements and the amount of the loss can be reasonably
estimated. Based on the Fund’s evaluation, there are no significant uncertain
tax positions requiring recognition in the Fund’s consolidated financial
statements. Other than to the extent of net operating loss carry forwards, the
Fund is no longer subject to U.S. or state income tax examinations by tax
authorities for years before 2005.




13
 Table of Contents





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 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. In
February 2008, FASB issued Staff Position 157-2, Effective Date of FASB Statement
No. 157, which delays the effective date of SFAS 157 for
non-financial assets and non-financial liabilities for the Fund until January 1,
2009, except for items that are recognized or disclosed at fair value in the
financial statements on a recurring basis.  In October 2008, the FASB
issued Staff Position 157-3, Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not Active,which clarifies the
application of SFAS 157 in a market that is not active and to determine the fair
value of a financial asset when the market for that financial asset is not
active. The Fund adopted SFAS 157 for financial assets and financial
liabilities effective January 1, 2008, with no material impact on its
consolidated financial statements.  Staff Position 157-3 does not have
a material impact on its consolidated financial statements. The Fund is
currently evaluating the impact of adopting SFAS 157 for non-financial
assets and non-financial liabilities on its consolidated financial
statements.





SFAS
159





In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of FASB
Statement No. 115 (“SFAS 159”), which 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. The
Fund adopted SFAS 159 effective January 1, 2008, with no material impact on its
consolidated financial statements.





SFAS
160





In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements — an amendment of ARB No. 51
(“SFAS 160”). SFAS 160 requires that ownership interests in subsidiaries
held by parties other than the parent, and the amount of consolidated net
income, be clearly identified, labeled, and presented in the consolidated
financial statements within equity, but separate from the parent’s equity.
It also requires once a subsidiary is deconsolidated, any retained
noncontrolling equity investment in the former subsidiary be initially measured
at fair value. Sufficient disclosures are required to clearly identify and
distinguish between the interests of the parent and the interests of the
noncontrolling owners. SFAS 160 will become effective for the Fund beginning
January 1, 2009. The Fund is currently evaluating the impact of adopting
SFAS 160 on its consolidated financial statements.





SFAS
162





In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles (“SFAS 162”).  SFAS 162 identifies the sources
of accounting principles and the framework for selecting principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with GAAP. This statement shall be effective 60
days following the SEC’s approval of the Public Company Accounting Oversight
Board’s amendments to AU section 411, The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting Principles. The Fund is
currently evaluating the impact of adopting SFAS 162 on its consolidated
financial statements.




ITEM
7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK




Not
required.





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 on page F-1 of this Form
10-K.





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




None.





ITEM
9A.  CONTROLS AND PROCEDURES





Evaluation
of Disclosure Controls and Procedures




In
accordance with Rule 13a-15(b) of the Exchange Act, the Fund’s Chief Executive
Officer and Chief Financial Officer have evaluated the effectiveness of the
Fund’s disclosure controls and procedures, as defined in Exchange Act Rule
13a-15(e). Based on this evaluation, the Fund’s Chief Executive Officer and
Chief Financial Officer concluded that the Fund’s disclosure controls and
procedures were effective as of the end of the period covered by this report to
ensure that information required to be disclosed by a registrant in reports
filed pursuant to Exchange Act are recorded, processed, summarized and reported
within the time periods specified in the SEC rules and forms and 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.




14
 Table of Contents




Management’s
Report on Internal Control over Financial Reporting





The
Fund’s management is responsible for establishing and maintaining adequate
internal control over financial reporting. The Fund’s internal control over
financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.





Management
of the Fund, including its Chief Executive Officer and Chief Financial Officer,
assessed the effectiveness of the Fund’s internal control over financial
reporting as of December 31, 2008.  In making this assessment,
management of the Fund used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal
Control — Integrated Framework.  Based on this evaluation,
the Fund’s management concluded that as of December 31, 2008, the Fund’s
internal controls over financial reporting were effective.





This
Annual Report on Form 10-K does not include an attestation report of the Fund’s
registered public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Fund’s registered public accounting firm pursuant to temporary rules of the SEC
that permit the Fund to provide only management’s report in this Annual
Report.




Changes
in Internal Control over Financial Reporting





The
Fund’s Chief Executive Officer and Chief Financial Officer have 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) that occurred
during the fiscal quarter ended December 31, 2008 that has materially affected,
or is reasonably likely to materially affect, the Fund’s internal control over
financial reporting.





ITEM 9B.  OTHER INFORMATION





None.





PART
III




ITEM
10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE




The
Fund’s Managing Shareholder, RRP, 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 SinceRandall
      D. Holmes,  61President
      and Chief Executive Officer
                            2004Robert
      E. Swanson, 62Chairman
                            1997Jeffrey
      H. Strasberg, 51Executive
      Vice President and Chief Financial Officer
                            2007Daniel
      V. Gulino, 48Senior
      Vice President, General Counsel and Secretary
                            2000


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, the Managing Shareholder
and affiliated Ridgewood Power trusts and limited liability companies since
January 2006 and served as Chief Operating Officer of the Fund, the Managing
Shareholder and affiliated Ridgewood Power trusts and limited liability
companies from January 2004 until January 2006. 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 the Fund. 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.




15
 Table of Contents




Robert E. Swanson has served
as Chairman of the Fund, the Managing Shareholder and affiliated Ridgewood Power
trusts and limited liability companies 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.





Jeffrey H. Strasberg has
served as Executive Vice President and Chief Financial Officer of the Fund, the
Managing Shareholder and Ridgewood Power trusts and limited liability companies
since May 2007. Mr. Strasberg also serves as Senior Vice President and
Chief Financial Officer of Ridgewood Capital and affiliated limited liability
companies 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 trusts 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 Ridgewood Power trusts and limited liability companies 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 Ridgewood Power trusts and limited liability companies
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.




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
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. 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 Fund. 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”.




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.





16
 Table of Contents




Section
16(a) Beneficial Ownership Reporting Compliance




Section 16(a) of the Exchange Act
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. During the past fiscal year,
all filings required to be made by members of management or others pursuant to
Section 16(a) of the Exchange Act have been duly 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 this Annual Report on Form
10-K.




ITEM
11.  EXECUTIVE COMPENSATION




During
2008, the executive officers of the Fund did 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.





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.





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 March 31, 2009 (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 658.2067 Investor Shares outstanding at March 31, 2009.
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)
                  PercentRidgewood
      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 in 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 Management Agreement, 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, which was approximately $1,645,000 for the years ended
December 31, 2008 and 2007, as compensation for the services the Managing
Shareholder provides to the Fund. 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.




17
 Table of Contents




For the
years ended December 31, 2008 and 2007, the Fund made management fee payments to
the Managing Shareholder of approximately $960,000 and $823,000,
respectively. In the fourth quarter of 2007, the Managing Shareholder
forgave approximately $834,000 of unpaid management fees and related
interest and also waived its right to reimbursement of approximately $934,000
relating to professional service fees of the Fund. Any waivers, or forgiveness,
by the Managing Shareholder are recorded by the Fund as a deemed capital
contribution. 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 offsets the
allocation of the recorded expense.





Under the
Operating Agreement with the Fund, RPM 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 years ended December 31, 2008 and 2007, RPM
charged the US Hydro projects approximately $678,000 and $689,000, respectively,
for overhead items allocated in proportion to the amount invested in projects
managed. In addition, for the years ended December 31, 2008 and 2007, RPM
charged the projects approximately $5,238,000 and $4,813,000, respectively,
for direct expenses incurred. These charges may not be indicative of costs
incurred if the projects 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
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
for the years ended December 31, 2008 and 2007 were $0
and approximately $3,000, respectively. 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.





