[The Vector] Financing for World’s Largest Offshore Wind Farm
Financing arrangements for the first phase of the world’s largest offshore wind farm are in the books. The London Array wind farm will cover 90 square miles, seven miles offshore in the outer Thames Estuary. It is eventually expected to have a capacity of 1,000 MW.
Phase 1 to install 175 turbines generating 630 MW will deliver power to the 2012 Summer Olympics in London. Offshore work is due to start in early 2011. The first phase of the project also includes laying 220 kilometres (140 miles) of 150 kV subsea export cable connecting two offshore substations to the shore and 210 kilometres (130 miles) of 33 kV array cables to link the turbines to each other and to the offshore substations.
DONG Energy, the Danish state-owned company, owns a 50% interest in the London Array wind farm. It signed a loan facility with the European Investment Bank for UK £250 million ($368 million), guaranteed by the Danish Export Credit Agency, to cover services and deliveries to the project from Siemens Wind Power and Per Aarsleff.
Ownership change
The London Array wind farm was initially to be built by a consortium of Shell WindEnergy Ltd, E.ON UK Renewables and DONG Energy. But in May 2008 Shell pulled out. In October 2008 Abu Dhabi-based Masdar purchased half of E.ON UK’s enlarged stake, giving Masdar a 20% interest in the project. In March 2009, the backers agreed on an initial investment in the scheme of €2.2 billion ($2.7 billion).
The installed capacity of wind power in the UK is growing fast. As of 1 June 2010, it exceeded 4.5 GW, according to the British Wind Energy Association. The Association estimates that installed capacity will pass the 5 and 6 GW marks before the end of the year. The milestone of 1 gigawatt of installed offshore capacity was reached in April 2010, with the opening of the Gunfleet Sands and Robin Rigg wind farms, according to www.newenergyfocus.com. There are also 6,800 MW of schemes with planning consent and a further 9,750 MW awaiting planning approval.