SeaEnergy PLC (AIM: SEA) is looking at increasing its stake in the Inch Cape offshore windfarm after RWE npower renewables notified the group’s 80 percent held unit SeaEnergy Renewables Ltd (SERL) and The Crown Estate (TCE) of its desire to exit the project.
The German group cited the considerable size of its other onshore and offshore renewable generation commitments as the reason for its move.
In February 2009, TCE awarded the Inch Cape site to a consortium comprised of SERL and RWE npower renewables as a part of the Scottish Territorial Waters leasing round conducted by TCE in association with the Scottish government. In connection with the site award, the consortium entered into an agreement with TCE providing the exclusive right for the consortium to negotiate 50 year lease deal.
The exclusivity agreement also provided the right to undertake further studies into the feasibility of the 905 MegaWat offshore wind farm, 15.5 kilometres east of the Angus coastline. Entry into the lease deal is scheduled to follow the completion of a Strategic Environmental Assessment by the Scottish government which is expected later this year.
According to SeaEnergy, TCE views the Inch Cape project as being important to the delivery of the Scottish Territorial Waters leasing round and to the UK in maintaining the delivery of the Offshore Wind Energy Programme.
To demonstrate their joint commitment to the project TCE and SERL have entered into discussions with the aim of ensuring that the site's development schedule and activities can progress as expeditiously as possible. These discussions are intended to lead to the establishment of a Memorandum of Understanding between The Crown Estate and SERL that will provide terms for the delivery of Inch Cape and may increase SERL's interest in the project.
SERL CEO Joel Staadecker said: "Inch Cape is an important site for Scotland, which expects to benefit from the construction and operation of offshore wind farms off the coast of central Scotland. We are delighted that The Crown Estate shares our commitment to the project and look forward to successful discussions to agree terms for its delivery. We are also very pleased at the prospect of potentially increasing our equity stake in what is a great project."
It is envisaged that a further announcement will be made when the negotiations have concluded, SeaEnergy added.
Edison Investment Research issued a note on SeaEnergy today, saying that RWE’s exit from the Inch Cape windfarm offers SeaEnergy the opportunity to increase its holding in the project.
Such a move could add long-term value to SeaEnergy’s UK windfarm business, but would increase project development costs in the short term.
Edison added it values each MegaWatt of offshore wind capacity at 21p for SeaEnergy. If the group were to increase its holding to 50 percent this would add 48p to the value of its holding in the Inch Cape project and increase the overall value of its UK windfarms to 211p/share.
Only yesterday, Marine Scotland (MS) announced that it has progressed the Strategic Environmental Assessment (SEA) and a draft Development Plan for offshore wind.
The company's Beatrice and Inch Cape sites are amongst 10 sites identified by the draft Development Plan, as the short term option, 2010 – 2020, for developing offshore wind. The draft Development Plan has also identified 25 additional areas as the medium term options, beyond 2020, for developing offshore wind.
There will now be a consultancy period of 12 weeks until 16 August 2010, after which it is expected that the SEA will be finalised, following which developers will enter into negotiations with TCE to acquire leases for their sites. As part of the consultation process, a series of stakeholder consultation workshops will be taken forward by the Scottish marine management authority in the coming weeks, to help explain the approach used to develop and assess the plan, and to further explore the environmental and sectoral issues raised in the process.
In January, SeaEnergy confirmed that its joint venture with Portugal’s EDP Renovaveis S.A. (EDPR) was awarded acreage by TCE to develop offshore wind farms in the Moray Firth, Scotland, with an approximate installed capacity of 1.3 GigaWatt as part of the UK Round 3 awards, enough to power 730,000 homes. Under the terms of the agreement, signed by EDPR, SeaEnergy unit SERL and TCE, the companies have been awarded the exclusive rights to develop wind farm sites within the Zone 1 of the latest round.
SeaEnergy came into existence when Ramco Energy PLC changed its name in September 2009 after selling its oil and gas operations to focus solely on its offshore wind energy activities. The company secured £7.5 million new funding from UK investment group Lanstead Capital LP which became the largest shareholder in the new entity.