Solar ousts wind from Centrica affections

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Richard Heap
August 3, 2015
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This content is from our archive. Some formatting or links may be broken.
Solar ousts wind from Centrica affections

One year ago, British Gas owner Centrica said the UK should stop building pricey offshore wind farms. It is no surprise, therefore, that it is now exiting the wind sector altogether.

The utility last week revealed its first-half results, which showed small rises in sales (2% to £15.7bn year-on-year) and operating profit (3% to £1bn in the same period). But its financial performance was overshadowed by the results of a strategic review launched in February. It is set to axe 6,000 jobs and sell its three wind assets.

These job losses will be made through a mix of redundancies and not replacing staff that leave, but investments in other parts of its business mean the net loss of 4,000. This is a significant change of direction for the firm, and one with little space for wind power.

It follows a plan that the company put into action last year.

In summer 2014 it axed plans to develop 4.2GW of wind power in the Irish Sea; and in December it sold its 50% stake in the 90MW Barrow offshore wind farm for £50m to co-owner Dong Energy. The result is that its interests in the wind now total just 245MW.

Centrica should not have any problem selling these assets, either to existing co-investors or new investors. The largest of its three wind assets is a 50% stake in the 270MW Lincs offshore wind farm, where Dong Energy and Siemens Project Ventures own the remaining 50%. Dong and Siemens have both showed they are highly active in the sector and, if they are not interested in buying Centrica’s stake, we are confident that plenty of others will be.

The British utility’s other stakes are a 50% share in the 194MW offshore wind farm Lynn and Inner Dowsing, where EIG owns the other half; and 50% in the 26MW onshore wind farm Glens of Foudland where, again, EIG owns the remaining 50%.

The bigger question is where Centrica goes from here, as its review shows that it is not completely turning its back on renewables. The utility may not want to own or build wind farms, but it has said it will continue to be involved through power purchase deals.

Instead, it has turned its attention to stepping up investment in solar, particularly in North America. The company’s US subsidiary Direct Energy last year bought domestic solar specialist Astrum Solar for $54m to enable it to push into that part of the market.

Also, for the last couple of years, the company has also backed a fund, initially worth $125m, with Solar City to invest in commercial scale solar projects. It is not that Centrica dislikes all renewables, but mainly that it does not see potential in its wind business.

Back in the UK it is looking to ramp up the services it offers to large corporates; is eyeing deals in nuclear; and is backing technology to help homeowners boost energy efficiency. But no place for wind.

We never thought there would be.

One year ago, British Gas owner Centrica said the UK should stop building pricey offshore wind farms. It is no surprise, therefore, that it is now exiting the wind sector altogether.

The utility last week revealed its first-half results, which showed small rises in sales (2% to £15.7bn year-on-year) and operating profit (3% to £1bn in the same period). But its financial performance was overshadowed by the results of a strategic review launched in February. It is set to axe 6,000 jobs and sell its three wind assets.

These job losses will be made through a mix of redundancies and not replacing staff that leave, but investments in other parts of its business mean the net loss of 4,000. This is a significant change of direction for the firm, and one with little space for wind power.

It follows a plan that the company put into action last year.

In summer 2014 it axed plans to develop 4.2GW of wind power in the Irish Sea; and in December it sold its 50% stake in the 90MW Barrow offshore wind farm for £50m to co-owner Dong Energy. The result is that its interests in the wind now total just 245MW.

Centrica should not have any problem selling these assets, either to existing co-investors or new investors. The largest of its three wind assets is a 50% stake in the 270MW Lincs offshore wind farm, where Dong Energy and Siemens Project Ventures own the remaining 50%. Dong and Siemens have both showed they are highly active in the sector and, if they are not interested in buying Centrica’s stake, we are confident that plenty of others will be.

The British utility’s other stakes are a 50% share in the 194MW offshore wind farm Lynn and Inner Dowsing, where EIG owns the other half; and 50% in the 26MW onshore wind farm Glens of Foudland where, again, EIG owns the remaining 50%.

