Centrica and DONG Energy announced they have formed a joint venture to co-develop offshore wind farms in the Round 3 Irish Sea Zone, which has a potential capacity of 4.2GW.
The transaction will see DONG Energy pay Centrica up to £40 million in cash for a 50 per cent interest in the joint venture. DONG Energy will pay Centrica £15 million at closing of the transaction, with the balance payable in later years contingent upon consent being achieved for a project in the Irish Sea Zone and DONG Energy reaching a final investment decision for a project in the Zone.
The joint venture further cements the relationship between two of the UK’s leading offshore wind farm developers, which together have around 1GW of offshore wind capacity installed or under construction in the UK. Centrica and DONG Energy already hold joint interests in the Barrow and Lincs offshore wind farms.
The two companies will work together to develop different projects in the zone on a 50/50 basis with construction management of the projects alternating between the parties. For the first project under Centrica’s management, a final investment decision is expected in 2016.
Mark Hanafin, Managing Director of Centrica Energy , said: “Creating this joint venture with DONG Energy is a logical step that will combine both companies’ expertise and scale to help realise the full potential of the zone. The partnership forms part of our strategy to deliver value from our growing upstream business.”
Carsten Krogsgaard Thomsen, acting CEO of DONG Energy said: “This marks DONG Energy’s second entry into a Round 3 project and Centrica is a natural partner for us as we already have a good working relationship with them from previous projects. The partnership also further cements our position as one of the leading players in the UK offshore wind market. It is a strategic addition to our long-term pipeline of projects which contributes to the industrialisation of the offshore wind business and bringing down costs.”
The information provided in this announcement does not change DONG Energy’s previous financial guidance for the 2012 financial year or the announced expected investment level.
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Offshore WIND staff, March 22, 2012; Image: centrica