Airtricity and Fluor in Joint Venture to Bid for U.K.'s Round 3 Offshore Wind Development Program

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Researched by Industrial Info Resources (Sugar Land, Texas)--Airtricity Holdings Limited (Dublin, Ireland), the renewable energy development division of Scottish and Southern Energy Plc (LSE:SSE) (Perth, Scotland), and Fluor Limited (Camberley, United Kingdom), the local division of Fluor Corporation (NYSE:FLR) (Irving, Texas), have formed a joint venture, Seagreen Wind Energy Limited. The joint venture will bid under the Round 3 Offshore Wind Development Program, run by The Crown Estate, for exclusive rights to develop windfarms off the U.K. coast.

The Crown Estate, an independent body that owns the seabed within 12 nautical miles of the U.K. coastline, had previously announced Rounds 1 and 2 of the program, aimed at developing 8 gigawatts (GW) of wind power. In December 2007, the British Department of Energy and Climate Change announced a Strategic Environment Assessment (SEA) to facilitate further offshore windfarm developments, oil and gas licensing, and the storage of combustible gas in previously depleted oil and gas wells.

Following the announcement of the SEA, the proposal for Round 3 of the Wind Farm Development Program was announced in June 2008 with the objective of developing 25 GW of wind power by 2020 from nine different development zones around the U.K. coast. Currently, The Crown Estate has received about 40 bids under Round 3, with bids coming from 18 different companies and consortia.

Under the terms of the Round 3 development, The Crown Estate will fund up to 50% of the development costs through co-investment to reduce the risk to developers. The Crown Estate will also offer exclusive development rights to the winning bidder for each zone. Successful bids will be determined by the end of 2009. Development will commence in 2010 and construction by 2014. The first site is slated for completion by 2018.

Airtricity and Fluor were previously successful under the Round 2 bidding process when they came together to bid for the 500-megawatt (MW) Greater Gabbard windfarm project, which is the largest offshore windfarm under construction in the world. The project, located off the Suffolk coast, is on schedule for a completion date of 2011 and will have 140 wind turbines provided by Siemens AG (NYSE:SI) (Munich, Germany). Airtricity later bought out Fluor's stake in the project and sold a share of 50% to RWE npower renewables (Swindon, United Kingdom), the U.K. arm of RWE Innogy (Essen, Germany), which in turn is a subsidiary of RWE AG (FRA:RWE) (Essen).

Fluor and Airtricity were also successful in February this year in obtaining an exclusive development agreement from The Crown Estate to develop the Bell Rock windfarm off the Angus coast in the Scottish territorial waters. The project is located about 10 kilometers from land, covers an area of around 93 square kilometers, and will generate 700 MW of power from 140 turbines.

The Seagreen consortium is the second such group formed by Scottish and Southern Energy for involvement in Round 3 bidding. In February this year, the firm announced plans to form Forewind, a consortium with RWE Innogy, StatoilHydro ASA (NYSE:STO) (Stavanger, Norway), and state-owned Statkraft (Oslo, Norway).

Although The Crown Estate has not revealed details of the bids received, several European firms, including E.ON AG (FRA:EOAN) (Duesseldorf, Germany), Enecon Energie (Rotterdam, The Netherlands), and Econcern (Utrecht, The Netherlands), have already announced that they are bidding under Round 3.

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