In
accordance with the  Declaration of Trust, upon or prior to the first
distribution by the Fund in liquidation, the Managing Shareholder is
required to contribute to the capital of the Fund an amount equal to any
deficit in the tax basis capital account of the Managing Shareholder calculated
just prior to the date of such distribution. As of December 31, 2008, the
last date such calculation was made, the Managing Shareholder would not have
been required to make any contributions to the Fund.





As
discussed in Item 1. “Business” under the heading “Projects and Properties -
Ridgewood UK”, on
January 23, 2007, RUK, which is owned 69.6% by Trust V and 30.4% 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 (the “CLP
Sale”).  The Managing Shareholder was not a party to the Sale
Agreement but received certain payments as a result of the CLP Sale and as a
result of its service as the Managing Shareholder of each of the Ridgewood ROCs
and each of the PowerBank Funds.





The CLP
Sale was completed on February 22, 2007. The total dollar amount attributable to
the Managing Shareholder as a result of the CLP Sale was approximately $37
million, all of which was paid out of the proceeds of the CLP 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 CLP Sale.





As a
result of the CLP 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 CLP Sale being allocated to RUK rather than to the
officers.




18
 Table of Contents




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 Funds, (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 CLP Sale, (i)
such CLP 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 CLP Sale was fair to the shareholders of CLP from a financial point of
view (without giving effect to any impacts of the CLP 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 CLP Sale was fair to the
members of such Ridgewood ROC from a financial point of view (without giving
effect to any impacts of the CLP 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 CLP Sale by each of the Sellers and
the Managing Shareholder, and the respective shareholders of the PowerBank
Funds, Trust V, the Fund and Arbutus.





ITEM
14.  PRINCIPAL ACCOUNTING 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, 2008 and 2007 (in
thousands).




2008
                  
                  
                  2007Audit
      fees
                  
                  $
                  467
                  
                  
                  $
                  531Tax
      fees1
                  
                  
                  106
                  
                  
                  
                  69Total
                  
                  $
                  573
                  
                  
                  $
                  600





1 Tax
fees consisted principally of tax compliance, planning and advisory services as
well as tax examination services.





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.






19
 Table of Contents




PART
IV
  ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  (a)           Financial
Statements
  See the
Index to Consolidated Financial Statements on Page F-1 of this
report.
 
 (b)             Exhibits
 
 Exhibits
required by Section 601 of Regulation S-K:
  Exhibit
      No.
                        Description2.1
                        
                        Sale
      and Purchase Agreement, dated June 5, 2008, as amended, by and among
      Ridgewood Near East Holdings LLC, RW Egyptian Holdings LLC, Horus Private
      Equity Fund III, L.P., Mariridge for Infrastructure Projects, Mr. Zaki
      Girges and Ridgewood Egypt for Infrastructure LLC (incorporated by
      reference to Annex A to the Definitive Schedule 14A filed by the
      Registrant with the SEC on September 19, 2008)2.2
                        
                        Escrow
      Agreement, dated June 5, 2008, as amended, by and among Ridgewood
      Near East Holdings, LLC, RW Egyptian Holdings, LLC, Horus Private Equity
      Fund III LP, Mariridge for Infrastructure Projects, Ridgewood Egypt for
      Infrastructure LLC and HSBC Egypt (incorporated by reference to Annex B to
      the Definitive Schedule 14A filed by the Registrant with the SEC on
      September 19, 2008)2.3
                        
                        Inter-Fund
      Agreement, dated June 5, 2008, by and between Ridgewood Renewable
      Power LLC, The Ridgewood Power Growth Fund, Ridgewood Electric Power Trust
      V and Ridgewood/Egypt Fund (incorporated by reference to Annex C to the
      Definitive Schedule 14A filed by the Registrant with the SEC on September
      19, 2008)2.4
                        
                        Amendment
      to the Sale and Purchase Agreement, dated September 9, 2008, as amended,
      by and among Ridgewood Near East Holdings LLC, RW Egyptian Holdings, LLC,
      Horus Private Equity Fund III LP, Mariridge for Infrastructure Projects,
      Mr. Zaki Girges and Ridgewood Egypt for Infrastructure LLC (incorporated
      by reference to Exhibit 2.2 to the Quarterly Report on Form 10-Q filed by
      the Registrant with the SEC on November 12,
  2008)


2.5
                          
                          Assignment
      and Amendment Agreement, dated September 30, 2008, by and among Ridgewood
      Near East Holdings LLC, RW Egyptian Holdings LLC, Horus Private Equity
      Fund III, LP, Mariridge for Infrastructure Projects, Mr. Zaki Girges,
      Ridgewood Egypt for Infrastructure LLC, EFG-Hermes for Water Desalination,
      SAE and EFG Hermes Holding Co., SAE (incorporated by reference to Annex 1
      to the Definitive Schedule 14A filed by the Registrant with the SEC on
      October 10, 2008)2.6
                          
                          Amendment
      to the Escrow Agreement, dated September 9, 2008, as amended, by and among
      Ridgewood Near East Holdings LLC, RW Egyptian Holdings, LLC, Horus Private
      Equity Fund III LP, Mariridge for Infrastructure Projects, HSBC Egypt, and
      Ridgewood Egypt for Infrastructure LLC (incorporated by reference to
      Exhibit 2.4 to the Quarterly Report on Form 10-Q filed by the Registrant
      with the SEC on November 12, 2008)3   (i)(A)
                          
                          Certificate
      of Fund 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 Fund (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 Fund of the Registrant filed with
      Delaware Secretary of State 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)
                          
                          First
      Amendment to the Declaration of Trust (incorporated by reference to the
      Registrant’s Definitive Schedule 14A 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
                          #
                          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)10.2
                          #
                          The
      CLPE Holdings Management Incentive Plan dated August 6, 2003 (incorporated
      by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form
      10-K filed with the SEC on August 17, 2007)10.3
                          #
                          Service
      Agreement dated October 1, 2004 between Douglas R. Wilson and CLPE
      Holdings Limited (incorporated by reference to Exhibit 10.13 to the
      Registrant’s Annual Report on Form 10-K filed with the SEC on August 17,
      2007)10.4
                          #
                          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 Exhibit 10.15 to
      the Registrant’s Annual Report on Form 10-K filed with the SEC on August
      17, 2007)10.5
                          #
                          Compromise
      Agreement dated February 22, 2007 between Douglas R. Wilson and CLPE
      Holdings Limited (incorporated by reference to Exhibit 10.16 to the
      Registrant’s Annual Report on Form 10-K filed with the SEC on August 17,
      2007)




20
 Table of Contents




Exhibit No
                                                          
                                                          Description10.6
                                                          #
                                                          Deed
      of Waiver dated January 22, 2007 between Douglas R. Wilson and CLPE
      Holdings Limited relating to a bonus entitlement under The CLPE Holdings
      Management Incentive Plan (incorporated by reference to Exhibit 10.14
      to the Registrant’s Annual Report on Form 10-K filed with the SEC on
      August 17, 2007)10.7
                                                          
                                                          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 Current Report on Form
      8-K filed by the Registrant with the SEC on January 29,
    2007)10.8
                                                          
                                                          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 Current Report on Form
      8-K filed by the Registrant with the SEC on January 29,
    2007)10.9
                                                          
                                                          Loan
      Agreement, dated June 5, 2008, by and between Horus Private Equity Fund
      III, LP and Ridgewood Egypt for Infrastructure LLC (incorporated by
      reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the
      Registrant with the SEC on June 13, 2008)14
                                                          
                                                          Code
      of Ethics, adopted on March 1, 2004 (incorporated by reference to the
      Registrant’s Annual Report on Form 10-K filed with the SEC on March 1,
      2006)21
                                                          
                                                          Subsidiaries
      of the Registrant (incorporated by reference to the Registrant’s Annual
      Report on Form 10-K filed with the SEC on March 26,
  2008)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


____________________*
              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
      SchedulesSee
      Consolidated Financial Statements and accompanying notes included in this
      report.


