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Offshore Wind

Centrica invests £725 million in offshore project

Centrica will build a 270-megawatt offshore wind farm. Photo by Centrica P.L.C.

Centrica P.L.C. will put in around £725 million ($1.2 billion) to build a 270-megawatt offshore wind farm off the coast of Skegness.

Centrica, the parent company of British Gas, said on Wednesday that the Lincs offshore wind project has received final investment approval.

The Lincs wind farm will be situated eight kilometers next to Centrica’s existing wind farm developments at Lynn and Inner Dowsing.

Construction is set to begin in 2010 and two years later start generating power for 200,000 British Gas customers.

The project will use 75 turbines from Siemens with 3.6-megawatt capacity each. Once completed, Centrica will have equity interests in operating renewable energy projects with an installed capacity of 650 MW.

Centrica also announced that it has agreed to sell its 50 percent equity stake in its Lynn, Inner Dowsing and Glens of Foundland wind farms to the United States-based investment management company TCW for a cash consideration of £84 million.

It also entered into agreements to raise approximately £340 million of non-recourse project finance facilities from a consortium of banks for these assets.

The transactions value the wind farms at approximately £460 million. Profit on disposal of the 50 percent stake will be around £50 million.

Reported operating profit in the year ending December 31, 2008 from these wind assets was £17 million. However, the Lynn and Inner Dowsing wind farms were not fully commissioned until December 2008.

Centrica and TCW have also agreed to form a joint venture as co-owners of the Lynn, Inner Dowsing and Glens of Foundland wind farms.

Through its subsidiary British Gas Trading Limited, Centrica will also enter into a 15-year power purchase agreement to off-take all the electricity production together with 50 percent of renewable obligation certificate generated by the three refinanced wind farms.

Centrica is listed on the London Stock Exchange and a part of the FTSE 100 Index, the share index of the 100 most highly capitalized companies in Britain listed on the exchange.

-   Katrice R. Jalbuena

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