German utility RWE has found three partners to finance the £1.5 billion Galloper wind park to be built off the British coast, it said yesterday, expanding the renewables business that critics said it had neglected for too long.
Most upfront financing for offshore wind parks usually comes from power producers, but the high price tag of at least €1 billion per park, as well as tight budget restraints in the crisis-ridden utilities sector, mean that outside money is crucial.
RWE, Germany’s worst-performing blue-chip company this year, is grappling with €25.6 billion of net debt and falling earnings at its coal- and gas-fired power plants as they face increasing competition from solar and wind capacity.
The company said that Britain’s Green Investment Bank (GIB), German engineering group Siemens and Australian bank Macquarie would join the 336 megawatt (MW) project, with each partner holding a 25 per cent stake.
“The partnerships are crucial to us. They enable us to realise our projects,” Hans Buenting, chief executive of RWE’s Innogy renewables unit, told Reuters.
Construction of the wind farm, which will be located about 27km off the coast of Suffolk in eastern England and produce power for up to 336,000 homes, will begin in November, with operations expected to start in March 2018.
Siemens will supply 56 of its 6MW-class turbines and will also have a 15-year service contract, it said in a separate statement. Buenting said that 30 per cent of the pro-ject’s costs were shouldered by the four partners, with the rest being financed by banks, translating to a direct investment of about £100 million for RWE.
Galloper will create 700 jobs during construction and 90 permanent roles once it is operational, RWE said, further boosting Britain’s burgeoning offshore sector. Despite deep cuts to renewables subsidies, Britain’s conservative government remains committed to offshore wind projects, hoping this will help to bridge a looming supply gap in the country’s power supplies as older coal plants close.
Planning permission has been granted for British offshore wind projects capable of generating about 11 gigawatts of electricity. If built, these would meet about 20 per cent of the country’s peak electricity demand.