RWE Drops 905-Megawatt Scottish Offshore Wind Project

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--In a surprising U-turn, the U.K. arm of German energy giant RWE AG (OTC:RWEOY) (Essen, Germany) has pulled out of the 905-megawatt (MW) Inch Cape offshore wind project off the coast of Scotland.

RWE npower renewables (Swindon, England) had partnered with Scotland's SeaEnergy Renewables (SERL), an 80% subsidiary of offshore windfarm developer SeaEnergy plc (Aberdeenshire, Scotland), for the project but has decided to drop out, claiming it already has a lot of other offshore and onshore windfarms in development. SERL said it intends to continue with the project, which is 15.5 kilometres east of the Angus coastline. The news comes just days after the Scottish government gave the green light to 10 offshore windfarm projects with a combined capacity of 6.4 gigawatts (GW), of which the Inch Cape project is one. For related news, see March 24, 2010, article - Scotland Approves 6.4 Gigawatts of Offshore Wind Projects.

"RWE npower renewables has notified SERL and The Crown Estate of its desire to exit the Inch Cape project," said SERL in a statement. "This is due to the considerable size of its other onshore and offshore renewable generation commitments."

The Crown Estate awarded the Inch Cape project as part of a rollout of 10 projects under the Scottish Territorial Waters leasing round, which was conducted in February 2009. SERL retains the exclusive right to negotiate a lease agreement for the next 50 years, and a lease is expected to be signed once the Scottish government has completed the wide-ranging Strategic Environmental Assessment later in the year.

Following the departure of RWE, The Crown Estate and SERL have begun discussions with the aim of ensuring that the site's development schedule and activities can progress as planned. The goal is to create a memorandum of understanding between both groups that provide terms for the delivery of Inch Cape and may increase SERL's interest in the project.

SERL CEO Joel Staadecker said: "Inch Cape is an important site for Scotland, which expects to benefit from the construction and operation of offshore windfarms off the coast of central Scotland. We are delighted that The Crown Estate shares our commitment to the project and look forward to successful discussions to agree terms for its delivery. We are also very pleased at the prospect of potentially increasing our equity stake in what is a great project."

SeaEnergy is also hoping to build the 920-MW Beatrice windfarm off the Scottish coast with Scottish and Southern Energy plc (OTC:SSEZY) (SSE) (Perth, Scotland). SeaEnergy was also one of the big winners in the U.K.'s Round 3 of offshore windfarm awards in January this year, with permission granted to build the 1.3-GW Moray Firth windfarm with partner EDP Renovaveis (Lisbon, Portugal). For related news, see January 11, 2010, article - Winners of U.K. Offshore Wind Jackpot Revealed.

In related news, SSE sold its 100% interest in Ardrossan Windfarm Limited (Ayrshire, Scotland), which owns and operates a 30-MW windfarm in Ayrshire. The company was sold to Infinis, a Terra Firma (London) company, in a deal worth £53.8 million ($77.5 million).

Gregor Alexander, the finance director of SSE, said: "We own generation assets in order to provide electricity for our customers, and with electricity generated at the site going elsewhere, Ardrossan did not fit into our portfolio. In our results statement earlier this week, we said we would use acquisitions and disposals to optimise our windfarm portfolio, and this sale is in line with that."

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