Centrica Sells 50% Stake in 270-Megawatt Lincs Windfarm

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Centrica plc (OTC:CPYYY) (Windsor, England) will sell a 50% stake in the 270-megawatt (MW) Lincs offshore windfarm to Dong Energy (Copenhagen, Denmark) and Siemens Project Ventures, a subsidiary of Siemens AG (NYSE:SI) (Munich, Germany).

The companies will pay a cash consideration of £50 million ($79.8 million), and when the deal closes, they will reimburse Centrica for 50% of the development costs incurred to date. Centrica's share of the build will cost £375 million ($598 millon). The deal comes a month after Centrica, which owns British Gas, received final investment approval for the £750 million ($1.2 billion) windfarm. For additional information, see November 2, 2009, article - Centrica Secures Final Investment Approval for 270-Megwatt U.K. Offshore Wind Power Project.

Construction is expected to start next year, and the windfarm will be commissioned by the end of 2012, generating enough electricity for 200,000 homes. The deal will also include a turbine supply agreement with Siemens to provide 75 SWT-3.6-120 offshore wind turbines, which are upgrades to the SWT-3.6-107 turbines originally outlined. The turbines will generate up to 10% more power through higher load factors.

Centrica has agreed to a 15-year power purchase agreement to take 75% of the electricity production and 50% of the renewable obligation certificates (ROCs) generated by the Lincs windfarm, which will bring two ROCs for every megawatt-hour of electricity produced.

"We are pleased to welcome Dong Energy and Siemens Project Ventures as equity partners in Lincs," said Sam Laidlaw, chief executive of Centrica. "Dong Energy brings substantial experience of offshore wind projects. Siemens Project Ventures' equity investment demonstrates Siemens' confidence in their latest offshore wind turbine technology."

Dong and Siemens have separately agreed to extend their already extensive turbine-supply agreement. In March, the companies signed the largest turbine agreement in the world, with Dong agreeing to buy 500 turbines with a total capacity of 1,800 MW. For additional information, see March 11, 2009, article - Siemens Signs 1,800-Megawatt Wind Turbine Contract with Dong Energy.

To date, more than 1,000 MW of turbines has been supplied to Dong. The companies have now agreed to extend various aspects of the original deal, but did not release details.

"The expanded supply agreement with DONG Energy is the world's largest agreement of its kind and will further strengthen our position as the clear market leader in offshore business," said Wolfgang Dehen, CEO of the Siemens Energy Sector. "It also supports our goal to grow faster than the market in order to become one of the top three suppliers worldwide in the wind power market by 2012."

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