Centrica plc, the parent company of British Gas, today announced that it has agreed the sale of a 50 per cent equity stake in its 270 megawatt (MW) Lincs offshore wind farm to DONG Energy and Siemens Project Ventures for a cash consideration of £50 million. As part of this transaction, Centrica also announced that Lincs has entered into a turbine supply agreement with Siemens Wind Power for 75 offshore wind turbines of class SWT-3.6-120. These turbines, which represent an upgrade to the class SWT-3.6-107 originally envisaged for Lincs, are expected to generate more power through higher load factors, enhancing project returns.
At closing of the transaction DONG Energy and Siemens Project Ventures will reimburse Centrica for 50 per cent of the development costs incurred to that date. Total investment in the project is expected to be approximately £750 million, with Centrica's share being £375 million. Construction of the Lincs wind farm is planned to commence in 2010 with first power expected in the second half of 2012.
Centrica, through its wholly-owned subsidiary Centrica Renewable Energy Limited, will continue to lead development, construction and operation of the Lincs wind farm. Through its subsidiary British Gas Trading Limited, Centrica will also enter into a 15 year Power Purchase Agreement (PPA) to off-take 75 per cent of the electricity production and 50 per cent of the Renewable Obligation Certificates (ROCs) generated by the Lincs wind farm. As previously announced, under current UK Government proposals Lincs will attract 2.0 ROCs for every megawatt hour (MWh) of electricity produced.
Sam Laidlaw, Chief Executive of Centrica, said: "We are pleased to welcome DONG Energy and Siemens Project Ventures as equity partners in Lincs. DONG Energy brings substantial experience of offshore wind projects. Siemens Project Ventures' equity investment demonstrates Siemens' confidence in their latest offshore wind turbine technology."
Lincs is Centrica's latest Round Two wind farm and follows the successful construction and refinancing of the Lynn and Inner Dowsing wind farms. Centrica's two other Round Two wind farms, Race Bank and Docking Shoal, which are awaiting consent, could add a further 1.1 gigawatts (GW) to its renewable energy portfolio.
Completion of the transaction is expected in January 2010.