21
 Table of Contents




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 FUNDDate: 
      April 10, 2009
            By:
            /s/ 
      Randall D. HolmesRandall
      D. HolmesPresident
      and 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
                
                President
      and Chief Executive Officer
                
                April
      10, 2009Randall
      D. Holmes
                
                (Principal
      Executive Officer)/s/
      Jeffrey H. Strasberg
                
                Executive
      Vice President and Chief Financial Officer
                
                April
      10, 2009Jeffrey
      H. Strasberg
                
                (Principal
      Financial and Accounting Officer)RIDGEWOOD
      RENEWABLE POWER LLC(Managing
      Shareholder)By: /s/ Randall D.
      Holmes
                
                President
      and Chief Executive Officer of Managing Shareholder
                
                April
      10, 2009Randall
      D. Holmes








22




THE
RIDGEWOOD POWER GROWTH FUND





INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS







PageReport of Independent Registered Public Accounting
      Firm
              F-2Consolidated Balance Sheets at December 31, 2008 and
      2007
              F-3Consolidated
      Statements of Operations and Comprehensive (Loss) Income for the years
      ended December 31, 2008and 2007
              F-4Consolidated Statements of Changes in Shareholders’ Equity
      (Deficit) for the years ended December 31, 2008 and
      2007
              F-5Consolidated Statements of Cash Flows for the years ended
      December 31, 2008 and 2007
              F-6Notes to Consolidated Financial
    Statements
              F-7






F-1
 Table of Contents




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, 2008 and
2007, and the related consolidated statements of operations and comprehensive
(loss) income, changes in shareholders’ equity (deficit), and cash flows
for the years then ended. 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 audits 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 consolidated financial position of The Ridgewood
Power Growth Fund as of December 31, 2008 and 2007, and the consolidated results
of its operations and comprehensive (loss) income and its cash flows for the
years then ended, in conformity with accounting principles generally accepted in
the United States of America.
















/s/ GRANT
THORNTON LLP


Edison,
New Jersey


April 10,
2009




F-2
 Table of Contents




THE
      RIDGEWOOD POWER GROWTH FUNDCONSOLIDATED
      BALANCE SHEETS(in
      thousands, except share data)December
      31,2008
                                            
                                            
                                            2007ASSETSCurrent
      assets:Cash
      and cash equivalents
                                            
                                            $
                                            1,120
                                            
                                            
                                            $
                                            4,154Accounts
      receivable, net of allowance
                                            
                                            
                                            1,425
                                            
                                            
                                            
                                            1,099Due
      from affiliates
                                            
                                            
                                            15
                                            
                                            
                                            
                                            -Inventory
                                            
                                            
                                            1,242
                                            
                                            
                                            
                                            969Assets
      held for sale
                                            
                                            
                                            5,533
                                            
                                            
                                            
                                            7,199Deferred
      tax assets
                                            
                                            
                                            858
                                            
                                            
                                            
                                            67Prepaid
      expenses and other current assets
                                            
                                            
                                            502
                                            
                                            
                                            
                                            434Total
      current assets
                                            
                                            
                                            10,695
                                            
                                            
                                            
                                            13,922Investments
                                            
                                            
                                            -
                                            
                                            
                                            
                                            277Property,
      plant and equipment, net
                                            
                                            
                                            21,976
                                            
                                            
                                            
                                            17,696Other
      assets
                                            
                                            
                                            133
                                            
                                            
                                            
                                            292Total
      assets
                                            
                                            $
                                            32,804
                                            
                                            
                                            $
                                            32,187LIABILITIES
      AND SHAREHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable and accrued expenses
                                            
                                            $
                                            1,037
                                            
                                            
                                            $
                                            798Liabilities
      related to assets held for sale
                                            
                                            
                                            2,708
                                            
                                            
                                            
                                            2,588Long-term
      debt - current portion
                                            
                                            
                                            1,803
                                            
                                            
                                            
                                            387Due
      to affiliates
                                            
                                            
                                            1,748
                                            
                                            
                                            
                                            700Total
      current liabilities
                                            
                                            
                                            7,296
                                            
                                            
                                            
                                            4,473Long-term
      debt - noncurrent portion
                                            
                                            
                                            1,284
                                            
                                            
                                            
                                            1,449Other
      liabilities
                                            
                                            
                                            1,264
                                            
                                            
                                            
                                            1,262Deferred
      tax liability
                                            
                                            
                                            858
                                            
                                            
                                            
                                            406Minority
      interest
                                            
                                            
                                            5,420
                                            
                                            
                                            
                                            4,969Total
      liabilities
                                            
                                            
                                            16,122
                                            
                                            
                                            
                                            12,559Commitments
      and contingenciesShareholders’
      equity (deficit):Shareholders’
      equity (658.2067 Investor Shares issuedand
      outstanding)
                                            
                                            
                                            17,078
                                            
                                            
                                            
                                            20,002Managing
      Shareholder's accumulated deficit(1
      management share issued and outstanding)
                                            
                                            
                                            (396
                                            )
                                            
                                            
                                            (374
                                            )Total
      shareholders’ equity
                                            
                                            
                                            16,682
                                            
                                            
                                            
                                            19,628Total
      liabilities and shareholders’ equity
                                            
                                            $
                                            32,804
                                            
                                            
                                            $
                                            32,187










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




F-3
 Table of Contents





THE
      RIDGEWOOD POWER GROWTH FUNDCONSOLIDATED
      STATEMENTS OF OPERATIONSAND
      COMPREHENSIVE (LOSS) INCOME(in
      thousands, except per share data)Years
      Ended December 31,2008
                      
                      
                      2007Revenues
                      
                      $
                      13,200
                      
                      
                      $
                      10,270Cost
      of revenues
                      
                      
                      8,206
                      
                      
                      
                      6,324Gross
      profit
                      
                      
                      4,994
                      
                      
                      
                      3,946Operating
      expenses:General
      and administrative expenses
                      
                      
                      4,032
                      
                      
                      
                      3,547Management
      fee to Managing Shareholder
                      
                      
                      1,645
                      
                      
                      
                      1,645Total
      operating expenses
                      
                      
                      5,677
                      
                      
                      
                      5,192Loss
      from operations
                      
                      
                      (683
                      )
                      
                      
                      (1,246
                      )Other
      income (expense):Interest
      income
                      
                      
                      29
                      
                      
                      
                      107Interest
      expense
                      
                      
                      (325
                      )
                      
                      
                      (296
                      )Equity
      in income from RUK
                      
                      
                      -
                      
                      
                      
                      16,423Loss
      on disposition of marketable securities
                      
                      
                      -
                      
                      
                      
                      (50
                      )Other
      (expense) income, net
                      
                      
                      (160
                      )
                      
                      
                      75Total
      other (expense) income, net
                      
                      
                      (456
                      )
                      
                      
                      16,259(Loss)
      income from continuing operations before income tax andminority
      interest
                      
                      
                      (1,139
                      )
                      
                      
                      15,013Income
      tax expense
                      
                      
                      (469
                      )
                      
                      
                      (395
                      )Minority
      interest in the earnings of subsidiary
                      
                      
                      (525
                      )
                      
                      
                      (318
                      )(Loss)
      income from continuing operations
                      
                      
                      (2,133
                      )
                      
                      
                      14,300(Loss)
      income from discontinued operations, net of income tax and minority
      interest
                      
                      
                      (27
                      )
                      
                      
                      64Net
      (loss) income
                      
                      
                      (2,160
                      )
                      
                      
                      14,364Foreign
      currency translation adjustment
                      
                      
                      (128
                      )
                      
                      
                      (76
                      )Comprehensive
      (loss) income
                      
                      $
                      (2,288
                      )
                      
