Fair wind for turbine firms as London Array signs €2bn of supply deals

The consortium behind the world's largest offshore wind farm project, the 1GW London Array, today announced that it has awarded contracts totalling almost €2bn (£1.8bn) for foundations, turbine manufacture, electricity substation installation and sub-sea cables for the giant project.

DONG Energy, E.ON and Masdar said that they remained on schedule to begin offshore work in the Thames Estuary in early 2011, with phase one of the construction project expected to finish by the end of 2012.

The second phase of the project, if approved, would begin the following year, ultimately bringing the capacity to 1GW and making the site the largest offshore wind farm in the world.

The group said the largest contract, worth about €1bn, was signed in May 2009 with Siemens Wind Power and will see the engineering giant provide 175 3.6MW turbines.

The other big winners include a joint venture between Per Aarsleff A/S and Bilfinger Berger Ingeniuerbeau GmBH, which was awarded the contract to install the turbine foundations contract, Future Energy which was selected to install two offshore substations, and Nexans Norway AS and JDR Cable Systems which were both awarded cable supply deals.

"We look forward to working together with this experienced team of partners, " said Anders Eldrup, chief executive of DONG Energy. "Together we will achieve the goal of constructing the world’s largest offshore wind farm."

The announcement came as energy regulator Ofgem revealed its shortlist of firms for contracts to connect up to 2GW of offshore wind power to the national grid.

Six engineering and energy firms have entered the bidding to connect nine sites around the UK: Macquarie Capital Group and Transmission Capital Partners have both bid for all nine sites; Balfour Beatty Capital and Green Energy Transmission have bid to connect seven sites; DONG Energy Sales and Distribution has bid for four sites; and National Grid Offshore has bid for two sites.

The winning bidders will be announced in May 2010 at which point they will be awarded contracts guaranteeing them a regulated income from operating the new transmission links for the next 20 years.

Ofgem's chief executive Alistair Buchanan said the fact that both new entrants and existing network companies had entered the bidding underlined the attraction of the UK's offshore wind energy industry to investors. "The strong competition for the first round of transmission links demonstrates the value of attracting new entrants and shows that firms have confidence in the tendering process and are willing to make a substantial investment," he said.

The connections are the first phase of a £15bn programme to build improved transmission links to offshore wind farms, which the government hopes will ultimately deliver 33GW of energy capacity by 2020.

In October, the European Investment Bank announced that it is considering providing more than £300m of funding for connections to six of the first phase of offshore wind farms.

The EIB funding is intended for six projects: Thanet, Greater Gabbard, Walney one, Walney two, Sheringham Shoal and Ormonde. The other projects are at Barrow, Gunfleet Sands and Robin Rigg.