**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC 20549**





**FORM
      10-K**


(Mark
      One)


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





For
      the
      fiscal year ended December 31, 2006





or





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





For
        the
        transition period from ________ to _______





Commission
      file number:  0-25935





**THE
      RIDGEWOOD POWER GROWTH FUND**


****(Exact
      Name of Registrant as Specified in Its Charter)


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





1314
                King Street, Wilmington, DE 19801(Address
                of Principal Executive Offices, including Zip Code)





(302)
                888-7444(Registrant’s
                telephone number, including area code)





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


None


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


Investor
                  Shares of Beneficial Interest(Title
                  of Class)


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





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





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




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




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




Large
      accelerated filer   oAccelerated
      filer   oNon-accelerated
      filer   x




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


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













**FORM
      10-K**




**TABLE
      OF CONTENTS**





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





**Forward-Looking
      Statements**




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





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





**PART
      I**




**ITEM
      1.  BUSINESS**





**Overview**





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




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




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


1


**Managing
      Shareholder**




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




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




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




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




**Business
      Strategy**




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


2


**Projects
      and Properties**




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




Company
            No.
                of Sites
            Fund
              Interest
            Leased/
              Owned1
            Purpose
            Structure5Ridgewood
              Egypt2
            17
                  locations
            68.1%
            Leased
            1
–
                  Power only
              8
–
                  Water only
              8
–
                  Water & Power
            Block/slabUS
                  Hydro3
            7
                  locations
            70.8%
            Leased
                  and
              Owned
            Hydroelectric
              Generation
            Integral
                  to river
              damsRidgewood
              UK4
            23
                  locations
            30.4%
            Leased
            Electricity
              Generation
            Containerized





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





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





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





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





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





**Ridgewood
      Egypt**





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





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





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


3




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





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





**US
      Hydro**





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





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





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





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





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





**Ridgewood
      UK**





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





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


4





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





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





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





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




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




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




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


5




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




**ZAP**





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





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





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





**Significant
      Customers**





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





**Business
      Segments**





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


6





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





**Project
      Feedstock/Raw Materials**





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





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





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





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





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





**Competition**





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


7





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





**Seasonality/Weather
      Effects**




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




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




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




**Government
      Incentives and Regulation**




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




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




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




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




8


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




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




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




**Financing
      Arrangements**




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




**Insurance**




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




**Employees**




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




**Offices**




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




**Available
      Information**




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


9





**Where
      You Can Get More Information**




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




**Reports
      to Shareholders**




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




**ITEM
      1A. RISK FACTORS**




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




**RISKS
      INHERENT IN THE BUSINESSES OF THE FUND**




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




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





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




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




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




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


10





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




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





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





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




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




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




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




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




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




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


11


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




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




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




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




**The
      Fund may become involved in litigation.**




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





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




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




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




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




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


12





**RISKS
      RELATED TO THE NATURE OF THE FUND’S SHARES**




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




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




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




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




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




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




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




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




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




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


13




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




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




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




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




**TAX
      RISKS ASSOCIATED WITH AN INVESTMENT IN SHARES**




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




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




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




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




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




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




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




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




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


14





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




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




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




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




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




**ITEM
      1B.  UNRESOLVED STAFF COMMENTS**




Not
      applicable.




**ITEM
      2.  PROPERTIES**




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




**ITEM
      3.  LEGAL PROCEEDINGS**




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




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


15




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




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




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




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




None.





**PART
      II**





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




**Market
      Information**





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





**Holders**





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





**Dividends**





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





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


16


**ITEM
      6.  SELECTED FINANCIAL DATA**





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





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




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





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





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




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





**Overview**





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




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


17


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




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





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




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


**Critical
      Accounting Policies and Estimates**





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





*Revenue
      Recognition*





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





*Accounts
      Receivable*





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





*Property,
      Plant and Equipment*





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


18





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





*Impairment
      of Goodwill, Intangibles and Long-Lived Assets*





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





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





*Income
      Taxes*





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





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





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





*Foreign
      Currency Translation*





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





*Management
      Fee*





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


19





**Results
      of Operations**




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





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





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





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





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





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





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





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





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





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





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





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


20


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




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





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





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





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





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





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





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





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




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





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





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





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


21





**Liquidity
      and Capital Resources**





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





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





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





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





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





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





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





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





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





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





**Future
        Liquidity and Capital Resource Requirements**




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





**Off-Balance
      Sheet Arrangements**





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


22





**Contractual
      Obligations and Commitments**





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




Payments
                  due by period as of December 31, 2006Less
                  than
              
