DONG Energy has today signed an agreement to sell 50 per cent of the 210 megawatt UK offshore wind construction project Westermost Rough to Marubeni Corporation and UK Green Investment Bank.
At completion of the transaction, Marubeni and UK Green Investment Bank will each acquire a 25 per cent ownership share in Westermost Rough for a total cash consideration of approximately GBP 240 million (DKK 2,100 million). After the joint venture has been established all shareholders will contribute on a pro rata basis to future funding and sharing of the risks related to the construction of the project. In aggregate Marubeni and UK Green Investment Bank will commit total funds of approximately GBP 500 million (DKK 4,500 million) for the construction of the project. Completion of the transaction will take place shortly after signing.
Westermost Rough is currently under construction and is the first large-scale commercial wind farm to deploy the new Siemens 6.0 megawatt direct drive turbine which marks a significant next step in DONG Energys efforts to reduce the cost of electricity for offshore wind. The first foundation was installed in February this year and the wind farm is expected to be fully commissioned in the first half of 2015.
The agreement with Marubeni and UK Green Investment Bank is a major step for DONG Energys partnership model. We have been able to enter into a shared construction risk partnership and at the same time we have locked-in significant value creation from the transaction. Marubeni and UK Green Investment Bank are two well-established and credible strategic investors and their decision to become our joint venture partners in Westermost Rough is a vote of confidence in DONG Energys ability to manage and execute offshore wind construction projects and to deploy new technology. We are proud of being recognized internationally as an attractive partner and a market leader in offshore wind. By 2020 we want to triple our installed capacity of offshore wind compared to what we have built today. Todays agreement enables us to free up capital to continue our investment programme and meet our 2020 target, said Samuel Leupold Executive Vice President in DONG Energy Wind Power.
In September 2011 DONG Energy and Marubeni entered into an agreement whereby Marubeni acquired a 49.9 per cent ownership stake in the 172 megawatt Gunfleet Sands offshore wind farm in the UK. With todays announcement it is the first time DONG Energy and the UK Green Investment Bank sign an agreement to enter into a joint partnership for an offshore wind farm.
Shaun Kingsbury, Chief Executive, UK Green Investment Bank, said:
DONG Energys Westermost Rough is a critical project in the development of the UKs offshore wind sector. For the first time we will see the commercial deployment of a 6 MW wind turbine, almost double the size of the typical existing turbines. This is an important step in reducing the costs of offshore wind construction and power generation.
The parties have agreed that DONG Energy will provide operation and maintenance services to Westermost Rough under a long-term agreement from DONG Energys O&M base in Grimsby. Furthermore, the parties have agreed that DONG Energy will provide a route to market for the power production and green certificates arising out of Marubenis and UK Green Investment Banks combined 50 per cent ownership interest.
Westermost Rough located 8 km off the Yorkshire Coast, east of Hull in the UK, will consist of 35 turbines from Siemens Wind Power, each of 6.0 megawatt, with a total capacity of 210 megawatt. It will be able to supply CO2-free power corresponding to the annual power consumption of approximately 210,000 British households.
The information provided in this announcement does not change DONG Energys previous financial guidance for the 2014 financial year or the announced expected investment level for 2014-2015.