(RTTNews) - Gas and electricity supplier Centrica plc (CNA.L: News ), the parent company of British Gas, announced Wednesday that it received final approval to invest about GBP 725 million for the 270 megawatt Lincs offshore wind project, and that it expects the construction work to begin in 2010.

Centrica revealed that Lincs will be located eight kilometres off the coast of Skegness next to Centrica's existing wind farm developments at Lynn and Inner Dowsing and will be equipped with 75 3.6MW Siemens turbines. The group foresees the wind farm to commence operations towards the end of 2012.

Subsequent to the UK Government's decision in April to enhance the level of support provided for new offshore wind projects, Lincs will attract two Renewable Obligation Certificates for every MW hour produced.

Further, the group said that it would sell 50% equity stake in its Lynn, Inner Dowsing and Glens of Foudland wind farms to the U.S-based investment firm TCW for GBP 84 million. Centrica will receive about GBP 340 million of non-recourse project finance facilities from a consortium of banks for the assets, bringing the total value the wind farms to around GBP 460 million.

Centrica is also entering into a joint venture agreement with TCW to govern their ongoing relationship as co-owners of the Lynn, Inner Dowsing and Glens of Foudland wind farms. The agreement contains customary rights for each party to acquire the other party's shares in the joint venture company at fair market value following a material default by, or on the insolvency of, the other party.
The company intends to enter into a 15-year Power Purchase Agreement, through its subsidiary British Gas Trading Ltd, to off-take all the electricity production together with 50 per cent of the ROCs generated by the three refinanced wind farms.

The group said that the non-recourse project finance facilities would be obtained in November 2009 and the equity sale would close by the year end, subject to regulatory approvals.

Sam Laidlaw, Chief Executive of Centrica, said that the Government's enhanced financial framework for offshore wind played a key role in improving the overall project economics. Laidlaw added, "This is a milestone in our renewables strategy and we look forward to working together with TCW who bring significant global expertise in energy investments."

CNA.L is currently trading at 244.20 pence, up 3.50 pence or 1.45%, on the LSE.

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by RTT Staff Writer

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