LONDON -(Dow Jones)- Centrica PLC (CNA.LN), the parent company of British Gas, Wednesday announced that its 270 megawatt (MW) Lincs offshore wind project has received final investment approval, and that construction is expected to begin in 2010; investment in this project is expected to total GBP725 million and the wind farm should start generating power towards the end of 2012.
MAIN FACTS:
-Centrica also announced that it has agreed the sale of a 50 per cent equity stake in its Lynn, Inner Dowsing and Glens of Foudland wind farms to the U.S.-based investment management company TCW for a cash consideration of GBP84 million
-When Lincs is completed, Centrica will have equity interests in operating renewable energy projects with an installed capacity of 650MW.
-Has entered into agreements to raise GBP340 million of non-recourse project finance facilities from a consortium of banks for these assets.
-The transactions value the wind farms at GBP460 million in aggregate.
-Profit on disposal of this 50 per cent equity stake will be around GBP50 million. Reported operating profit in the year ended 31 December 2008 from these wind assets was GBP17 million, however, the Lynn and Inner Dowsing wind farms were not fully commissioned until December 2008.
-Lincs will be situated eight kilometres off the coast of Skegness next to Centrica's existing wind farm developments at Lynn and Inner Dowsing and will comprise of 75 3.6MW Siemens turbines.
-Under current U.K. Government proposals, Lincs will attract two Renewable Obligation Certificates (ROCs) for every megawatt hour (MWh) produced, following the U.K. Government's decision in April to enhance the level of support provided for new offshore wind projects.
-Centrica is also entering into a joint venture agreement with TCW to govern their ongoing relationship as co-owners of the Lynn, Inner Dowsing and Glens of Foudland wind farms.
-The agreement contains customary rights for each party to acquire the other party's shares in the joint venture company at fair market value following a material default by, or on the insolvency of, the other party.
-Through its subsidiary British Gas Trading Ltd, Centrica will also enter into a 15-year Power Purchase Agreement, or PPA, to off-take all the electricity production together with 50 per cent of the ROCs generated by the three refinanced wind farms.
-Financial close on the non-recourse project finance facilities is expected to occur in November 2009 and the equity sale is expected to close before year end, conditional on receipt of European Community Merger Regulation, or ECMR, approvals.
-By London Bureau, Dow Jones Newswires; Contact Ian Walker; +44 (0)20 7842 9296; ian.walker@dowjones.com