Centrica gives go-ahead on Lincs offshore wind farm

Centrica received Government planning approval for the offshore wind farm a year ago. Now final investment approval has been agreed and the project is expected to begin construction in 2010 and generating power by the end of 2012.

The offshore farm will consist of 75, 3.6 MW Siemens turbines adjacent to Centrica’s existing wind farm developments at Lynn and Inner Dowsing. The wind farm should be capable of generating electricity for around 200,000 British Gas customers.

The project is expected to cost £725 million in total and under current UK Government proposals, will attract two Renewable Obligation Certificates (ROCs) for every megawatt hour (MWh) produced, following the UK Government’s decision in April to enhance the level of support provided for new offshore wind projects.

Sam Laidlaw, chief executive of Centrica, said: "Our decision to build Lincs illustrates our continued commitment to develop renewable generation and confirms our position as one of the UK leaders in green energy. The Government’s enhanced financial framework for offshore wind has been fundamental in improving the overall project economics of this development.”

At the same time as announcing the go-ahead on the Lincs farm, Centrica is undertaking a re-financing arrangement that will see it sell a 50 per cent equity stake in its Lynn, Inner Dowsing and Glens of Foudland wind farms to the US-based investment management company TCW for a cash consideration of £84 million and raise approximately £340 million of non-recourse project finance facilities from a consortium of banks for these assets. It said it would also be entering into a joint venture agreement with TCW to co-own the Lynn, Inner Dowsing and Glens of Foudland wind farms.

Commenting on the re-financing and equity sale, Laidlaw said: "This is a milestone in our renewables strategy and we look forward to working together with TCW who bring significant global expertise in energy investments.”

Through its subsidiary British Gas Trading Ltd, Centrica will also enter into a 15-year Power Purchase Agreement to off-take all the electricity production together with 50 per cent of the ROCs generated by the three refinanced wind farms.