                      $
                      14,288Managing
      Shareholder - Net (loss) income:Continuing
      operations
                      
                      $
                      (21
                      )
                      
                      $
                      (25
                      )Discontinued
      operations
                      
                      
                      -
                      
                      
                      
                      1Shareholders
      - Net (loss) income:Continuing
      operations
                      
                      
                      (2,112
                      )
                      
                      
                      14,325Discontinued
      operations
                      
                      
                      (27
                      )
                      
                      
                      63Net
      (loss) income per Investor Share:Continuing
      operations
                      
                      
                      (3,208
                      )
                      
                      
                      21,758Discontinued
      operations
                      
                      
                      (41
                      )
                      
                      
                      95








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




F-4
 Table of Contents




THE
      RIDGEWOOD POWER GROWTH FUNDCONSOLIDATED
      STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
      (DEFICIT)YEARS
      ENDED DECEMBER 31, 2008 AND 2007(in
      thousands)Managing
                  
                  
                  TotalShareholders'
                  
                  
                  Shareholder
                  
                  
                  Shareholders'Equity
                  
                  
                  (Deficit)
                  
                  
                  EquityBalance
      at December 31, 2006
                  
                  $
                  18,090
                  
                  
                  $
                  (364
                  )
                  
                  $
                  17,726Net
      income
                  
                  
                  14,388
                  
                  
                  
                  (24
                  )
                  
                  
                  14,364Foreign
      currency translation adjustment
                  
                  
                  (75
                  )
                  
                  
                  (1
                  )
                  
                  
                  (76
                  )Cash
      distributions
                  
                  
                  (14,151
                  )
                  
                  
                  (3
                  )
                  
                  
                  (14,154
                  )Capital
      contributions
                  
                  
                  1,750
                  
                  
                  
                  18
                  
                  
                  
                  1,768Balance
      at December 31, 2007
                  
                  
                  20,002
                  
                  
                  
                  (374
                  )
                  
                  
                  19,628Net
      loss
                  
                  
                  (2,139
                  )
                  
                  
                  (21
                  )
                  
                  
                  (2,160
                  )Foreign
      currency translation adjustment
                  
                  
                  (127
                  )
                  
                  
                  (1
                  )
                  
                  
                  (128
                  )Cash
      distributions
                  
                  
                  (658
                  )
                  
                  
                  -
                  
                  
                  
                  (658
                  )Balance
      at December 31, 2008
                  
                  $
                  17,078
                  
                  
                  $
                  (396
                  )
                  
                  $
                  16,682






















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




F-5
 Table of Contents




THE
      RIDGEWOOD POWER GROWTH FUNDCONSOLIDATED
      STATEMENTS OF CASH FLOWS(in
      thousands)Years
      Ended December 31,2008
                          
                          
                          2007Cash
      flows from operating activities:Net
      (loss) income
                          
                          $
                          (2,160
                          )
                          
                          $
                          14,364Adjustments
      to reconcile net (loss) income to net cash provided byoperating
      activities:Depreciation
      and amortization
                          
                          
                          2,769
                          
                          
                          
                          3,603Provision
      for bad debts
                          
                          
                          94
                          
                          
                          
                          107Forgiveness
      of unpaid professional and management fees and related
      interest
                          
                          
                          -
                          
                          
                          
                          1,768Equity
      in income from RUK
                          
                          
                          -
                          
                          
                          
                          (16,423
                          )Loss
      on disposition of marketable securities
                          
                          
                          -
                          
                          
                          
                          50Loss
      on sale of equipment
                          
                          
                          -
                          
                          
                          
                          14Deferred
      income taxes, net
                          
                          
                          (328
                          )
                          
                          
                          (529
                          )Minority
      interest in the earnings of subsidiaries
                          
                          
                          514
                          
                          
                          
                          344Changes in operating assets and liabilities:Accounts
      receivable
                          
                          
                          (429
                          )
                          
                          
                          (167
                          )Inventory
                          
                          
                          (287
                          )
                          
                          
                          (307
                          )Assets
      held for sale
                          
                          
                          1,666
                          
                          
                          
                          -Prepaid
      expenses and other current assets
                          
                          
                          8
                          
                          
                          
                          (112
                          )Other
      assets
                          
                          
                          (151
                          )
                          
                          
                          (194
                          )Accounts
      payable and accrued expenses
                          
                          
                          212
                          
                          
                          
                          (41
                          )Liabilities
      related to assets held for sale
                          
                          
                          519
                          
                          
                          
                          -Due
      to/from affiliates, net
                          
                          
                          1,269
                          
                          
                          
                          80Other
      liabilities
                          
                          
                          (109
                          )
                          
                          
                          85Total
      adjustments
                          
                          
                          5,747
                          
                          
                          
                          (11,722
                          )Net
      cash provided by operating activities
                          
                          
                          3,587
                          
                          
                          
                          2,642Cash
      flows from investing activities:Distributions
      from RUK
                          
                          
                          -
                          
                          
                          
                          15,674Capital
      expenditures
                          
                          
                          (6,832
                          )
                          
                          
                          (1,568
                          )Proceeds
      from sale of equipment
                          
                          
                          -
                          
                          
                          
                          11Investment
      in Sinai
                          
                          
                          (137
                          )
                          
                          
                          -Net
      cash (used in) provided by investing activities
                          
                          
                          (6,969
                          )
                          
                          
                          14,117Cash
      flows from financing activities:Repayments
      under loan
                          
                          
                          (708
                          )
                          
                          
                          (857
                          )Proceeds
      from loan
                          
                          
                          2,000
                          
                          
                          
                          -Cash
      distributions to shareholders
                          
                          
                          (658
                          )
                          
                          
                          (14,154
                          )Cash
      distributions to minority interest
                          
                          
                          (389
                          )
                          
                          
                          -Net
      cash provided by (used in) financing activities
                          
                          
                          245
                          
                          
                          
                          (15,011
                          )Effect
      of exchange rate on cash and cash equivalents
                          
                          
                          103
                          
                          
                          
                          (65
                          )Net
      (decrease) increase in cash and cash equivalents
                          
                          
                          (3,034
                          )
                          
                          
                          1,683Reclassification
      of US Hydro cash and cash equivalents to assets held for
    sale
                          
                          
                          -
                          
                          
                          
                          (117
                          )Cash
      and cash equivalents, beginning of year
                          
                          
                          4,154
                          
                          
                          
                          2,588Cash
      and cash equivalents, end of year
                          
                          $
                          1,120
                          
                          
                          $
                          4,154Supplemental
      disclosure of cash flow information:Interest
      paid
                          
                          $
                          208
                          
                          
                          $
                          335Income
      tax paid
                          
                          
                          49
                          
                          
                          
                          171




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




F-6
 Table of Contents


THERIDGEWOOD 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”) is a Delaware trust formed on
February 18, 1997. The Fund began offering shares in February 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 Shareholder of the Fund is Ridgewood
Renewable Power LLC (“RRP” or the “Managing Shareholder”).  The Fund
has been organized to invest primarily in independent power generation
facilities, water desalinization plants and other infrastructure projects both
in US and abroad. The projects owned by the Fund have characteristics that
qualify the projects for government incentives.





The
Fund’s accompanying consolidated financial statements include the accounts of
the Fund and its majority-owned subsidiaries, Ridgewood US Hydro Corporation
(“US Hydro”) and Ridgewood Near East Holdings LLC (“NEH”). The Fund’s
consolidated financial statements also include the Fund’s 30.4% interest in
Ridgewood UK, LLC (“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 investment’s operating and financial policies. RUK
previously owned landfill gas-fired electric projects located in the United
Kingdom, which were sold in February 2007.





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 interests are 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 interests in the
consolidated financial statements.




