Joint Venture for Offshore Wind Farm in UK

Centrica has entered into a joint venture with DONG, the Danish energy group, and Statkraft, the Norwegian power company, to acquire Barrow Offshore Wind Limited (BOW), which has the rights to develop a 90-MW offshore electricity wind farm in the East Irish Sea.

Windsor Berkshire, England – September 23, 2003 [] Centrica, DONG and Statkraft will purchase the entire share capital of BOW from Warwick Energy Limited. Centrica will hold a 25 percent interest in BOW and the other two parties 37.5 percent each. The intention is for BOW to build 30 wind turbines off Walney Island, near Barrow-in-Furness, Cumbria. Centrica’s subsidiary British Gas Trading Limited will take all of the electricity produced by the wind farm under a long-term power purchase agreement, together with the associated Renewable Obligation Certificates. British Gas is the UK’s biggest household electricity supplier with more than 6 million customers. When fully operational, the wind farm is expected to produce approximately 320 GWh per year, or around 6 per cent of Centrica’s estimated renewables obligation by 2010. The capital investment cost, assuming the project progresses to completion, together with the acquisition consideration, is currently estimated at approximately £100 million (US$165 million). Of this, £10 million (US$16.5 million) will be funded by a government capital grant. The shareholders expect to contribute to the development costs from existing funds according to their equity stakes. Centrica’s share would therefore be approximately £22.5 million (US$37 million). BOW has full consents from the UK government to construct and operate the windfarm. It is one of the largest offshore projects in the UK to have obtained such consents and will be around 8 kilometers offshore. “This is a significant step towards establishing British Gas as a major player in renewables,” said Sir Roy Gardner, Centrica chief executive. “The location, near to our Morecambe Bay gas field and our newly acquired power station at Roosecote, will allow us to leverage our infrastructure and skills base in the area.” Centrica indicated in July its intention was to make equity investments of around £500 million (US$824 million) over the next five years in renewable generation plant. It will invest alongside skilled joint venture partners to build around 1,000 MW of capacity. Construction of the Barrow wind farm is expected to begin in 2004 or 2005. The expected life of the asset is 20 years.
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