£423m deal for Grimsby's first offshore wind farms as Centrica sells up

By Grimsby Telegraph | Posted: 5 Feb 2016

A SALE has been agreed for the first offshore wind farms operated out of Grimsby.
Lynn and Inner Dowsing, the twin sites off the coast of Skegness, have been sold by Centrica, and its joint venture partner EIG, for £423 million.

Investor consortium UK Green Investment Bank Offshore Wind Fund and BlackRock has swooped. The deal includes the Glens of Foundland onshore wind farm, in Aberdeenshire. 

Centrica announced it was looking to exit the wind generation market last summer, having also sold the development rights for Race Bank to Dong Energy in 2013. The deal comes just weeks after it was revealed that 2015 was a record year for wind generation for the business, parent company of British Gas.

Director of operations for Centrica, Mark Futyan, said: “We recognise this is an unsettling time for the team so we will be working hard to support everyone as we continue to manage and operate these important wind farms. The sale follows a record-breaking year for the Grimsby base, of which I think we can all be very proud.”

A team of 100 is employed at a £3 million base on North Quay, the first significant investment witnessed by the town as the burgeoning industry took hold and began to transform the old fish docks. There will be no immediate impact on jobs with operations and maintenance support continuing to be provided out of Grimsby by the company until March 2017, when it is envisaged a new operator will be appointed. The much larger Lincs farm, is not part of the sale.  

Karl Smith, fund manager for UK Green Investment Bank Financial Services, which has taken a 61 per cent share, said: "The unique partnership that we have entered into demonstrates the ability of the Offshore Wind Fund to capitalise on opportunities presented by the UK offshore wind sector, as well as highlighting the quality of existing assets in UK waters."

It takes the Green Investment Bank portfolio of capital commitments in renewables to £818 million.
Lynn and Inner Dowsing, with 54 turbines, was initiated back in 2003, with construction starting in 2006 and commissioning in March 2009. A month later Centrica sold a 50 per cent stake in the pair for £84 million.
Together they have a 194MW capacity.

Large-scale Lincs followed, at 270MW, with 75 turbines located beyond the original development. It remains the largest farm operating out of Grimsby. Former Deputy Prime Minister Nick Clegg, and then Energy Secretary Ed Davey, came to Grimsby to officially open it in August 2013.
Under an existing power purchase agreement Centrica will continue to buy the generated electricity from Lynn and Inner Dowsing until 2024.

This transaction also marks the first time that an operating offshore wind farm has been 100 per cent owned by non-utility investors.

BlackRock's infrastructure business has $8.3 billion in investment and committed capital, including more than $2 billion in equity capital focused on investment in renewable power projects via four funds and associated co-investment programmes. It currently owns and manages 66 wind and solar projects in Europe and North America on behalf of its clients.

Rory O'Connor, managing director, said: "This landmark transaction demonstrates BlackRock's significant investment programme in the UK renewables sector. For investors, the sector can provide opportunities for less correlated, inflation-linked, long-duration income and attractive risk-adjusted returns."

The sale is expected to generate a profit of £70 million for Centrica on disposal, from a share of the proceeds of £115 million after repayment of debts associated with the developments.

Centrica's strategy change has seen a £63 million investment signed off for its Stallingborough gas-fired power station.

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