At
December 31, 2008 and 2007, NEH’s wholly-owned subsidiary, Ridgewood Egypt for
Infrastructure LLC (Egypt) (“REFI”), owned 75.9% and 66.4%, respectively, of
Sinai For Environmental Services S.A.E. (“Sinai”). The interests of the other
owners are also presented as minority interests in the consolidated financial
statements.


The
Managing Shareholder has announced its intention to market for sale the assets
of NEH and US Hydro, which represents the only remaining investments of the
Fund. The Managing Shareholder cannot predict the timing of the sale process or
whether any sales will occur.





On
December 22, 2008, US Hydro met the criteria of being classified as assets held
for sale in accordance with Statement of Financial Accounting Standards (“SFAS”)
No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets (“SFAS 144”). The Fund
has reflected the results of US Hydro operations as discontinued operations in
the accompanying consolidated statements of operations and comprehensive (loss)
income for all years presented. Accordingly, historical amounts in the
consolidated statements of operations and comprehensive (loss) income have been
restated to reflect the discontinued operations. The assets and liabilities
related to US Hydro were reflected as held for sale on the consolidated balance
sheets at December 31, 2008 and 2007, as discussed in Note 3.





The
Managing Shareholder performs (or arranges for the performance of) the operation
and maintenance of the projects invested in by the Fund and the management and
administrative services required for Fund operations. Among other services, the
Managing Shareholder administers the accounts, including tax and other financial
information and handles relations with the shareholders. 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 (“GAAP”) 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 of
assets, including accounts receivable, inventory, other current
assets, 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
 Table of Contents
 THERIDGEWOOD POWER GROWTH FUND
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (dollar amounts in thousands, except
per share data)


c)      Revenue
Recognition





Power
generation revenue is recorded in the month of delivery, based on the estimated
volumes sold to customers. Revenues generated from the sale of fresh water are
recorded in the month of delivery, based on actual 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 did not vary significantly from
estimates.




d)      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. At December 31, 2008 and
2007, the Fund had cash deposits held in foreign banks of $1,087 and $1,865,
respectively, where there is no insurance. At December 31, 2008, cash balances
held in US banks did not exceed insured limits. At December 31, 2007, cash
balances held in US banks exceeded insured limits by $2,206.





e)      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 receivables will not be recovered.





f)      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.





g)      Property,
Plant and Equipment





Property,
plant and equipment, consisting principally of land and water desalinization
facilities 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 consolidated statement of operations.





The Fund
used straight-line method of depreciation over the estimated useful life of the
assets:




Water
      desalinization facilities
                5-10
      yearsOffice
      equipment
                5
      years





In
accordance with SFAS 144, the Fund ceased depreciating the US Hydro assets as of
December 22, 2008.





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





The Fund
evaluates intangibles 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. For the year ended December 31, 2008,
the classification of US Hydro as assets held for sale was a triggering event.
Based on the analyses performed at that time, no impairment in the recorded
value of US Hydro was deemed necessary. For the year ended December 31, 2007,
there were no triggering events at the Fund level and the Fund did not perform
an impairment assessment.





The Fund
evaluates goodwill and intangible assets with indefinite useful lives under
SFAS No. 142, Goodwill
and Other Intangible Assets (“SFAS 142”).  Under SFAS 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. The
Fund performed an annual review of goodwill in accordance with SFAS 142 and
determined no goodwill impairment was required for the years ended December 31,
2008 and 2007.


F-8
 Table of Contents
  THERIDGEWOOD POWER GROWTH FUND
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (dollar amounts in thousands, except
per share data)


i)      Assets
Held for Sale








SFAS 144
requires that in the period the operations are qualified to be classified as
“held for sale”, the assets and liabilities should be presented as assets held
for sale and liabilities related to assets held for sale. The results of
operations of the project that qualifies as “held for sale” are to be presented
as discontinued operations in all periods presented if the operations are
expected to be eliminated and the seller will not have significant continuing
involvement following the sale.





j)      Income
Taxes





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.





The
Fund’s Egyptian subsidiary has a ten year income tax holiday that expires on
December 31, 2010. The Fund records deferred tax liabilities for book to
tax differences that are scheduled to exist at the expiration of the tax
holiday.





Except
for the above, no provision is made for 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. As a result, changes in the Fund’s pre-tax income (loss) do
not necessarily lead to changes in income tax expense, thereby resulting in
volatility of the effective tax rate. US Hydro operates in several tax
jurisdictions and, as a result, the geographic mix of US Hydro’s pre-tax income
or loss can also impact the Fund’s overall effective tax rate.





k)      Foreign
Currency Translation





The
Egyptian pound is the functional currency of the Fund’s Egyptian subsidiary. The
consolidated financial statements of the Fund’s foreign subsidiary are
translated into US dollars. Assets and liabilities are translated into US
dollars using the current exchange rate in effect at the balance sheet date,
while revenues and expenses are translated using the average exchange rate
during the applicable reporting period. The cumulative foreign currency
translation adjustment is a component of other comprehensive (loss) income
included in shareholders’ equity.





l)      
Comprehensive (Loss) Income





The
Fund’s comprehensive (loss) income consists of net (loss) income and
foreign currency translation adjustments.





m)      Fair
Value of Financial Instruments





At
December 31, 2008 and 2007, the carrying value of the Fund’s cash and cash
equivalents, accounts receivable, other assets, 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)      Reclassifications





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





o)      Recent
Accounting Pronouncements





FIN
48




In June
2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation
No. 48,Accounting for
Uncertainty in Income Taxes (“FIN 48”), an interpretation of SFAS No.
109, Accounting for Income
Taxes(“SFAS 109”). 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. In February 2008, the
FASB issued FASB Staff Position FIN 48-2,Effective Date of FASB
Interpretation No. 48 for Certain Nonpublic Enterprises, which deferred
the effective date of FIN 48 for non-public companies to fiscal
years beginning after December 15, 2007. In December 2008, the
FASB issued FASB Staff Position FIN 48-3,Effective Date of FASB
Interpretation No. 48 for Certain Nonpublic Enterprises, which further
deferred the effective date of FIN 48 for non-public companies to
fiscal years beginning after December 15, 2008. The Fund has concluded that it
is eligible for this deferral and therefore, FIN 48 will become effective for
the Fund beginning January 1, 2009. The Fund is currently evaluating the impact
of adopting FIN 48 on its consolidated financial statements. The Fund evaluates
uncertain tax positions, if any, using SFAS No. 5, Accounting for Contingencies.
If applicable, a loss contingency is recognized when, in the opinion of
management, it is probable that a tax liability has been incurred as of the
date of the financial statements and the amount of the loss can be reasonably
estimated. Based on the Fund’s evaluation, there are no significant uncertain
tax positions requiring recognition in the Fund’s consolidated financial
statements. Other than to the extent of net operating loss carry forwards, the
Fund is no longer subject to U.S. or state income tax examinations by tax
authorities for years before 2005.


F-9
 Table of Contents
  THERIDGEWOOD POWER GROWTH FUND
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (dollar amounts in thousands, except
per share data)


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 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. In
February 2008, FASB issued Staff Position 157-2, Effective Date of FASB Statement
No. 157, which delays the effective date of SFAS 157 for
non-financial assets and non-financial liabilities for the Fund until January 1,
2009, except for items that are recognized or disclosed at fair value in the
financial statements on a recurring basis.  In October 2008, the FASB
issued Staff Position 157-3, Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not Active,which clarifies the
application of SFAS 157 in a market that is not active and to determine the fair
value of a financial asset when the market for that financial asset is not
active. The Fund adopted SFAS 157 for financial assets and financial
liabilities effective January 1, 2008, with no material impact on its consolidated
financial statements.  Staff Position 157-3 does not have a material
impact on its consolidated financial statements. TheFundis currently evaluating
the impact of adopting SFAS 157 for non-financial assets and non-financial
liabilities on its consolidated financial statements.





