Offshore wind

UK Green Investment Bank invests £461m in the UK offshore wind sector

31 March 2014

GIB is investing alongside Japan's Marubeni Corporation to jointly purchase a 50% stake in the Westermost Rough offshore wind farm, from DONG Energy. GIB is committing £241m to the c. £500m transaction.

The UK Green Investment Bank (GIB) has today announced two equity investments in the UK offshore wind sector.

The Westermost Rough project, currently in the early stages of construction off the coast of Yorkshire, will utilise Siemens' next generation 6 MW direct drive turbines which are almost twice the size of the majority of wind turbines operating in UK waters.

This is the first time these new turbines will be commercially deployed in the UK and the project is the first time that GIB has taken construction risk in an investment.

Once operational, Westermost Rough will generate over 800 GWh of net renewable electricity, equivalent to the electricity consumption of c. 200,000 homes, a city the size of York.

GIB has also agreed to acquire a 10% stake in the Gwynt y Môr offshore wind farm, from RWE Innogy. The purchase price is £220m. The project, off the coast of north Wales, is in the late stages of construction.

Gwynt y Môr is the largest offshore wind farm under construction in Europe. Once operational it will generate over 1,700 GWh of net renewable electricity each year. This is equivalent to the electricity consumption of c. 400,000 households or meeting the electricity requirements of a city the size of Bristol.

The proceeds of both sales are expected to be reinvested back into renewable energy projects in the UK.

"The UK has ambitious plans to build on its position as a world leader in offshore wind. We have two roles to play in supporting those plans. Firstly, to directly invest to help developers recycle their capital into the next wave of new renewable energy projects. Secondly, to invest on fully commercial terms to create a demonstration effect which others will follow.

DONG Energy's Westermost Rough wind farm is a critical project in the development of the UK's offshore wind sector. For the first time we will see the commercial deployment of a 6 MW wind turbine, almost double the size of the typical existing turbines. This is an important step in reducing the costs of offshore wind construction and power generation."

Shaun Kingsbury
Chief Executive Officer, UK Green Investment Bank

These investments are part of a strategy, led by GIB, to mobilise capital into the UK offshore wind industry. Helping developers to refinance part of their investments in developed projects is essential to ensuring that the industry is able to deliver the next round of new projects. By making these investments on fully commercial terms GIB is able to directly finance the expansion of the sector and create a demonstration effect that other investors can follow.

"The Green Investment Bank is playing a game-changing role in financing our transition to a green economy. The Bank has now invested well over £600 million in five offshore wind farms and mobilised £1.3 billion of total funding. This industry has the potential to generate thousands of new skilled jobs and billions in business investment.

Both the Westermost Rough and Gwynt y Môr projects will use Siemens turbines which demonstrates why their decision last week to build new manufacturing facilities in the UK was so important. Through our industrial strategy we are working in partnership with business to give companies the confidence to invest, securing high skilled manufacturing jobs and a stronger economy."

Vince Cable
UK Business Secretary

"The UK is number one in the world for investment in offshore wind. This news is proof of the strength of investment in British energy infrastructure - and proof that the Government's strategy is working - supporting green jobs across the country and delivering secure energy supplies for the future. £34 billion worth of investment has been announced since 2010 thanks to our electricity market reforms which give investors long-term certainty."

Ed Davey
UK Energy and Climate Change Secretary

"The agreement with Marubeni and the UK Green Investment Bank is a major step for DONG Energy's partnership model. We have been able to enter into a shared construction risk partnership and at the same time we have locked-in significant value creation from the transaction.

Marubeni and UK Green Investment Bank are two well-established and credible strategic investors and their decision to become our joint venture partners in Westermost Rough is a vote of confidence in DONG Energy's ability to manage and execute offshore wind construction projects and to deploy new technology. We are proud of being recognized internationally as an attractive partner and a market leader in offshore wind. By 2020 we want to triple our installed capacity of offshore wind compared to what we have built today. Today's agreement enables us to free up capital to continue our investment programme and meet our 2020 target."

