Centrica speeds up wind-park plans to qualify for subsidies

Centrica is accelerating plans to build two giant offshore wind parks in the North Sea to allow it to qualify for extra subsidies that could be worth hundreds of millions of pounds.

The two projects at Race Bank and Docking Shoal, off the Norfolk coast, are expected to cost about £1.5 billion each to build. But if Centrica, owner of British Gas, places an order for the turbines before March 31, it will clinch an extra 33 per cent in government subsidies for up to 25 years — transforming the economics of the projects.

Centrica is engaged in a race against time to secure financing and planning consent for the schemes, which will be located up to 27 kilometres offshore and will have a combined generating capacity of as much as 1.1 gigawatts — enough to power 700,000 homes. “It makes a huge difference,” a spokesman said. “We don’t know whether or not we will get the full consents in time, but it may be do-able.”

In a drive to kick-start faltering investment in offshore wind energy, due partly to the recession, the Government announced in April a temporary boost in the renewable obligation certificates (ROCs) awarded to offshore wind generators from 1.5 to 2 per megawatt hour. The move was designed to help meet the Government’s ambitious target of generating 40 per cent of UK energy from renewable sources, such as wind, by 2020.
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At the time, just three offshore windfarm projects were expected to benefit from the decision. They comprised another, smaller Centrica-backed wind farm called Lincs; London Array, a joint venture involving E.ON; and the Gwynt y Mor project off the Welsh coast led by RWE Energy.

Centrica had not been expected to order turbines for Docking Shoal or the nearby Race Bank until 2011 or later.

Nick Hyslop, director at RBC Capital Markets, said there was a huge financial incentive: “It is hard to put an exact figure on how much this is worth because it all depends on future power prices, but it is a very significant amount of money; we are talking hundreds of millions of pounds.”

A spokesman for the Department of Energy and Climate Change said that a decision on consent for both wind parks would be made in due course, but gave no further detail.

Centrica has also been holding talks with turbine manufacturers in the hope that its order for as many as 300 turbines can be placed swiftly once consent is granted.

Some planning concerns have been raised over the impact of the two projects on birds and on UK air radar.