              
              
              
              
              
              
              
              More
                  than1
                  Year
              
              
              1-3
                  Years
              
              
              3-5
                  Years
              
              
              5
                  Years
              
              
              TotalLong-term
                  debtSinai
                  (1)
              
              $
              287
              
              
              $
              1,469
              
              
              $
              305
              
              
              $
              -
              
              
              $
              2,061REFI
                  (2)
              
              
              136
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              136US
                  Hydro (3)
              
              
              432
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              432Minimum
                  lease payment (4)
              
              
              700
              
              
              
              2,163
              
              
              
              766
              
              
              
              3,998
              
              
              
              7,627Consulting
                  agreement settlement (5)
              
              
              83
              
              
              
              305
              
              
              
              364
              
              
              
              553
              
              
              
              1,305Total
              
              $
              1,638
              
              
              $
              3,937
              
              
              $
              1,435
              
              
              $
              4,551
              
              
              $
              11,561




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





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





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





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





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





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


23




**Recent
      Accounting Pronouncements**





*FIN
      48*





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





*SFAS
        157*




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





*SAB
      108*




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





*SFAS
      159*




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




**ITEM
      7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**




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




**ITEM
      8.FINANCIAL STATEMENTS AND SUPPLEMENTARY
      DATA**




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




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




None.




24




**ITEM
      9A.  CONTROLS AND PROCEDURES**




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




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




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




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




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




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




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




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




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




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





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


25




**ITEM
      9B.OTHER INFORMATION**





None.




**PART
      III**




**ITEM
      10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
      GOVERNANCE**




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




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




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


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




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




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





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


26


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




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




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




**Board
      of Directors and Board Committees**




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




**Managing
      Shareholder**




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




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




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


27


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




**Section
      16(a) Beneficial Ownership Reporting Compliance**




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




**Code
      of Ethics**




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




**ITEM
      11.EXECUTIVE COMPENSATION**




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




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




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




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




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




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


28





**Compensation
      Discussion and Analysis**




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




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





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





**Report
      of the Managing Shareholder**




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




Submitted
      by the Managing Shareholder




Robert
      E.
      Swanson, Chairman







**Employment
      Contracts, Termination of Employment and Change of Control
      Arrangements**




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


29




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




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





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


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





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





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





*   Represents
      less than one percent.





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





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





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





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


30





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




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





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





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





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




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




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


31


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




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




**Related
      Person Transactions**





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




**ITEM
      14.PRINCIPAL ACCOUNTANT FEES AND
      SERVICES**




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




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




**Audit
      Committee Pre-Approval Policy**




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


32





**PART
      IV**




**ITEM
      15.EXHIBITS AND FINANCIAL STATEMENT
      SCHEDULES**




(a)           **Financial
      Statements**




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





(b)           **Exhibits**





Exhibits
      required by Section 601 of Regulation S-K:




Exhibit
                No.
            Description3
            (i)(A)
            
            Certificate
                  of Trust of the Registrant (incorporated by reference to the Registrant’s
                  Registration Statement on Form 10 filed with the SEC on April 30,
                  1999).3
            (i)(B)
            
            Amendment
                  No. 1 to Certificate of Trust (incorporated by reference to the
                  Registrant’s Registration Statement on Form 10 filed with the SEC on April
                  30, 1999).3
            (i)(C)
            
            Certificate
                  of Amendment to the Certificate of Trust of the Registrant dated
                  December
                  18, 2003 (incorporated by reference to the Registrant’s Annual Report on
                  Form 10-K filed with the SEC on August 17, 2007).3
            (ii)(A)
            
