British gas and electricity provider Scottish & Southern Energy Plc (SSE.L), Wednesday, said it has signed a deal with Danish energy company Dong Energy to acquire a 25.1% stake in the Walney offshore wind farm for a total consideration of up to about £39 million, while Dong Energy will retain the remaining 74.9% stake.
The company noted that of the transaction value, £17 million will be paid subject to the operational performance of the wind farm. As a shareholder in the project, Scottish & Southern will pay its pro rata share of the construction costs with payments being made when each phase of the wind farm is commissioned.
The 367 megawatt Walney offshore wind farm is being built 14km west of the Isle of Walney in the Irish Sea. Walney will be constructed in two phases, each totalling 183.6 MW, with construction of the first phase due to begin in the spring of 2010 and of the second phase in the spring of 2011.The wind farm is expected to enter commercial operation in two phases, during the first half of 2011 and towards the end of 2011.
The company said, excluding the connection to the Great Britain electricity network, the cost of constructing Walney is expected to total under £1 billion. The project will initially be funded by Dong Energy, while Scottish and Southern will contribute its 25.1% share of the construction cost, that is under £250 million. Dong Energy will manage the construction of the wind farm with Siemens supplying the wind turbines.
Scottish & Southern said that the wind farm is expected to have an average load factor of around 43% and produce around 1,300 GWh of electricity in a typical year, and both the companies will market the output of the wind farm in proportion to their equity stakes.
The addition of the stake in Walney takes the company's portfolio of onshore and offshore wind farms in operation, in construction or with consent for development in the UK and Ireland to over 2,100MW, excluding the Arklow development opportunity in the Irish Sea.
Earlier this month, Scottish & Southern and Dong Energy announced an agreement to form a 50:50 joint venture to develop three offshore wind farms in the Dutch sector of the North Sea with a total capacity of more than 1,000MW.
SSE is currently trading at 1,149.00 pence per share, up 0.35%, on the London Stock Exchange.
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