UK wind industry gets breath of fresh air

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Centrica, the owner of British Gas, has sold a 50 per cent stake in three British wind farms to an American fund management group, in the latest sign of renewed investor interest in the industry

Centrica said that Trust Company of the West (TCW), a Los Angeles-based fund manager, was buying the stake in its Lynn and Inner Dowsing offshore wind farms off the Lincolnshire coast, and Glens of Foudland, an onshore wind farm in Scotland.

The £84 million deal comes amid rising interest in the wind industry, which was virtually paralysed in the credit crunch last year. Last week, The Times reported that multinational companies, including Google, were examining opportunities in the industry in the UK.

TCW, a subsidiary of Société Générale, the French bank, has $118 billion (£72 billion) in assets under management and is a well-known investor in energy projects. It has energy investments worth $7 billion in more than 250 energy projects in 27 countries.

Nick Hyslop, an analyst for RBC Capital Markets said: “It’s clearly a much better market than it was. The UK wind market is recovering and good projects have more chance of getting money.”

Sam Laidlaw, chief executive of Centrica, which also made a £50 million profit on the deal, said that the refinancing was a milestone in the group’s renewables strategy. The strategy was boosted in April by the Government’s decision to strengthen the subsidies available to offshore wind operators.

Analysts at Credit Suisse said that the announcement was “good news for the offshore wind industry, signalling that there are equity financial investors, aside from utilities and international oil companies, still looking at assets”.

Centrica has also raised £340 million in project finance from a consortium of 14 banks to fund the wind farms.

However, Andy Cox, energy partner in KPMG, said: “The challenge to finance offshore wind projects should not be underestimated. Capital remains constrained and the operating risks are still cause for concern. “The deal is definitely a step forward, but it’s dwarfed by the total amount of refinancing required to construct the 25 gigawatts of UK offshore wind projects in the pipeline, around £100 billion according to the Crown Estate.”

Centrica also said that it was to press ahead with a £725 million investment in another offshore wind farm to be built off Skegness.

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