            Declaration
                  of Trust of the Registrant (incorporated by reference to the Registrant’s
                  Registration Statement on Form 10 filed with the SEC on April 30,
                  1999).3
            (ii)(B)
            
            Amendment
                  No. 1 to the Declaration of Trust (incorporated by reference to
                  the
                  Registrant’s definitive proxy statement filed with the SEC on November 5,
                  2001, SEC File No. 000-25935).3
            (ii)(C)
            
            Amendment
                  of the Declaration of Trust of the Registrant effective January
                  1, 2005
                  (incorporated by reference to the Registrant’s Annual Report on Form 10-K
                  filed with the SEC on August 17, 2007).10.1
            
            
            Stock
                  and Warrant Purchase Agreement for ZAP Power Systems, Inc., dated
                  March
                  29, 1999 (incorporated by reference to the Registrant’s Registration
                  Statement on Form 10 filed with the SEC on April 30,
                  1999).10.2
            
            
            Warrant
                  for Purchase of Common Stock of ZAP Power Systems, Inc., dated
                  March 29,
                  1999 (incorporated by reference to the Registrant’s Registration Statement
                  on Form 10 filed with the SEC on April 30, 1999).


33





Exhibit
                No.
            Description10.3
            
            
            Investors’
                  Rights Agreement with ZAP Power Systems, Inc., dated March 29,
                  1999
                  (incorporated by reference to the Registrant’s Registration Statement on
                  Form 10 filed with the SEC on April 30, 1999).10.4
            
            
            Milestone
                  letter agreement with ZAP Power Systems, Inc., dated March 29,
                  1999
                  (incorporated by reference to the Registrant’s Registration Statement on
                  Form 10 filed with the SEC on April 30, 1999).10.5
            
            
            Letter
                  agreement re board representation with ZAP Power Systems, Inc.,
                  dated
                  March 29, 1999 (incorporated by reference to the Registrant’s Registration
                  Statement on Form 10 filed with the SEC on April 30,
                  1999).10.6
            
            #
            Management
                  Agreement between the Fund and Managing Shareholders, dated February
                  9,
                  1998 (incorporated by reference to the Registrant’s Registration Statement
                  on Form 10 filed with the SEC on April 30, 1999).10.7
            
            #
            Key
                  Employees’ Incentive Plan (incorporated by reference to the Registrant’s
                  Registration Statement on Form 10 filed with the SEC on April 30,
                  1999).10.8
            
            
            Operating
                  Agreement of Ridgewood Near East Holding LLC, dated September 30,
                  1999
                  (incorporated by reference to the Annual Report on Form 10-K filed
                  by the
                  Registrant with the SEC on March 1, 2006).10.9
            
            
            Form
                  of contracts and agreements between affiliates of CLPE Holdings
                  Ltd. and
                  each of (i) Ridgewood Renewable PowerBank I, LLC, (ii) Ridgewood
                  Renewable
                  PowerBank II, LLC, (iii) Ridgewood Renewable PowerBank III, LLC
                  and (iv)
                  Ridgewood Renewable PowerBank IV, LLC (incorporated by reference
                  to the
                  Annual Report on Form 10-K filed by the Registrant with the SEC
                  on March
                  1, 2006).10.10
            
            #
            The
                  CLPE Holdings Management Incentive Plan dated August 6, 2003 (incorporated
                  by reference to the Registrant’s Annual Report on Form 10-K filed with the
                  SEC on August 17, 2007).10.11
            
            
            Agreement
                  made on January 23, 2007 by and among Ridgewood UK LLC, Arbutus
                  Energy
                  Limited, Ridgewood ROC 2003 LLC, Ridgewood ROC II 2003 LLC, Ridgewood
                  ROC
                  III 2003 LLC, Ridgewood ROC IV 2004 LLC, and MEIF LG Energy Limited
                  (incorporated by reference to Exhibit 10.1 to the Form 8-K filed
                  by the
                  Registrant with the SEC on January 29, 2007).10.12
            
