By Kari Lundgren
Oct. 28 (Bloomberg) -- Centrica Plc, Britain’s biggest energy supplier, will build a 725 million-pound ($1.2 billion) wind farm off England’s east coast and sell stakes in three existing wind projects to a unit of Societe Generale.
Construction of the 270-megawatt Lincs wind farm will begin next year using 3.6-megawatt Siemens AG turbines, Centrica said today in a statement. The project, due to be operational in 2012, will be able to supply 200,000 customers, according to estimates from the Windsor, England-based utility.
Centrica is increasing investment in offshore wind after the U.K. government agreed to raise subsidies for the industry in April, seeking to save new projects as borrowing and equipment costs rose. Power producers are also tapping equity funds as the economic decline drags down electricity prices, curbing revenue and jeopardizing renewable-energy targets.
Trust Co. of the West, a U.S.-based unit of Societe Generale Asset Management, will pay 84 million pounds in cash for a 50 percent stake in Centrica’s Lynn and Inner Dowsing projects, adjacent to the planned Lincs farm, and in its onshore Glens of Foudland farm, according to the statement.
The utility also reached agreements for about 340 million pounds in “non-recourse financing” for the three existing projects from a group of banks including Mitsubishi UFJ, HSBC Holdings Plc and National Australia Bank Ltd. Mitsubishi and Credit Suisse Group AG advised on the refinancing and sale.
Centrica will book about 50 million pounds in profit from the TCW deal. The financing transactions value the farms at around 460 million pounds, according to the statement.
Scope for Growth
Centrica is “spending its money well,” Ajay Patel, a London-based analyst at UBS AG, said today in a note to investors. “There is plenty of scope to grow further through tighter capital management and cost cutting.”
The U.K. has a target to get 15 percent of its energy from renewable sources by 2020, part of a broader European Union goal to more than double the overall share of renewable energy to an average 20 percent. That’s prompted utilities, some of which are facing the closure of aging coal and nuclear plants, to invest in new technologies including wind and solar power.
“If you look at the U.K.’s plans for renewable targets, there is a lot of investment needed,” Centrica’s Director of Finance and Strategy Sarwjit Sambhi said today by telephone. TCW is the first infrastructure fund to make such a large investment in offshore wind in Britain, he said, adding that the deal may become a “benchmark funding model for future investments.”
Attract Investors
In putting the agreement together, Centrica “broadened the scope for equity partners” to include infrastructure funds and sovereign wealth funds, Sambhi said. “If we are going to meet our renewable-energy targets as a country we’re going to have to attract wider investment.”
Under Britain’s Renewables Obligation law, power suppliers are required to sell customers an increasing portion of energy from renewable sources or face penalties. Electricity plants get certificates for each unit of renewable power they generate.
Lincs will be eligible for two such certificates for every megawatt-hour produce, Centrica said in the statement. On completion of the farm, Centrica will control stakes in renewable projects with an installed capacity of 650 megawatts.
“The government’s enhanced financial framework for offshore wind has been fundamental in improving the overall project economics of this development,” Chief Executive Officer Sam Laidlaw said in the statement.
Centrica has also submitted planning applications for two more wind farms in the Greater Wash area off the east coast, with a potential installed capacity of 540 megawatts and 640 megawatts each.
Subsidiary British Gas Trading Ltd. has agreed to a 15-year power purchase agreement to use the energy generated by the three refinanced wind farms and receive 50 percent of all renewable obligation certificates, Centrica said.
TCW will make the investment through its $2.6 billion TCW Energy Fund XIV and 354 million-euro ($524 million) TCW European Clean Energy Fund.
To contact the reporter on this story: Kari Lundgren in London at
klundgren2@bloomberg.net Centrica to Build $1.2 Billion Wind Farm, Team Up With SocGen - Bloomberg.com 
Centrica to Build $1.2 Billion Wind Farm, Team Up With SocGen 
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