SFAS
159





In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities –
Including an amendment of FASB Statement No. 115 (“SFAS 159”), which
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. The Fund adopted SFAS 159 effective January 1, 2008,
with no material impact on its consolidated financial statements.





SFAS
160





In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements — an amendment of ARB No. 51
(“SFAS 160”). SFAS 160 requires that ownership interests in subsidiaries
held by parties other than the parent, and the amount of consolidated net
income, be clearly identified, labeled, and presented in the consolidated
financial statements within equity, but separate from the parent’s equity.
It also requires once a subsidiary is deconsolidated, any retained


noncontrolling
equity investment in the former subsidiary be initially measured at fair value.
Sufficient disclosures are required to clearly identify and distinguish between
the interests of the parent and the interests of the noncontrolling owners. SFAS
160 will become effective for the Fund beginning January 1, 2009. The Fund
is currently evaluating the impact of adopting SFAS 160 on its consolidated
financial statements.





SFAS
162





In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles (“SFAS 162”).  SFAS 162 identifies the sources
of accounting principles and the framework for selecting principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with GAAP. This statement shall be effective 60
days following the SEC’s approval of the Public Company Accounting Oversight
Board’s amendments to AU section 411, The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting Principles. The Fund is
currently evaluating the impact of adopting SFAS 162 on its consolidated
financial statements.


F-10
 Table of Contents
  THERIDGEWOOD POWER GROWTH FUND
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (dollar amounts in thousands, except
per share data)
  3.      ASSETS
HELD FOR SALE/DISCONTINUED
OPERATIONS








In the
fourth quarter of 2008, US Hydro became qualified to be classified as held for
sale, in accordance with SFAS 144. As such, the assets and liabilities of
US Hydro, excluding deferred tax assets, are presented as assets held for
sale and liabilities related to assets held for sale in the consolidated balance
sheets at December 31, 2008 and 2007. The US Hydro results are presented as
discontinued operations in the consolidated statements of operations and other
comprehensive (loss) income for all years presented.





Assets
held for sale and liabilities related to assets held for sale on the Fund’s
December 31, 2008 and 2007 consolidated balance sheets were as
follows:





2008
                    
                    
                    2007Current
      Assets:Cash
                    
                    $
                    122
                    
                    
                    $
                    117Accounts
      receivable
                    
                    
                    262
                    
                    
                    
                    233Due
      from affiliates
                    
                    
                    -
                    
                    
                    
                    394Notes
      receivable – current
                    
                    
                    137
                    
                    
                    
                    130Prepaid
      and other current assets
                    
                    
                    275
                    
                    
                    
                    333Total
      current assets
                    
                    
                    796
                    
                    
                    
                    1,207Notes
      receivable – noncurrent
                    
                    
                    1,024
                    
                    
                    
                    1,161Property,
      plant and equipment, net
                    
                    
                    1,125
                    
                    
                    
                    1,141Intangibles,
      net
                    
                    
                    2,325
                    
                    
                    
                    3,449Goodwill
                    
                    
                    227
                    
                    
                    
                    227Other
      assets
                    
                    
                    36
                    
                    
                    
                    14Total
      assets
                    
                    $
                    5,533
                    
                    
                    $
                    7,199Current
      liabilities:Accounts
      payable and accrued expenses
                    
                    $
                    374
                    
                    
                    $
                    91Due
      to affiliates
                    
                    
                    152
                    
                    
                    
                    -Total
      current liabilities
                    
                    
                    526
                    
                    
                    
                    91Deferred
      rent
                    
                    
                    648
                    
                    
                    
                    564Minority
      interest
                    
                    
                    1,534
                    
                    
                    
                    1,933Total
      liabilities
                    
                    $
                    2,708
                    
                    
                    $
                    2,588


The
following table summarizes (loss) income from discontinued operations (net of
income tax and minority interest) for the years ended December 31, 2008 and
2007:





2008
                          
                          
                          2007Total
      revenues
                          
                          $
                          3,806
                          
                          
                          $
                          3,467Cost
      of revenues
                          
                          
                          2,677
                          
                          
                          
                          2,697Operating
      expenses
                          
                          
                          1,877
                          
                          
                          
                          1,644Other
      income, net
                          
                          
                          (31
                          )
                          
                          
                          (48
                          )Income
      tax benefit
                          
                          
                          (680
                          )
                          
                          
                          (917
                          )Minority
      interest in the (earnings) loss of subsidiaries
                          
                          
                          (10
                          )
                          
                          
                          27Total
      expenses
                          
                          
                          3,833
                          
                          
                          
                          3,403(Loss)
      income from discontinued operations
                          
                          $
                          (27
                          )
                          
                          $
                          64


4.      ACCOUNTS
RECEIVABLE





Accounts
receivable at December 31, 2008 and 2007 is as follows:




2008
                        
                        
                        2007Accounts
      receivable
                        
                        $
                        1,706
                        
                        
                        $
                        1,318Less:
      allowance for doubtful accounts
                        
                        
                        (281)
                        
                        
                        
                        (219)$
                        1,425
                        
                        
                        $
                        1,099




F-11
 Table of Contents
  THERIDGEWOOD POWER GROWTH FUND
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (dollar amounts in thousands, except
per share data)


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, 2008 and 2007:





2008
                  
                  
                  
                  2007Balance
      at beginning of  year
                  
                  $
                  219
                  
                  
                  $
                  127Additions
      charged to bad debt provision (1)
                  
                  
                  94
                  
                  
                  
                  107Deductions,
      net of recoveries (2)
                  
                  
                  (32)
                  
                  
                  
                  (15)Balance,
      end of year
                  
                  $
                  281
                  
                  
                  $
                  219





(1)
            Bad
      debt provision relates to estimated losses due to collectability issues,
      which is included in general and administrative expenses in the
      consolidated statements of operations.(2)
            Deductions,
      net of recoveries, primarily relate to receivable write-offs, but also
      include recoveries of previously written off
  receivables.




5.PROPERTY, PLANT AND
EQUIPMENT





At
December 31, 2008 and 2007, property, plant and equipment at cost and
accumulated depreciation are as follows:





2008
                  
                  
                  2007Water
      desalinization facilities
                  
                  $
                  37,810
                  
                  
                  $
                  30,938Office
      equipment
                  
                  
                  556
                  
                  
                  
                  53538,366
                  
                  
                  
                  31,473Less:
      accumulated depreciation
                  
                  
                  (16,390)
                  
                  
                  
                  (13,777)$
                  21,976
                  
                  
                  $
                  17,696





For the
years ended December 31, 2008 and 2007, depreciation expense was $2,769 and
$2,383, respectively, which is included in cost of revenues.





6.      ACCUMULATED
OTHER COMPREHENSIVE (LOSS) INCOME





The
Fund’s other comprehensive (loss) income, which is reported in the
accompanying consolidated statements of operations, consists of net (loss)
income and foreign currency translation adjustments.





As of
December 31, 2008 and 2007, the cumulative foreign currency translation loss was
$7,889 and $7,761, respectively.





7.      INVESTMENTS





United
Kingdom Landfill Gas Projects





In May
1999, RUK was formed as a New Jersey limited liability company and was
re-domiciled to Delaware in December 2002. RUK’s operations, through its
subsidiary, CLPE Holdings Limited (“CLP”), included extracting
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 Fund owns 30.4% and Trust V owns 69.6% of
RUK.





On
January 23, 2007, RUK entered into a sale agreement  along with
Arbutus Energy Ltd. (Jersey) (“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,
ROC III and ROC IV, each of which is a wholly-owned subsidiary of a
corresponding Ridgewood Renewable PowerBank Fund (the “PowerBank Funds”), as
sellers (collectively, the “Sellers”), with MEIF LG Energy Limited (the
“Buyer”), as the purchaser.





