SSE sells 50 per cent stake in giant offshore project

Scottish and Southern Energy (SSE) has become the latest energy giant to look to spread the risk associated with offshore wind projects, agreeing to sell a 50 per cent stake in the Greater Gabbard wind farm to npower renewables.

Under the terms of the deal, npower renewables, which is owned by German energy giant RWE Innogy, will shell out £308m to acquire 50 per cent of the equity in SSE's Greater Gabbard Offshore Winds Limited (GGOWL) subsidiary and also reimburse the company for half of the capital costs incurred on the project to date.

SSE will continue as the operator of the 500MW 140 turbine project, which is located off the Suffolk coast and is expected to create the UK's largest offshore wind farm when it comes on line in from 2010.

The company said onshore construction work for the £1.3bn project was now underway and that it was on track to begin generating electricity in mid 2010 and complete the full project by 2011.

SSE originally acquired GGOWL when it bought wind energy company Airtricity in February this year. It followed that deal by buying out the company's original partner in the Greater Gabbard project, engineering giant Fluor, but said at the time of the deal in May that it would look to dispose of the stake at a later date.

Ian Marchant, chief executive of SSE, welcomed the deal with RWE Innogy, arguing that the German company's "long-standing interest and participation in offshore wind farm developments will complement our own expertise in the development of major renewable energy projects".

He added that despite SSE's decision to offload some of its stake in the Greater Gabbard project the long term outlook for the offshore wind energy sector remained strong. "This year has been characterised by high and volatile prices for fossil fuels and by political uncertainty in key oil and gas producing regions," he said. "All of this again demonstrates the long-term value of energy sources which are both renewable and indigenous, and of our acquisition of Airtricity earlier this year."

Coalitions of energy companies have emerged as the preferred means of funding offshore wind farms, with groups of firms seeking to spread the costs and risks associated with such projects.

Last month, for example, E.ON sought to replace oil giant Shell as a partner in the London Array project, selling 40 per cent of its 50 per cent stake in the project to the Abu Dhabi-backed Masdar investment fund.