Dong buys UK's 580MW Race Bank

Denmark’s Dong Energy is buying the UK’s Race Bank offshore wind project from utility Centrica, it was announced today.

Centrica has agreed to sell the 580MW Round 2 project to Dong for £50m ($81.8m).

Race Bank is sited 27km off the Norfolk Coast and was consented in 2012. Dong said offshore construction could begin from 2017 if a final investment decision is made.

Samuel Leupold, executive vice president of Dong Energy Wind Power said: “Race Bank fits very well into our existing pipeline of offshore wind projects and will contribute to the achievement of our strategic target of constructing 6.5GW by 2020.

"The addition of up to 580MW to our UK project portfolio underlines our commitment to the UK market in general, and to the UK offshore wind sector in particular.

“The Race Bank project is located relatively close to shore, with good wind resources, low water depths, and seabed conditions similar to Dong Energy’s other UK Round 2 projects."

Last week it emerged that Race Bank was not one of the projects to make the shortlist for an early contract for difference (CfD) under the UK government’s new support arrangements.

Centrica had been making doubtful noises about pressing on with Race Bank for some time.

This summer Centrica went on the record stating that the draft CfD prices for offshore wind – £155 ($248) per MWh in 2014/15 before falling to £135 per MWh in 2018/19 – were not high enough to prompt an investment at Race Bank.

But Dong said the "forward visibility" on tariffs until the end of the decade created by last week's announcement of final support arrangements under the UK's electricity market reform  (EMR) left it confident  "we can turn this into a successful project".

The deal confirms Dong as one of the most enthusiastic backers of UK offshore development.

British Gas-owner Centrica said the divestment leaves it with interests in 290MW of operating UK offshore wind, including a half-share in the 270MW Lincs project. It also has a 50% share in the 4.2GW Round 3 Irish Sea zone.

But the utility indicated that its role as a constructor of large-scale offshore wind is over.

Huub den Rooijen, head of offshore wind at The Crown Estate, which manages the UK seabed, said:  “We’ve seen some big announcements in offshore wind over the past month and this news further underlines the healthy dynamics of the UK’s pipeline. It’s fantastic news for the Race Bank project which is one of the best development opportunities in the industry.”