On
February 22, 2007, RUK completed the sale to the Buyer of all of the issued and
outstanding shares of CLP (the “Shares”). Under the sale agreement, the Buyer
acquired (i) 100% of the issued and outstanding Shares from RUK and Arbutus and
(ii) substantially all of the assets of the PowerBank Funds. The assets and the
Shares constitute all the landfill gas business, located in the United Kingdom,
of the Fund, Trust V and the PowerBank Funds.




The gain
on disposal represents proceeds, less transaction costs and the net asset value
of CLP, plus the reversal of previously recorded foreign currency translation
adjustments. The Managing Shareholder waived its right to receive its 1% of the
distributions from these transactions. As a result, the gain from the sale and
related cash distributions are allocated solely to Investor Shares.


F-12
 Table of Contents
  THERIDGEWOOD POWER GROWTH FUND
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (dollar amounts in thousands, except
per share data)


Summarized
balance sheet data for RUK at December 31, 2007 is presented
below. At December 31, 2008, RUK did not have any recorded assets or
liabilities.





2007Current
      assets
                  
                  $
                  921Noncurrent
      assets
                  
                  
                  -Total
      assets
                  
                  $
                  921Current
      liabilities
                  
                  $
                  7Noncurrent
      liabilities
                  
                  
                  -Members’
      equity
                  
                  
                  914Liabilities
      and members’ equity
                  
                  $
                  921Fund
      share of RUK equity
                  
                  $
                  277





Summarized
statements of operations data for RUK for the year ended December 31, 2007 is presented
below. RUK did not have any operations in 2008.





2007Other
      income
                    
                    $
                    119Gain
      on disposition of CLP
                    
                    
                    54,979Net
      income
                    
                    $
                    55,098Fund
      share of  income in RUK
                    
                    $
                    16,423





8.      LONG-TERM
DEBT





Following
is a summary of long-term debt at December 31, 2008 and 2007:





2008
                        
                        
                        2007Total
      long-term debt
                        
                        $
                        3,087
                        
                        
                        $
                        1,836-
      Sinai
                        
                        
                        1,436
                        
                        
                        
                        1,836-
      REFI
                        
                        
                        1,651
                        
                        
                        
                        -





Current
      maturity
                      
                      $
                      1,803
                      
                      
                      $
                      387-
      Sinai
                      
                      
                      480
                      
                      
                      
                      387-
      REFI
                      
                      
                      1,323
                      
                      
                      
                      -Long-term
      portion
                      
                      $
                      1,284
                      
                      
                      $
                      1,449-
      Sinai
                      
                      
                      956
                      
                      
                      
                      1,449-
      REFI
                      
                      
                      328
                      
                      
                      
                      -





The Sinai
loan, which is secured by a part of its assets, bears interest at 11.5% per
annum. 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 April 10, 2009, Sinai has been in
compliance with the revised agreement since the inception of the
agreement.


F-13
 Table of Contents
  THERIDGEWOOD POWER GROWTH FUND
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (dollar amounts in thousands, except
per share data)





Concurrent
with the NEH sale and purchase agreement, the prospective buyer entered into a
loan agreement, dated June 5, 2008, with REFI pursuant to which the buyer
loaned $2,000 to REFI, at an interest rate of 10% per annum on an unsecured
basis, for the purpose of financing general corporate operations, including the
purchase of equipment, and providing REFI with working capital. The loan is to
be repaid in US dollars by REFI commencing 120 days after the making of the
loan and is payable on a monthly basis over the successive 17 months. The
loan does not provide for acceleration of the loan in the event of the
termination of the sale and purchase agreement, which has since
occured.





Scheduled
principal repayments of the Fund’s long-term debt at December 31, 2008 are as
follows:





2009
                  
                  $
                  1,8032010
                  
                  
                  9712011
                  
                  
                  313Total
                  
                  $
                  3,087





9.      COMMITMENTS
AND CONTINGENCIES





The US
Hydro 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, 2008 and 2007,
which is included as discontinued operations in the consolidated statements of
operations. The facility of US Hydro at the Box Canyon dam in Siskiyou
County, California is owned subject to a ground lease which US Hydro has
accounted for 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, 2008 and
2007, which is included as discontinued operations in the consolidated
statements of operations.




Minimum
lease payments at December 31, 2008 are as follows:





2009
                  
                  $
                  7202010
                  
                  
                  7322011
                  
                  
                  2432012
                  
                  
                  2552013
                  
                  
                  268Thereafter
                  
                  
                  3,998Total
                  
                  $
                  6,216





The Fund
has certain other leases that require payments based upon a percentage of the
annual gross revenue of the respective hydro-electric 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 hydro-electric plants for the years ended December 31, 2008 and 2007 was
$8 for both periods, which is included as discontinued operations in the
consolidated statements of operations.





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. These transfers to the legal reserve did not stop until
2007, when the legal reserve had reached 100% of the issued
capital.





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 the Federal District Court in
Massachusetts, Paul
Bergeron v. Ridgewood Securities Corporation,et
al.  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 the Fund and affiliated trusts managed by
the Managing Shareholder or affiliates of the Managing Shareholder which were
sold in private offerings and the operation of the Fund and affiliated trusts
subsequent to the sale.  The Plaintiff is seeking
damages of $900 plus interest and attorney fees. Neither the Fund nor
trusts are party to this litigation. Discovery has been completed and in March
2009 a Motion for Summary Judgment filed by the Defendant was granted on breach of
fiduciary duty claims and partially granted on contract claims, but otherwise
denied,and a trial date of June 15, 2009 was set.





On March
20, 2007, the Plaintiff in Bergeron I commenced a derivative action, in Suffolk
County Superior Court, Commonwealth of Massachusetts,  Paul Bergeron v.TheRidgewoodPower Growth
Fund,et
al.
(“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 – Projects and Properties - RidgewoodUK”. The Superior Court
denied the request by the Plaintiff for an injunction.  On February
29, 2008, the Plaintiff filed an amended complaint in Bergeron II adding two
additional investors, one in the Fund and one in Trust V, as additional
plaintiffs. Discovery is ongoing and no trial date has been
set.




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


F-14
 Table of Contents
  THERIDGEWOOD POWER GROWTH FUND
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (dollar amounts in thousands, except
per share data)





On August
16, 2006, the Fund and several affiliated entities, including the Managing
Shareholder, filed lawsuits 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 other plaintiffs by Perelson
Weiner. On October 20, 2006, Perelson Weiner filed a counterclaim against the
Fund and other plaintiffs, alleging breach of contract due to unpaid invoices
with a combined total of approximately $1,200. Discovery is ongoing and no trial
date has been set. The costs and expenses of this litigation, including
adverse judgments, if any, are being paid for by the Managing Shareholder and
affiliated management companies and not the underlying investment
funds.





The Fund
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 Fund may be required to record
additional litigation expense.  While it is not possible to predict
the outcome of the litigation discussed above with certainty and some lawsuits,
claims or proceedings may be disposed of unfavorably to the Fund, based on its
evaluation of matters which are pending or asserted, the Fund’s management
believes the disposition of such matters will not have a material adverse effect
on the Fund’s business or consolidated financial statements.





10.      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 $325 at December 31, 2008 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 $805 at December
31, 2008 to reflect this obligation.