The bigger question is where Centrica goes from here, as its review shows that it is not completely turning its back on renewables. The utility may not want to own or build wind farms, but it has said it will continue to be involved through power purchase deals.

Instead, it has turned its attention to stepping up investment in solar, particularly in North America. The company’s US subsidiary Direct Energy last year bought domestic solar specialist Astrum Solar for $54m to enable it to push into that part of the market.

Also, for the last couple of years, the company has also backed a fund, initially worth $125m, with Solar City to invest in commercial scale solar projects. It is not that Centrica dislikes all renewables, but mainly that it does not see potential in its wind business.

Back in the UK it is looking to ramp up the services it offers to large corporates; is eyeing deals in nuclear; and is backing technology to help homeowners boost energy efficiency. But no place for wind.

We never thought there would be.

One year ago, British Gas owner Centrica said the UK should stop building pricey offshore wind farms. It is no surprise, therefore, that it is now exiting the wind sector altogether.

The utility last week revealed its first-half results, which showed small rises in sales (2% to £15.7bn year-on-year) and operating profit (3% to £1bn in the same period). But its financial performance was overshadowed by the results of a strategic review launched in February. It is set to axe 6,000 jobs and sell its three wind assets.

These job losses will be made through a mix of redundancies and not replacing staff that leave, but investments in other parts of its business mean the net loss of 4,000. This is a significant change of direction for the firm, and one with little space for wind power.

It follows a plan that the company put into action last year.

In summer 2014 it axed plans to develop 4.2GW of wind power in the Irish Sea; and in December it sold its 50% stake in the 90MW Barrow offshore wind farm for £50m to co-owner Dong Energy. The result is that its interests in the wind now total just 245MW.

Centrica should not have any problem selling these assets, either to existing co-investors or new investors. The largest of its three wind assets is a 50% stake in the 270MW Lincs offshore wind farm, where Dong Energy and Siemens Project Ventures own the remaining 50%. Dong and Siemens have both showed they are highly active in the sector and, if they are not interested in buying Centrica’s stake, we are confident that plenty of others will be.

The British utility’s other stakes are a 50% share in the 194MW offshore wind farm Lynn and Inner Dowsing, where EIG owns the other half; and 50% in the 26MW onshore wind farm Glens of Foudland where, again, EIG owns the remaining 50%.

The bigger question is where Centrica goes from here, as its review shows that it is not completely turning its back on renewables. The utility may not want to own or build wind farms, but it has said it will continue to be involved through power purchase deals.

Instead, it has turned its attention to stepping up investment in solar, particularly in North America. The company’s US subsidiary Direct Energy last year bought domestic solar specialist Astrum Solar for $54m to enable it to push into that part of the market.

Also, for the last couple of years, the company has also backed a fund, initially worth $125m, with Solar City to invest in commercial scale solar projects. It is not that Centrica dislikes all renewables, but mainly that it does not see potential in its wind business.

Back in the UK it is looking to ramp up the services it offers to large corporates; is eyeing deals in nuclear; and is backing technology to help homeowners boost energy efficiency. But no place for wind.

We never thought there would be.

One year ago, British Gas owner Centrica said the UK should stop building pricey offshore wind farms. It is no surprise, therefore, that it is now exiting the wind sector altogether.

The utility last week revealed its first-half results, which showed small rises in sales (2% to £15.7bn year-on-year) and operating profit (3% to £1bn in the same period). But its financial performance was overshadowed by the results of a strategic review launched in February. It is set to axe 6,000 jobs and sell its three wind assets.

These job losses will be made through a mix of redundancies and not replacing staff that leave, but investments in other parts of its business mean the net loss of 4,000. This is a significant change of direction for the firm, and one with little space for wind power.

It follows a plan that the company put into action last year.

