Dong Snaps Up 580-Megawatt Race Bank Windfarm

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Denmark's Dong Energy A/S (Fredericia, Denmark) continues to cement its position as one of the U.K.'s leading developers of offshore wind, after it agreed to buy the 580-megawatt (MW) Race Bank offshore windfarm project from energy utility Centrica plc (OTC:CPYYY) (Windsor, England).

In a deal worth €59 million ($81 million) Dong acquired a 100% ownership interest in Race Bank, located in the Greater Wash area, approximately 27 kilometers off the east coast of England. Earlier this year, Centrica pulled out of a project to build the U.K.'s first new nuclear plant in 20 years, blaming concerns over costs and project delays. For additional information, see February 8, 2013, article - Centrica Abandons U.K. Nuclear Projects.

Last week, Centrica set its sights on Ireland's energy market, after the Irish government announced that a Centrica-led consortium was the preferred bidder for a €1.125 billion ($1.54 billion) takeover of the country's gas and electricity utility, Bord Gáis Energy (Cork, Ireland). For additional information, see December 13, 2013, article - Ireland Selling Bord Gáis Energy for €1.1 Billion.

Race Bank received all major consents from U.K. authorities last year for the construction and operation of the windfarm. Construction should start in 2017. When commissioned, it will be capable of providing enough power for more than 450,000 homes.

"Race Bank fits very well into our existing pipeline of offshore wind projects, and will contribute to the achievement of our strategic target of constructing 6,500 MW by 2020," said Samuel Leupold, Executive Vice President of Dong Energy Wind Power. "The addition of up to 580 MW to our U.K. project portfolio underlines our commitment to the U.K. market in general, and to the U.K. offshore wind sector in particular.

"The Race Bank project is located relatively close to shore, with good wind resources, low water depths, and seabed conditions similar to Dong Energy's other U.K. Round 2 projects. I'm confident that--given our proven experience in developing and building offshore windfarms and the forward visibility on tariffs until the end of the decade created by the Electricity Market Reform (EMR)--we can turn this into a successful project."

It might not be all smooth sailing for the project, however, as it recently failed to qualify for investment contracts from the U.K. government.

Race Bank had applied alongside 25 other renewable energy projects to the Department of Energy and Climate Change's (DECC) "final investment decision enabling for renewables" (Fider) process, which is designed to let developers to take final investment decisions ahead of the forthcoming Contract for Difference (CfD) system coming into play under the country's EMR.

Seven other offshore projects got the green light to apply for investment contracts, but not Race Bank. Dong said it will work with DECC and is "confident" that Race Bank will qualify for CfD inclusion.

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