As part of the transaction, Centrica also announced that Lincs has entered into a wind turbine supply deal with Siemens Wind Power for 75 offshore wind turbines of class SWT-3.6-120. Centrica stated that the turbines, which represent an upgrade to class SWT-3.6-107 originally envisaged for Lincs, are estimated to generate more power through higher load factors enhancing project returns.
At closing of the deal, privately-held Dong Energy and Siemens Project Ventures will be reimbursing Centrica for 50% of development costs incurred to that date in the wind energy project. Total investment in the wind power project is anticipated to be nearly GBP 750 million, with Centrica’s share being GBP 375 million.
Centrica plc, the parent company of British Gas, today announced that it has agreed the sale of a 50 per cent equity stake in its 270 megawatt (MW) Lincs offshore wind farm to DONG Energy and Siemens Project Ventures for a cash consideration of £50 million. As part of this transaction, Centrica also announced that Lincs has entered into a turbine supply agreement with Siemens Wind Power for 75 offshore wind turbines of class SWT-3.6-120. These turbines, which represent an upgrade to the class SWT-3.6-107 originally envisaged for Lincs, are expected to generate more power through higher load factors, enhancing project returns.
At closing of the transaction DONG Energy and Siemens Project Ventures will reimburse Centrica for 50 per cent of the development costs incurred to that date. Total investment in the project is expected to be approximately £750 million, with Centrica’s share being £375 million. Construction of the Lincs wind farm is planned to commence in 2010 with first power expected in the second half of 2012.
Centrica, through its wholly-owned subsidiary Centrica Renewable Energy Limited, will continue to lead development, construction and operation of the Lincs wind farm. Through its subsidiary British Gas Trading Limited, Centrica will also enter into a 15 year Power Purchase Agreement (PPA) to off-take 75 per cent of the electricity production and 50 per cent of the Renewable Obligation Certificates (ROCs) generated by the Lincs wind farm. As previously announced, under current UK Government proposals Lincs will attract 2.0 ROCs for every megawatt hour (MWh) of electricity produced.
Sam Laidlaw, Chief Executive of Centrica, said: "We are pleased to welcome DONG Energy and Siemens Project Ventures as equity partners in Lincs. DONG Energy brings substantial experience of offshore wind projects. Siemens Project Ventures’ equity investment demonstrates Siemens’ confidence in their latest offshore wind turbine technology."
Lincs is Centrica’s latest Round Two wind farm and follows the successful construction and refinancing of the Lynn and Inner Dowsing wind farms. Centrica’s two other Round Two wind farms, Race Bank and Docking Shoal, which are awaiting consent, could add a further 1.1 gigawatts (GW) to its renewable energy portfolio. Completion of the transaction is expected in January 2010.
Centrica (Lincs) Limited (CLL), which owns the Lincs wind farm, reported operating profit in the year ended 31 December 2008 of approximately £84 million. After taking into account the exceptional profit arising from CLL’s disposal of a subsidiary, it made a loss of approximately £2 million for the year ended 31 December 2008. CLL reported gross assets for the year ended 31 December 2008 of approximately £104 million. CLL will be renamed Lincs Wind Farm Limited at closing of this transaction.
DONG Energy is one of the leading energy groups in Northern Europe, procuring, producing, distributing and trading energy and related products. DONG Energy has a substantial pipeline of development projects in the UK, which are currently under planning and development.
Siemens Project Ventures has invested equity capital in the development of infrastructure projects worldwide, particularly in the energy, transport and telecommunication sectors. It is a division of Siemens Financial Services GmbH, an international provider of financial solutions in the business-to-business area.
DONG Energy and Siemens Project Ventures will acquire the 50% equity stake in CLL through a jointly controlled company, Lincs Wind Farm Holdings Limited.
Centrica’s joint venture agreement with Lincs Wind Farm Holdings Limited to govern their ongoing relationship as co-owners of CLL contains customary rights for each party to acquire the other party’s shares in CLL in certain circumstances.
The Siemens SWT-3.6-120 turbine was released in September 2009. It is based on the proven technology of the SWT-3.6-107 turbine currently installed at the Lynn and Inner Dowsing wind farms and features a 120 metre rotor diameter and 58.5 metre long rotor blades. The turbine has a swept area of 11,300 square metres, equivalent to nearly two football fields. Siemens anticipates that the new SWT-3.6-120 rotor blades will enhance the performance of the proven SWT-3.6-107 turbine and typically generate ten per cent more electricity compared to the SWT-3.6-107.
Project investment is calculated net of anticipated proceeds from the disposal of assets under the offshore transmission regime (OFTO).