Dong Energy Acquires Stake in Hornsea Offshore Wind Projects

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Researched by Industrial Info Resources Europe (Galway, Ireland)--Dong Energy A/S (Fredericia, Denmark) has invested £15 million ($23 million) to buy a 33.3% stake in two North Sea windfarms that are being developed by Smart Wind, a joint venture of Siemens AG (NYSE:SI) (Munich, Germany) and Mainstream Renewable Power (Dublin, Ireland).

The two U.K. wind projects, Heron and Njord, have a potential total capacity of up to 1,000 megawatts (MW), the deal also includes an option to purchase the remaining 66.7% of the shares at a fixed market price. In addition, Dong has acquired an option for a further 1,000 MW in the Hornsea zone, which was awarded to Smart Wind as part of the Crown Estate's Round 3 tender process.

Commenting on the announcement, Mainstream CEO Eddie O'Connor said: "This deal clearly proves the value of our offshore business model. Our expertise is securing the best locations and taking these projects through the complex development process, then bringing in long-term owners at the appropriate stage. Dong Energy is an excellent partner, and I look forward to continuing our positive relationship."

Although Dong has about 675 MW of offshore wind capacity in the U.K., including the Gunfleet Sands and Walney windfarms, and almost 1,000 MW under development in West Duddon and Walney III, they were unsuccessful in the bidding process for the nine Round 3 zones, which were announced in January 2010. In a company statement, Anders Eldrup, CEO of Dong Energy, said: "Participation in Round 3 is a natural step for Dong Energy, taking into account our leading position within offshore wind and our existing presence and focus on the U.K. market. Hornsea is an attractive zone, and the agreement with Smart Wind provides Dong Energy access to development projects, which fits well into our mid-term project pipeline."

In October 2011, Smart Wind successfully installed the first met mast in the Round 3 programme. In November, the company announced it had secured grid connection for the second 1,000 MW of the zone. The zone has the potential for windfarms with a total capacity of 4,000 MW. For additional information, see October 8, 2010, article - Hornsea Offshore Windfarm Secures Grid Connection.

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