SSE Buys Stake in Walney Windfarm in Irish Sea

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Scottish and Southern Energy plc (OTC:SSEZY) (SSE) (Perth, Scotland) has announced plans to take a 25.1% stake in the 367-megawatt (MW) Walney offshore windfarm, which is being built by Dong Energy (Copenhagen, Denmark) in the Irish Sea.

The Walney windfarm is almost ready to start construction and will be situated 14 kilometres west of the Isle of Walney in the Irish Sea. Dong Energy, which will oversee the construction, will retain the remaining 74.9% stake. SSE will pay £39 million ($62.4 million) for its stake, with £17 million of this amount subject to the operational performance of the windfarm. As a shareholder in the project, SSE will pay about £250 million ($400 million) of the construction costs.

The windfarm will cost roughly £1 billion ($1.6 billion) to build and will be constructed in two phases, Walney 1 and 2, each totalling 183.6 MW. Construction of the first phase is scheduled to start this spring. The second phase will begin in the spring of 2011. Commissioning of the windfarm will also take part in two phases during the first half of 2011 and at the end of 2011. Siemens is supplying the wind turbines for the project, with new 120-metre rotors slated for use in the second phase.

The windfarm will have an average load factor of about 43% and produce approximately 1,300 gigawatt-hours of electricity annually. This level of output will qualify Walney for 2.0 Renewable Obligation Certificates (ROCs) per MWh, under the U.K. government's Renewables Obligation Scheme.

The addition of the Walney stake takes SSE's portfolio of onshore and offshore windfarms in operation, in construction or with consent for development in the U.K. and Ireland to more than 2,100 MW. Dong Energy recently purchased a 50% stake in the 270-MW Lincs offshore windfarm for £50 million ($79.8 million) from Centrica plc (OTC:CPYYY) (Windsor, England). For additional information, see December 27, 2009, article - Centrica Sells 50% Stake in 270-Megawatt Lincs Windfarm.

"SSE is already the U.K.'s leading generator of electricity from renewable sources, with the largest and most diverse portfolio," said Ian Marchant, chief executive of SSE. "The potential for harnessing the energy of the wind off the coast of the U.K. is vast, and the combination of Walney and Greater Gabbard gives us a very good offshore wind construction portfolio for the next few years. Dong Energy is one of the world's leading offshore windfarm developers, with extensive construction and operational experience."

Anders Eldrup, chief executive of Dong Energy, said: "The partnership with SSE in the U.K. provides an opportunity for Dong Energy, through its reduced share in Walney, to diversify risks, and at the same time utilise and further develop our offshore experience. The U.K. is one of the primary markets for Dong Energy's wind development activities now and in the near future."

The news comes as Scotland's First Minister Alex Salmond claimed that Scotland could be Europe's leading exporter of renewable energy in the coming decades. In his New Year's address, Salmond said: "We have perhaps the capacity to produce 10 times Scotland's own electricity requirements and make sure we're the major exporter, the energy powerhouse of the continent."

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