Second utility buys into Thornton Bank -- Cash injections free up finance

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German utility RWE Innogy has acquired a 27% share of C-Power, the consortium building Belgium's first offshore wind farm, to become the majority owner of the project and the second utility to buy a stake in it. The acquisition took place just days before all six turbines in the pilot phase of the 300 MW Thornton Bank project became operational.

RWE Innogy bought 20.22% of the development company from two of its shareholders, Belgian investment companies Socofe and Ecotech Finance, which both retain interests in Thornton Bank. It acquired another 6.5% of the shares from the other members of the consortium, French utility EDF Energies Nouvelles, electricity infrastructure investment vehicle Nuhma and Belgium's Dredging, Environmental & Marine Engineering, which helped with the foundations and cables. EDF now owns 18% of the project, with the four Belgian investors holding a combined 55% in almost equal shares.

Far from shore

From C-Power, CEO Filip Martens describes RWE as an experienced partner for the construction and further development of Thornton Bank. Socofe and Ecotech between them retain 20% of the shares in the project and intend to use the proceeds from the sale to help fund the second phase. At 30 kilometres off Zeebrugge, Thornton Bank is the first wind project anywhere to be located so far from shore. The six Repower 5 MW turbines were installed in 2008 and connected to the grid from the end of last year.

"We are now negotiating for the next 24-turbine stage of the project. We want to reach financial close within this year," says Martens. Only six months ago, the future of the project looked uncertain as banks were unwilling to extend the credit needed for the next phase. But an additional equity owner and a EUR 10 million cash injection from EU economic recovery funds (page 42) have freed up finance for the remaining 270 MW.

According to Martens, finance is to be provided by a syndication of four banks: Dexia, Rabobank, KBC and Société Générale. With strong backers that include Belgian investment and engineering companies as well as two major European utilities, plus a "winning team" of finance providers, Martens comments: "If we cannot raise the finance, no offshore developer can."

Fritz Vahrenholt, CEO of RWE Innogy and former CEO of Repower, says Thornton Bank is one of the first offshore wind farms to be built in waters of up to 28 metres as well as so far from land. "This is why the investment provides us with an excellent opportunity to not only contribute, but also extend our experience significantly in the offshore sector. This will benefit our ambitious development aims." RWE is already involved with over 4 GW of offshore wind projects in the UK, the Netherlands and Germany.

Thornton Bank is supported under Belgium's renewables certificate system. Utilities have to meet a proportion of their energy mix from renewables, either by owning the generating facilities or through the purchase of certificates from renewable energy generators. Prices are based on supply and demand, but there are lower limits depending on technology. Offshore wind certificates have a minimum price of EUR 107/MWh for the first 216 MW and EUR 90/MWh for additional capacity.

The next 24 Repower turbines, totalling 120 MW, are to go up in 2010-11 and the final phase, 24 Repower 6 MW units, in 2012-2013, says Martens. The plant will generate about 1 TWh a year, meeting nearly 20% of Belgium's 2010 target for green power consumption under the EU renewables law and around 5% of its 2020 goal.

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