In summer 2014 it axed plans to develop 4.2GW of wind power in the Irish Sea; and in December it sold its 50% stake in the 90MW Barrow offshore wind farm for £50m to co-owner Dong Energy. The result is that its interests in the wind now total just 245MW.

Centrica should not have any problem selling these assets, either to existing co-investors or new investors. The largest of its three wind assets is a 50% stake in the 270MW Lincs offshore wind farm, where Dong Energy and Siemens Project Ventures own the remaining 50%. Dong and Siemens have both showed they are highly active in the sector and, if they are not interested in buying Centrica’s stake, we are confident that plenty of others will be.

The British utility’s other stakes are a 50% share in the 194MW offshore wind farm Lynn and Inner Dowsing, where EIG owns the other half; and 50% in the 26MW onshore wind farm Glens of Foudland where, again, EIG owns the remaining 50%.

The bigger question is where Centrica goes from here, as its review shows that it is not completely turning its back on renewables. The utility may not want to own or build wind farms, but it has said it will continue to be involved through power purchase deals.

Instead, it has turned its attention to stepping up investment in solar, particularly in North America. The company’s US subsidiary Direct Energy last year bought domestic solar specialist Astrum Solar for $54m to enable it to push into that part of the market.

Also, for the last couple of years, the company has also backed a fund, initially worth $125m, with Solar City to invest in commercial scale solar projects. It is not that Centrica dislikes all renewables, but mainly that it does not see potential in its wind business.

Back in the UK it is looking to ramp up the services it offers to large corporates; is eyeing deals in nuclear; and is backing technology to help homeowners boost energy efficiency. But no place for wind.

We never thought there would be.

One year ago, British Gas owner Centrica said the UK should stop building pricey offshore wind farms. It is no surprise, therefore, that it is now exiting the wind sector altogether.

The utility last week revealed its first-half results, which showed small rises in sales (2% to £15.7bn year-on-year) and operating profit (3% to £1bn in the same period). But its financial performance was overshadowed by the results of a strategic review launched in February. It is set to axe 6,000 jobs and sell its three wind assets.

These job losses will be made through a mix of redundancies and not replacing staff that leave, but investments in other parts of its business mean the net loss of 4,000. This is a significant change of direction for the firm, and one with little space for wind power.

It follows a plan that the company put into action last year.

In summer 2014 it axed plans to develop 4.2GW of wind power in the Irish Sea; and in December it sold its 50% stake in the 90MW Barrow offshore wind farm for £50m to co-owner Dong Energy. The result is that its interests in the wind now total just 245MW.

Centrica should not have any problem selling these assets, either to existing co-investors or new investors. The largest of its three wind assets is a 50% stake in the 270MW Lincs offshore wind farm, where Dong Energy and Siemens Project Ventures own the remaining 50%. Dong and Siemens have both showed they are highly active in the sector and, if they are not interested in buying Centrica’s stake, we are confident that plenty of others will be.

The British utility’s other stakes are a 50% share in the 194MW offshore wind farm Lynn and Inner Dowsing, where EIG owns the other half; and 50% in the 26MW onshore wind farm Glens of Foudland where, again, EIG owns the remaining 50%.

The bigger question is where Centrica goes from here, as its review shows that it is not completely turning its back on renewables. The utility may not want to own or build wind farms, but it has said it will continue to be involved through power purchase deals.

Instead, it has turned its attention to stepping up investment in solar, particularly in North America. The company’s US subsidiary Direct Energy last year bought domestic solar specialist Astrum Solar for $54m to enable it to push into that part of the market.

Also, for the last couple of years, the company has also backed a fund, initially worth $125m, with Solar City to invest in commercial scale solar projects. It is not that Centrica dislikes all renewables, but mainly that it does not see potential in its wind business.

Back in the UK it is looking to ramp up the services it offers to large corporates; is eyeing deals in nuclear; and is backing technology to help homeowners boost energy efficiency. But no place for wind.

We never thought there would be.

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Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.