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UK Green Investment Bank invests £461m in the UK offshore wind sector

Equity investments include the Westermost Rough offshore project as well as a stake in the Gwynt y Môr offshore wind farm.

Specifically, the UK Green Investment Bank, or GIB, is investing alongside Japan’s Marubeni Corporation to jointly purchase a 50% stake in the Westermost Rough offshore wind farm, from DONG Energy. (GIB is committing £241m to the c. £500m transaction.)

The Westermost Rough project, currently in the early stages of construction off the coast of Yorkshire, will utilise Siemens’ next generation 6 MW direct drive turbines which are almost twice the size of the majority of wind turbines operating in UK waters. Once operational, Westermost Rough will generate more than 800GWh of net renewable electricity — the equivalent to the electricity consumption of c. 200,000 homes, a city the size of York. This is the first time these new turbines will be commercially deployed in the UK, and the project is the first time that GIB has taken construction risk in an investment.

“DONG Energy’s Westermost Rough wind farm is a critical project in the development of the UK’s offshore wind sector,” said Shaun Kingsbury, chief executive, UK Green Investment Bank. “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.”

DONG Energy’s Westermost Rough Offshore Wind Farm will be located 8 km from the Holderness coast, approximately 25 km north of Spurn Head at the River Humber estuary. The wind farm will have a capacity of 210 MW and will be made up of 35 Siemens 6 MW turbines, providing CO2-free electricity for around 200,000 homes. Westermost Rough will be the first wind farm in the world to use the 6 MW offshore wind turbine on a large scale. Offshore construction has begun and the wind farm is expected to be fully commissioned in the first half of 2015.

GIB has also agreed to acquire a 10% stake in the Gwynt y Môr offshore wind farm from RWE Innogy. (The purchase price of the project is £220m.) Located off the coast of north Wales, this is the largest offshore wind farm under construction in Europe. Once operational, it will generate more than 1,700 GWh of net renewable electricity each year — that’s the equivalent to the electricity consumption of c. 400,000 households. Like the DONG Energy project, the Gwynt y Môr offshore wind farm will also utilize turbines manufactured by Siemens. 

“The UK has ambitious plans to build on its position as a world leader in offshore wind,” Kingsbury said, noting that the proceeds of both sales are expected to be reinvested back into renewable energy projects in the UK. “We have two roles to play in supporting those plans: Firstly, to directly invest to help developers recycle their capital into the next wave of new renewable energy projects. Secondly, to invest on fully commercial terms to create a demonstration effect which others will follow.”

These investments are part of a strategy, led by GIB, to mobilise capital into the UK offshore wind industry whilst creating the potential to generate thousands of new skilled jobs and billions in business investment. Helping developers to refinance part of their investments in developed projects is essential to ensuring that the industry is able to deliver the next round of new projects. By making these investments on fully commercial terms, GIB is able to directly finance the expansion of the sector and create a demonstration effect that other investors can follow.

"GIB is playing a game-changing role in financing our transition to a green economy,” said Vince Cable, UK Business Secretary. “The Bank has now invested well over £600 million in five offshore wind farms and mobilised £1.3 billion of total funding.”  

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