            
            Sellers
                  Agreement entered into as of January 23, 2007 by and among Ridgewood
                  UK,
                  LLC, and Ridgewood ROC 2003 LLC, Ridgewood ROC II 2003 LLC, Ridgewood
                  ROC
                  III 2003 LLC, Ridgewood ROC IV 2004 LLC, Arbutus Energy Limited,
                  Ridgewood
                  Renewable PowerBank LLC, Ridgewood Renewable PowerBank II LLC,
                  Ridgewood
                  Renewable PowerBank III LLC, Ridgewood Renewable PowerBank IV LLC,
                  Ridgewood Electric Power Trust V, The Ridgewood Power Growth Fund,
                  Ridgewood Renewable Power LLC and Ridgewood Management Corporation
                  (incorporated by reference to Exhibit 10.2 to the Form 8-K filed
                  by the
                  Registrant with the SEC on January 29, 2007).10.13
            
            #
            Service
                  Agreement dated October 1, 2004 between Douglas R. Wilson and CLPE
                  Holdings Limited (incorporated by reference to the Registrant’s Annual
                  Report on Form 10-K filed with the SEC on August 17,
                  2007).


34





Exhibit
                No.
            
            Description10.15
            
            #
            Deed
                  of Waiver dated January 22, 2007 between Randall D. Holmes and
                  CLPE
                  Holdings Limited relating to a bonus entitlement under The CLPE
                  Holdings
                  Management Incentive Plan (incorporated by reference to the Registrant’s
                  Annual Report on Form 10-K filed with the SEC on August 17,
                  2007).10.16
            
            #
            Compromise
                  Agreement dated February 22, 2007 between Douglas R. Wilson and
                  CLPE
                  Holdings Limited (incorporated by reference to the Registrant’s Annual
                  Report on Form 10-K filed with the SEC on August 17,
                  2007).14
            
            
            Code
                  of Ethics, adopted on March 1, 2004 (incorporated by reference
                  to the
                  Annual Report on Form 10-K filed by the Registrant with the SEC
                  on March
                  1, 2006).21
            
            *
            Subsidiaries
                  of the Registrant.31.1
            
            *
            Certification
                  of Randall D. Holmes, Chief Executive Officer of the Registrant,
                  pursuant
                  to Securities Exchange Act Rule 13a-14(a).31.2
            
            *
            Certification
                  of Jeffrey H. Strasberg, Chief Financial Officer of the Registrant,
                  pursuant to Securities Exchange Act Rule
                  13a-14(a).32
            
            *
            Certifications
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                  906 of
                  The Sarbanes-Oxley Act of 2002, signed by Randall D. Holmes, Chief
                  Executive Officer of the Registrant, and Jeffrey H. Strasberg,
                  Chief
                  Financial Officer of the Registrant.99.1
            
            *
            Financial
                  statements of Ridgewood UK,
                  LLC.


_____________________


*
            Filed
                herewith.





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





(c)           **Financial
      Statement Schedules**





See
      Financial Statements and accompanying notes included in this
      report.




35


**SIGNATURES**





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






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




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




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









36




**THE
      RIDGEWOOD POWER GROWTH FUND**





**INDEX
      TO CONSOLIDATED FINANCIAL STATEMENTS**





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


















F-1





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
      FIRM**











The
      Managing Shareholder and Shareholders


**The
      Ridgewood Power Growth Fund**








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





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





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














/s/
      GRANT
      THORNTON LLP





Edison,
      New Jersey


December
      14, 2007
















F-2




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




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





F-3


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





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





F-4




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




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





F-5





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


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





F-6




The
      Ridgewood Power Growth
      Fund **Notes
        to Consolidated Financial
        Statements** **(**dollar
        amounts in thousands, except per share data)




**1.  DESCRIPTION
      OF BUSINESS**





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





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





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





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





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




**2.   SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**





*a)  Principles
      of Consolidation*





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





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





*b)  
      Use of Estimates*





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





F-7




The
      Ridgewood Power Growth
      Fund **Notes
        to Consolidated Financial Statements** **(**dollar
        amounts in thousands, except per share data)





