Dong Energy enters Hornsea Project Two into auction as it raises earnings expectations

By Grimsby Telegraph | Posted: 10 Aug 2017

DONG Energy will submit a bid for subsidy support for Hornsea Project Two next week, it has confirmed, as it raised its earnings projections for the year.

The Danish giant has reported strong second quarter results, heavily focused on its under-construction Grimsby wind farm - Race Bank - and a stake sale of a development in Germany.

It now predicts to make £2 billion to £2.3 billion over the course of the year, up from £1.8 billion to £2 billion.

Bosses in Copenhagen listed higher earnings from the ramp up of offshore wind farms, higher energy generation and the gains of selling a 50 per cent stake in the ongoing project off the Lincolnshire coast as key to the advancing outlook.

They expect to hear on the outcome of the bid to the Department for Business Energy and Industrial Strategy next month, with near neighbour Triton Knoll also understood to be in the running.

Should one or both succeed it will another huge boost for a town that has recently passed the 1GW milestone for installed capacity, bringing a figure five times that closer to reality. 

It would be the fourth wind farm from Dong to be served out of Grimsby and built out of the wider Humber, on the back of Hornsea Project One, the world’s largest wind farm.

Henrik Poulsen, chief executive and president, (pictured below) said: “The first half of the year showed strong strategic progress supplemented by good financial and operating results.

“Our expectations for partnership income in the second half of 2017 have increased, corresponding to an underlying growth of 18 to 32 per cent.

“In May and June, we inaugurated the UK offshore wind farm Burbo Bank Extension (off the west coast) and the German offshore wind farms Gode Wind One and Two. Furthermore, in May we produced the first power from Race Bank, which is expected to be commissioned in the first quarter of 2018.

“Our offshore wind farms under construction are progressing according to plan. We are also continuing our efforts to expand our portfolio of offshore wind projects for construction after 2020.”

In May Dong Energy announced it was selling off its oil and gas business to British chemical company Ineos, and it expects to complete in the coming months.  

It now believes it will shortly have excess investment capacity than its target rating allows “assuming the current dividend policy, the current farm down model, the current wind power build out plan as well as the ambition of a 1GW per year offshore wind build out from 2021-2025 are continued”. 

Mr Poulsen said: “The likely excess investment capacity materialises as more and more wind power assets come on line and start generating cash flow and has recently been positively impacted by the experienced decline in the build out cost per MW.”

As reported, UK managing director Matthew Wright has expressed a desire to lead from the front, and the Humber, in a “new energy paradigm” around storage and distribution, with wind a key force in generation, and his has been endorsed in the report.

“Value-enhancing, green growth opportunities beyond the current investment plan will thus be explored against tight strategic and financial criteria,” Mr Poulsen said. “This could naturally include additional opportunities within offshore wind – which remains our core focus – as well as other renewable technologies and within our downstream, customer-facing business. All of this supporting Dong Energy’s vision to play a leading role in the energy transformation.”

There is also a hint of a strategic shift. “After the farm down of Borkum Two and the expected farm downs of Walney Extension and Hornsea One, we will only consider farm downs subject to substantial value creation and risk diversification,” Mr Poulsen said. “Any excess financial headroom will be returned to shareholders in a disciplined manner through increased annual dividends and/or share buybacks.”

And he praised the employees, who will soon number 500 in the Grimsby area, as well as others on assembly projects in Hull.

“In recent years, our employees have made an outstanding contribution to transforming Dong Energy from a Danish company primarily focused on gas, oil and coal to being a global leader in renewable energy,” he said. “They continue to pursue profitable, long-term growth and deserve huge recognition for their entrepreneurial spirit, diligence and hard work.”

Dong first built Westermost Rough and now operates it from the expanding Royal Dock ‘East Coast Hub’, and is also in the process of taking over operations and maintenance for Lincs wind farm for third party ownership, after Centrica decided to leave the sector. Race Bank is partly generating and two-thirds built, with the Hornsea zone to follow. 


MORE: Today's main headlines from Humberbusiness.com


Energy & Renewables News
Share Article

Grimsby News

Young's Seafood Q3 results: Double-digit turnover boost with slight squeeze on margins

Hull & East Riding News

Queen's Award sees praise shower down on East Yorkshire's Kohler Mira

Scunthorpe News

Home town twin project joy for Britcon in Scunthorpe

Your News

Would you want your employees working from home? Read more in our Your News special report