Samuel Leupold
Executive Vice President, DONG Energy Wind Power

"This is planned to be the second direct investment from the Green Investment Bank into one of our UK offshore wind farms. By continuing to open up our projects to investors, we maintain our stated objective of being a trusted partner for the transformation of the European energy system, within which the UK has a key role. Our aim is to raise additional capital for the extension of renewable energy in Europe by creating attractive investment models. I am delighted that the Green Investment Bank has chosen RWE once again for its investment in the offshore wind sector. This reinforces the quality and attractiveness of our projects."

Dr Hans Bünting
CEO, RWE Innogy

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Westermost Rough offshore wind farm

DONG Energy's Westermost Rough Offshore Wind Farm will be located 8 km from the Holderness coast, approximately 25 km north of Spurn Head at the River Humber estuary. The wind farm will have a capacity of 210 MW and will be made up of 35 Siemens 6 MW turbines, providing CO2-free electricity for around 200,000 homes. Westermost Rough will be the first wind farm in the world to use the 6 MW offshore wind turbine on a large scale. Offshore construction has begun and the wind farm is expected to be fully commissioned in the first half of 2015.

The construction of the Westermost Rough offshore wind farm represents a total investment of approximately £800 million, employing over 50 people at the construction office in Grimsby, many of whom are from the local area. It is estimated that up to 100 employees may be based at the Grimsby O&M facility once construction is complete.

Gwynt y Môr offshore wind farm

Gwynt y Môr is currently the largest offshore wind farm in construction anywhere in Europe. A c.£2 billion project, Gwynt y Môr will consist of 160 turbines and is being built by RWE Innogy UK (formerly RWE npower renewables) in Liverpool Bay, off the North Wales coast. Once operational, Gwynt y Môr will have an installed capacity of 576 MW, using Siemens 3.6 MW turbines and generators. It will be capable of generating enough energy to meet the average annual energy needs of around 400,000 homes. Construction is now well underway in North Wales and offshore in Liverpool Bay. The wind farm is due to be fully operational by the end of 2014.

The construction of Gwynt y Môr to date has enabled the injection of over £350m into the UK supply chain, created and secured employment for over 2,500 people in the UK, and is expected to sustain over 110 long term jobs.

UK Green Investment Bank

The UK Green Investment Bank was launched in November 2012. With £3.8 billion of funding from the UK Government, it is the first bank of its kind in the world. It is a "for profit" bank, whose mission is to accelerate the UK's transition to a greener economy, and to create an enduring institution, operating independently of Government.

Offshore wind is a priority investment sector for GIB. Since launching in November 2012, GIB has made investments in three operational wind farms:

Walney
Rhyl Flats
London Array

Marubeni Corporation

Marubeni Corporation, a large, publicly traded Japanese company, founded in 1858 and incorporated in 1949, has its principal office in Tokyo, Japan with 120 offices in 65 countries/areas. Marubeni is involved in the handling of products/services in a broad range of sectors and conducts business investment, development and management on a global level. Marubeni owns approximately 10 GW of net generating capacity or 34 GW of gross capacity in its global power portfolio as of the 31st day of March, 2014. As the owner of numerous projects, Marubeni is committed to creating long-term value from its investments in the power and infrastructure sector.

DONG Energy

DONG Energy is one of the leading energy groups in Northern Europe. Our business is based on procuring, producing, distributing and trading in energy and related products in Northern Europe. DONG Energy has around 6,500 employees and is headquartered in Denmark. The Group generated DKK 73 billion (EUR 9.8 billion) in revenue in 2013.

RWE Innogy UK

RWE Innogy UK is the UK subsidiary of RWE Innogy and one of the UK's leading renewable energy developers and operators. RWE Innogy UK are committed to developing and operating renewable energy projects to produce sustainable electricity and is a sister company to RWE npower, a leading UK energy company with around 5.4 million customer accounts.