*c)    Reclassifications*





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





*d)    Revenue
      Recognition*





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





*e)    Cash
      and Cash Equivalents*





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





*f)   Accounts
      Receivable*





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





*g)    Inventory*





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





*h)    Investment
      in Securities*





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





*i)    Property,
      Plant and Equipment*





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





F-8




The
      Ridgewood Power Growth
      Fund **Notes
        to Consolidated Financial Statements** **(**dollar
        amounts in thousands, except per share data)


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




HEGFs
            30
                  yearsWater
                desalinization facilities
            5-10
                yearsOffice
                  equipment
            5
                  years





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





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





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





*k)    Income
      Taxes*





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





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





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




*l)    Foreign
      Currency Translation*





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





F-9


The
        Ridgewood Power Growth
        Fund **Notes
          to Consolidated Financial Statements** **(**dollar
          amounts in thousands, except per share data)





*m)    Fair
      Value of Financial Instruments*





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





*n)     Significant
      Customers*





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





*o)    Recent
      Accounting Pronouncements*





*FIN
      48*





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





*SFAS
        157*




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





*SAB
      108*




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





*SFAS
      159*




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





F-10


The
        Ridgewood Power Growth
        Fund **Notes
          to Consolidated Financial Statements** **(**dollar
          amounts in thousands, except per share data)


**3.    ACCOUNTS
      RECEIVABLE**





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




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





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





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




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




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




**4.    NOTES
      RECEIVABLE**





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




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





**Blackstone**





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





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





F-11


The
        Ridgewood Power Growth
        Fund **Notes
          to Consolidated Financial Statements** **(**dollar
          amounts in thousands, except per share data)
 **5.    IMPAIRMENT
          OF GOODWILL, INTANGIBLES AND LONG-LIVED ASSETS**





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





**6.    PROPERTY,
      PLANT AND EQUIPMENT**





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





2006
            
            
            2005Land
            
            $
            186
            
            
            $
            186HEGF
            
            
            1,110
            
            
            
            1,082Water
                  desalinization facilities
            
            
            28,516
            
            
            
            27,545Office
                equipment
            
            
            518
            
            
            
            75430,330
            
            
            
            29,567Less:
                  accumulated depreciation
            
            
            (11,141
            )
            
            
            (8,755
            )$
            19,189
            
            
            $
            20,812





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





**7****.********GOODWILL
      AND INTANGIBLE ASSETS**




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





2006
            
            
            2005Electric
                  power sales contracts - gross
            
            $
            10,754
            
            
            $
            10,754Water
                rights - gross
            
            
            321
            
            
            
            32111,075
            
            
            
            11,075Less:
                accumulated amortization
            
            
            (6,449
            )
            
            
            (5,178
            )Intangibles,
                net
            
            $
            4,626
            
            
            $
            5,897Goodwill
            
            $
            227
            
            
            $
            227




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





F-12


The
        Ridgewood Power Growth
        Fund **Notes
          to Consolidated Financial Statements** **(**dollar
          amounts in thousands, except per share data)
 The
          Fund expects to record amortization expense
          during the next five years as follows:


2007
            
            $
            1,1772008
            
            
            1,1242009
            
            
            9622010
            
            
            9622011
            
            
            23





**8.     ACCUMULATED
      OTHER COMPREHENSIVE LOSS**





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





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




**9.   INVESTMENTS**





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




**United
      Kingdom Landfill Gas Projects**





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





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





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





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





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





F-13


The
        Ridgewood Power Growth
        Fund **Notes
          to Consolidated Financial Statements** **(**dollar
          amounts in thousands, except per share data)


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





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





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





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





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





**ZAP**





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





F-14


The
        Ridgewood Power Growth
        Fund **Notes
          to Consolidated Financial Statements** **(**dollar
          amounts in thousands, except per share data)





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





Warrant
                Series
            
            Maximumpurchase
            
            Initialexpiration
              date
            
            Warrantexercise
              shares
            
            ExercisePrice
                Per
              ShareB
            
            
            994,500
            
            6/30/2003
            
            
            994,500
            
            $
            1.07C
            
            
            994,500
            
            12/31/2004
            
            
            538,462
            
            $
            3.25D
            
            
            994,500
            
            6/30/2007
            
            
            -
            
            $
            -




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





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





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





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





**10.  LONG-TERM
      DEBT**





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




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





F-15


The
        Ridgewood Power Growth
        Fund **Notes
          to Consolidated Financial Statements** **(**dollar
          amounts in thousands, except per share data)