Schedule
of future discounted principal payments related to the settlements as of
December 31, 2008 are as follows:




2009
                  
                  $
                  1012010
                  
                  
                  1122011
                  
                  
                  1232012
                  
                  
                  1362013
                  
                  
                  105Thereafter
                  
                  
                  553Total
                  
                  $
                  1,130




F-15
 Table of Contents
  THERIDGEWOOD POWER GROWTH FUND
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (dollar amounts in thousands, except
per share data)


11.      INCOME
TAXES





The
components of income (loss) from continuing operations before provision for
income taxes and minority interest for the years ended December 31, 2008 and
2007 are as follows:





2008
                      
                      
                      2007United
      States
                      
                      $
                      (3,133
                      )
                      
                      $
                      (2,666
                      )Foreign
                      
                      
                      1,994
                      
                      
                      
                      17,679$
                      (1,139)
                      
                      
                      $
                      15,013





The
foreign component includes income from continuing operations of $1,994 and
$1,256 from NEH for the years ended December 31, 2008 and 2007, respectively,
that is subject to an Egyptian tax holiday that expires on December 31, 2010. It
also includes foreign income of $16,423 during 2007 from RUK, which is
reported net of tax effect consistent with the equity method of
accounting.





The
provision for income taxes on continuing operations for the years ended December
31, 2008 and 2007 consists of:





2008
                                            
                                            
                                            
                                            2007Current:Foreign
                                            
                                            $
                                            5
                                            
                                            
                                            $
                                            -DeferredForeign
                                            
                                            
                                            464
                                            
                                            
                                            
                                            395Income
      tax expense
                                            
                                            $
                                            469
                                            
                                            
                                            $
                                            395




The
Fund’s effective tax rate differs from the statutory federal income tax rate for
the years ended December 31, 2008 and 2007 as follows:





2008
                          
                          
                          2007US
      federal income taxes at the statutory rate
                          
                          
                          0%
                          
                          
                          
                          0%(Loss)
      income subject to tax at the subsidiarylevel
      (at statutory rate)
                          
                          
                          -41%
                          
                          
                          
                          3%Effective
      tax rate
                          
                          
                          -41%
                          
                          
                          
                          3%





The Fund
has recorded income tax benefit for US Hydro operations of $680 and $917 for the
years ended December 31, 2008 and 2007, respectively, which is included in
discontinued operations in the consolidated statements of
operations.




Deferred
income taxes reflect the effects of temporary differences between the carrying
amount 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, 2008 and 2007 are as
follows:
  2008
                              
                              
                              2007Deferred
      tax assetNOL
      carryforward
                              
                              $
                              2,529
                              
                              
                              $
                              2,134Less:
      valuation allowance
                              
                              
                              (673
                              )
                              
                              
                              (481
                              )1,856
                              
                              
                              
                              1,653Deferred
      tax liabilityAmortization and
      depreciation
                              
                              
                              (1,694
                              )
                              
                              
                              (1,992
                              )Other
                              
                              
                              (162
                              )
                              
                              
                              -(1,856
                              )
                              
                              
                              (1,992
                              )Net
      deferred tax liability
                              
                              $
                              -
                              
                              
                              $
                              (339
                              )
  Balance
sheet presentation of deferred taxes at December 31, 2008 and 2007 is as
follows:
 
 2008
                
                
                2007Current
      deferred tax asset
                
                $
                858
                
                
                $
                67Non-current
      deferred tax liability
                
                
                (858
                )
                
                
                (406
                )$
                -
                
                
                $
                (339
                )
 At
December 31, 2008, US Hydro had a Federal net operating loss ("NOL")
carryforward of $5,448, which will be expiring in 2023 through 2026.
US Hydro 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 ability to realize the
benefit of the net operating losses may be limited should US Hydro or the Fund
undergo an ownership change within the meaning of IRC Section
382.





In
addition, at December 31, 2008, US Hydro had a state NOL carryforward of
$12,367, which will be expiring in 2023 through 2026. US Hydro 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, US Hydro
has recorded a valuation allowance of $673 and $481 at December 31, 2008 and
2007, respectively, against the full amount of the related deferred tax
asset.





12.      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, which was $1,645 for the years ended
December 31, 2008 and 2007, 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.


F-16
 Table of Contents
  THERIDGEWOOD POWER GROWTH FUND
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (dollar amounts in thousands, except
per share data)


For the
years ended December 31, 2008 and 2007, the Fund made management fee payments to
the Managing Shareholder of $960 and $823, respectively. In the fourth
quarter 2007, the Managing Shareholder forgave $834 of unpaid management
fees and related interest and also waived its right to reimbursement of $934,
relating to professional service fees of the Fund. Any waivers, or forgiveness,
by the Managing Shareholder are recorded by the Fund as a deemed capital
contribution. 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 offsets the
allocation of the recorded expense.




Under the
Operating Agreement with the Fund, Ridgewood Power Management (“RPM”) 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 years ended December 31, 2008 and
2007, RPM charged the US Hydro projects $678 and $689, respectively, for
overhead items allocated in proportion to the amount invested in projects
managed. In addition, for the years ended December 31, 2008 and 2007, RPM
charged the projects $5,238 and $4,813, respectively, for direct expenses
incurred.  These charges may not be indicative of costs incurred if the
projects 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. Distributions to the Managing
Shareholder were $0 and $3 for the years ended December 31, 2008 and
2007, respectively. The Fund has not reached Payout as of April 10,
2009.





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.





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.





In
accordance with the  Declaration of Trust, upon or prior to the first
distribution by the Fund in liquidation, the Managing Shareholder is
required to contribute to the capital of the Fund an amount equal to any
deficit in the tax basis capital account of the Managing Shareholder calculated
just prior to the date of such distribution. As of December 31, 2008, the
last date such calculation was made, the Managing Shareholder would not have
been required to make any contributions to the Fund.





On
January 23, 2007, RUK and affiliates, entered into a sale agreement
pursuant to which RUK sold its 88% equity interest in CLP and affiliates sold
their interests in similar assets (the “CLP Sale”). The Managing
Shareholder was not a party to the sale agreement but was entitled to receive
certain payments from the affiliates as a result of the CLP Sale and as a result
of its service as the Managing Shareholder to the affiliated
funds.





The CLP
Sale was completed on February 22, 2007. The total dollar amount received by the
Managing Shareholder as a result of the CLP Sale was approximately $37,000, all
of which was paid out of the proceeds of the CLP Sale allocable to the
affiliated funds. The Managing Shareholder did not receive any payments
from the Fund or Trust V as a result of the sale.


F-17
 Table of Contents
  THERIDGEWOOD POWER GROWTH FUND
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (dollar amounts in thousands, except
per share data)


The Fund
records short-term payables to and receivables from other affiliates in the
ordinary course of business. The amounts payable to and receivables from the
other affiliates do not bear interest. At December 31, 2008 and 2007, the Fund
had outstanding receivables and payables as follows:





Due
      from
                                                                                
                                                                                
                                                                                Due
      to2008
                                                                                
                                                                                
                                                                                2008
                                                                                
                                                                                
                                                                                2007RPM
                                                                                
                                                                                $
                                                                                -
                                                                                
                                                                                
                                                                                $
                                                                                36
                                                                                
                                                                                
                                                                                $
                                                                                406RRP
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                1,072
                                                                                
                                                                                
                                                                                
                                                                                -Trust
      V
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                189
                                                                                
                                                                                
                                                                                
                                                                                -Egypt
      Fund
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                451
                                                                                
                                                                                
                                                                                
                                                                                98RUK
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                196Other
      affiliates
                                                                                
                                                                                
                                                                                15
                                                                                
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                -Total
                                                                                
                                                                                $
                                                                                15
                                                                                
                                                                                
                                                                                $
                                                                                1,748
                                                                                
                                                                                
                                                                                $
                                                                                700





13.      ASSETS
BY LOCATION





At
December 31, 2008 and 2007, assets by geographic location were as
follows:





2008
                  
                  
                  2007US
                  
                  
                  Egypt
                  
                  
                  US
                  
                  
                  EgyptTotal
      assets
                  
                  $
                  6,572
                  
                  
                  $
                  26,232
                  
                  
                  $
                  9,845
                  
                  
                  $
                  22,342













F-18