Wind News

Thursday 29 October 2009

Centrica is selling off half of the Lynn and Inner Dowsing wind farms

Construction on the 270MW Lincs wind farm off the coast of Lincolnshire is set to begin next year after developer Centrica sold off 50% of three other wind farms, it emerged yesterday (October 29).

The Lincs scheme, which will be situated eight kilometres off the coast of Skegness next to the existing Lynn and Inner Dowsing wind farms, is part of the Crown Estate's Round Two cycle of offshore wind development and originally received planning permission in October last year (see this NewEnergyFocus.com story).

Centrica said that the £725 million project would comprise a set of 75 Siemens turbines, and would start producing electricity in 2012. Lincs has planning consent for 250MW with a proposed additional 20MW to be constructed in the footprint of the Lynn and Inner Dowsing wind farm development but connected to the Lincs transmission.

To fund the project, the company said it had agreed the £84 million sale of a 50% stake in its Lynn, Inner Dowsing and Glens of Foudland wind farms to the US-based investment management company TCW, and entered into agreements to raise around £340 million from a consortium of banks.

The company said it expected to raise £230 million through the OFTO regime process, which sees companies bid to own and run the offshore transmission cables connecting wind farms to the shore.

Yesterday, Sam Laidlaw, chief executive of Centrica, said that building the Lincs wind farm showed Centrica's commitment to renewables and backed the government's role.

He said: "Our decision to build Lincs illustrates our continued commitment to develop renewable generation and confirms our position as one of the UK leaders in green energy. The Government's enhanced financial framework for offshore wind has been fundamental in improving the overall project economics of this development."

Finance

Centrica said the equity sale of Lynn, Inner Dowsing and Glens of Foudland was expected to go through by the end of 2009, conditional on receipt of European Community Merger Regulation (ECMR) approvals.

The company revealed that it is also set to enter into a joint venture agreement with TCW to govern its ongoing relationship as co-owners of the Lynn, Inner Dowsing and Glens of Foudland wind farms.

Centrica said it planned to enter into a 15-year Power Purchase Agreement (PPA) through its subsidiary British Gas Trading Ltd, to off-take all the electricity production together with 50% of the ROCs generated by the three refinanced wind farms.

Mr Laidlaw called the refinancing deal was a "milestone" for the company's renewable strategy.

"The refinancing and equity sale of part of our existing wind portfolio underlines the quality of the operational assets and creates a structure for recycling Centrica's capital and mobilising third party funds efficiently. This is a milestone in our renewables strategy and we look forward to working together with TCW who bring significant global expertise in energy investments," he said.