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





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





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





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





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







2007
            
            $
            8552008
            
            
            3742009
            
            
            4682010
            
            
            6272011
            
            
            305Total
            
            $
            2,629




F-16


The
        Ridgewood Power Growth
        Fund **Notes
          to Consolidated Financial Statements** **(**dollar
          amounts in thousands, except per share data)


**11.  COMMITMENTS
      AND CONTINGENCIES**





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





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





2007
            
            $
            7002008
            
            
            7102009
            
            
            7212010
            
            
            7322011
            
            
            243Thereafter
            
            
            4,521Total
            
            $
            7,627





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





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





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




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








F-17


The
        Ridgewood Power Growth
        Fund **Notes
          to Consolidated Financial Statements** **(**dollar
          amounts in thousands, except per share
          data)


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





**12.  OTHER
      LIABILITIES**





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





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





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





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





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




2007
            
            $
            832008
            
            
            922009
            
            
            1012010
            
            
            1122011
            
            
            123Thereafter
            
            
            794Total
            
            $
            1,305







**13.  INCOME
      TAXES**





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





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





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





F-18


The
        Ridgewood Power Growth
        Fund **Notes
          to Consolidated Financial Statements** **(**dollar
          amounts in thousands, except per share
          data)


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





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





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





2006
              
              
              2005Deferred
                  tax assetNOL
                  carryforward - noncurrent
              
              $
              1,578
              
              
              $
              1,319Notes
                  receivable - current
              
              
              -
              
              
              
              4291,578
              
              
              
              1,748Less:
                  valuation allowance
              
              
              (406
              )
              
              
              (336
              )Total
                  deferred tax asset
              
              
              1,172
              
              
              
              1,412Deferred
                  tax liabilitiesAmortization
                  and depreciation - noncurrent
              
              
              (2,029
              )
              
              
              (2,498
              )Net
                  deferred tax liabilities
              
              $
              (857
              )
              
              $
              (1,086
              )




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





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





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





F-19


The
        Ridgewood Power Growth
        Fund **Notes
          to Consolidated Financial Statements** **(**dollar
          amounts in thousands, except per share
          data)


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





**14.  TRANSACTIONS
      WITH MANAGING SHAREHOLDER AND AFFILIATES**





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





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




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





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





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





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





F-20


The
        Ridgewood Power Growth
        Fund **Notes
          to Consolidated Financial Statements** **(**dollar
          amounts in thousands, except per share data)


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





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





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




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




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




**15.  FINANCIAL
      INFORMATION BY BUSINESS SEGMENT AND LOCATION**





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




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




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







F-21


The
        Ridgewood Power Growth
        Fund **Notes
          to Consolidated Financial Statements** **(**dollar
          amounts in thousands, except per share
          data)


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





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




Power2006
              
              
              2005
              
              
              2004Revenues
              
              $
              5,357
              
              
              $
              5,539
              
              
              $
              5,096Depreciation
                  and amortization
              
              
              1,302
              
              
              
              1,597
              
              
              
              1,709Gross
                  profit
              
              
              2,629
              
              
              
              2,440
              
              
              
              1,968Interest
                  income
              
              
              74
              
              
              
              83
              
              
              
              10Interest
                  expense
              
              
              43
              
              
              
              56
              
              
              
              86Income
                  tax (benefit) expense
              
              
              (77
              )
              
              
              138
              
              
              
              (773
              )Total
                  assets
              
              
              8,373
              
              
              
              10,785
              
              
              
              17,221Capital
                  expenditures
              
              
              28
              
              
              
              -
              
              
              
              2Goodwill
              
              
              227
              
              
              
              227
              
              
              
              227Water2006
              
              
              2005
              
              
              2004Revenues
              
              $
              8,161
              
              
              $
              6,742
              
              
              $
              5,489Depreciation
                  and amortization
              
              
              2,307
              
              
              
              2,173
              
              
              
