Centrica forms joint venture to acquire offshore windfarm company

Centrica plc today announces that it has entered into a joint venture with DONG, the Danish energy group, and Statkraft, the Norwegian power company, to acquire Barrow Offshore Wind Limited (BOW), which has the rights to develop a 90MW offshore electricity windfarm in the East Irish Sea.

Centrica, DONG and Statkraft will purchase the entire share capital of BOW from Warwick Energy Limited. Centrica will hold a 25 per cent interest in BOW and the other two parties 37.5 per cent each.

The intention is for BOW to build 30 wind turbines off Walney Island, near Barrow. Centrica’s subsidiary British Gas Trading Limited will take all of the electricity produced by the windfarm under a long term power purchase agreement, together with the associated Renewable Obligation Certificates. British Gas is the UK’s biggest household electricity supplier with more than 6 million customers.

When fully operational, the windfarm is expected to produce approximately 320GWh per annum, or around 6 per cent of Centrica’s estimated renewables obligation by 2010.

The capital investment cost, assuming the project progresses to completion, together with the acquisition consideration, is currently estimated at approximately £100 million. Of this, £10 million will be funded by a government capital grant. The shareholders expect to contribute to the development costs from existing funds according to their equity stakes. Centrica’s share would therefore be approximately £22.5 million.

BOW has full consents from the UK government to construct and operate the windfarm. It is one of the largest offshore projects in the UK to have obtained such consents and will be around 8 kilometres offshore.

Sir Roy Gardner, Centrica chief executive, said: "This is a significant step towards establishing British Gas as a major player in renewables."

He added: "The location, near to our Morecambe Bay gas field and our newly acquired power station at Roosecote, will allow us to leverage our infrastructure and skills base in the area."

Centrica indicated in July its intention was to make equity investments of around £500 million over the next five years in renewable generation plant. It will invest alongside skilled joint venture partners to build around 1,000MW of capacity.

Construction of the Barrow windfarm is expected to begin in 2004 or 2005. The expected life of the asset is 20 years.