Siemens Sells Wind Zone That May Meet 4 Percent of U.K.’s Power

Siemens Financial Services GmbH and Mainstream Renewable Power Ltd. sold an offshore wind development area to Dong Energy A/S that has the potential to provide as much as 4 percent of the U.K.’s electricity demand.

If developed to its full 4-gigawatt capacity, the Hornsea zone may require an investment of as much as 12 billion pounds ($19 billion), Mainstream said Friday in an e-mailed statement. That’s enough to power as many as 3 million homes, it said.

Dong, the largest operator of offshore wind parks, bought the first 1.2-gigawatt phase of the zone off the Yorkshire coast from Siemens and Mainstream in February. The purchase of the entire area means it can now develop a further two facilities, one of which is expected to receive planning consent in the middle of next year, according to the statement.

Dong has invested about 6 billion pounds in U.K. offshore wind, said Samuel Leupold, executive vice president. The size of Hornsea and “high generation potential” will help the company as it strives to cut the costs of electricity from sea-based wind farms.

Offshore wind is one of the most expensive clean-energy technologies, costing about $176 a megawatt-hour compared with an average $72 for coal, Bloomberg estimates show. U.K. developers plan to cut that figure to about $156 a megawatt-hour by the end of the decade.

Today’s acquisition may be worth 550 million euros ($624 million) to 750 million euros, according to Keegan Kruger, a European wind analyst at Bloomberg New Energy Finance, citing BNEF data.

“Despite being one of the biggest pre-construction acquisitions to date, Dong will have to achieve significant permitting milestones if it intends to fully develop one of the world’s biggest offshore development areas,” Kruger wrote in an e-mail.

The U.K. had almost 4,500 megawatts of installed offshore wind capacity at the end of last year, the largest in Europe, according to European Wind Energy Association estimates.

©2015 Bloomberg News

Lead image credit: www.siemens.com

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