              2,022Gross
                  profit
              
              
              1,889
              
              
              
              1,120
              
              
              
              443Interest
                  income
              
              
              10
              
              
              
              7
              
              
              
              9Interest
                  expense
              
              
              209
              
              
              
              677
              
              
              
              604Total
                  assets
              
              
              21,103
              
              
              
              21,934
              
              
              
              21,219Capital
                  expenditures
              
              
              680
              
              
              
              2,038
              
              
              
              370Corporate2006
              
              
              2005
              
              
              2004Interest
                  income
              
              $
              12
              
              
              $
              6
              
              
              $
              1Interest
                  expense
              
              
              93
              
              
              
              262
              
              
              
              186Equity
                  in loss from RUK
              
              
              (65
              )
              
              
              (833
              )
              
              
              (699
              )Investment
                  in RUK
              
              
              -
              
              
              
              114
              
              
              
              2,149Total
                  assets
              
              
              1,437
              
              
              
              1,356
              
              
              
              449Consolidated2006
              
              
              2005
              
              
              2004Revenues
              
              $
              13,518
              
              
              $
              12,281
              
              
              $
              10,585Depreciation
                  and amortization
              
              
              3,609
              
              
              
              3,770
              
              
              
              3,731Gross
                  profit
              
              
              4,518
              
              
              
              3,560
              
              
              
              2,411Interest
                  income
              
              
              96
              
              
              
              96
              
              
              
              20Interest
                  expense
              
              
              345
              
              
              
              995
              
              
              
              876Income
                  tax (benefit) expense
              
              
              (77
              )
              
              
              138
              
              
              
              (773
              )Total
                  assets
              
              
              30,913
              
              
              
              34,075
              
              
              
              38,889Capital
                  expenditures
              
              
              708
              
              
              
              2,038
              
              
              
              372Goodwill
              
              
              227
              
              
              
              227
              
              
              
              227Equity
                  in loss from RUK
              
              
              (65
              )
              
              
              (833
              )
              
              
              (699
              )Investment
                  in RUK
              
              
              -
              
              
              
              114
              
              
              
              2,149


F-22


The
        Ridgewood Power Growth
        Fund **Notes
          to Consolidated Financial Statements** **(**dollar
          amounts in thousands, except per share data)





**16.    
       SELECTED UNAUDITED QUARTERLY FINANCIAL DATA**




2006
                  Quarters1st
              
              
              2nd
              
              
              3rd
              
              
              4thRevenues
              
              $
              3,461
              
              
              $
              3,838
              
              
              $
              3,082
              
              
              $
              3,137Gross
                  profit
              
              
              1,233
              
              
              
              1,791
              
              
              
              431
              
              
              
              1,063Income
                  (loss) from operations
              
              
              157
              
              
              
              748
              
              
              
              (742
              )
              
              
              (384
              )Net
                  (loss) income
              
              
              (221
              )
              
              
              134
              
              
              
              (377
              )
              
              
              (539
              )Net
                  (loss) income per Investor Share
              
              
              (332
              )
              
              
              202
              
              
              
              (567
              )
              
              
              (812
              )2005
                  Quarters1st
              
              
              2nd
              
              
              3rd
              
              
              4thRevenues
              
              $
              2,915
              
              
              $
              3,514
              
              
              $
              2,875
              
              
              $
              2,977Gross
                  profit
              
              
              975
              
              
              
              1,397
              
              
              
              421
              
              
              
              767(Loss)
                  income from operations
              
              
              (930
              )
              
              
              280
              
              
              
              (582
              )
              
              
              (439
              )Net
                  loss
              
              
              (656
              )
              
              
              (241
              )
              
              
              (1,694
              )
              
              
              (1,368
              )Net
                  loss per Investor Share
              
              
              (987
              )
              
              
              (363
              )
              
              
              (2,548
              )
              
              
              (2,057
              )




**17.  SUBSEQUENT
      EVENTS**





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





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





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





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





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





F-23


The
        Ridgewood Power Growth
        Fund **Notes
          to Consolidated Financial Statements** **(**dollar
          amounts in thousands, except per share
          data)


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





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





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





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





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








F-24