Scottish and Southern signs $3B in wind contracts

Perth, Scotland's Scottish and Southern Energy (LON: SSE) signed $3 billion in contracts for the construction of the 500 megawatt Greater Gabbard offshore wind farm, with Irving, Texas-based Fluor (NYSE: FLR) to build the farm and turbines to come from Germany's Siemens (NYSE: SI).

Scottish and Southern also acquired the 50 percent of the project it didn't already own from Fluor for $80 million.

The U.K. government approved plans for the project early last year (see UK approves Greater Gabbard wind farm).

Fluor had been developing the wind project with Airtricity, which was acquired by Scottish and Southern in February.

Scottish and Southern said the wind farm would be commissioned in two phases, with the entire construction scheduled to be completed in 2011.

Greater Gabbard will be located approximately 25 kilometers off England's Suffolk coast, in the outer Thames Estuary.

"The U.K. wants to respond to climate change and become more self-sufficient in energy, so it makes sense to exploit the excellent resource that U.K. offshore wind represents," said Ian Marchant, CEO of Scottish and Southern.

"Greater Gabbard is a landmark project for SSE and for the development of the U.K.'s offshore wind resource, and our priority now is to deliver it in an efficient, focused and timely manner."

Fluor received a $1.8 billion contract to build the wind farm, with construction expected to begin in the summer of 2009. Fluor said preparation work for the onshore substation was already underway.

Siemens will supply 140 wind wind turbines to Scottish and Southern for the project under a separate $1.2 billion deal.

Earlier this month, the London Array was dealt a blow when Royal Dutch Shell (NYSE: RDS.A) said it would drop out of the planned 1,000 MW offshore wind project (see Shell to exit London Array wind project).

Shell is one of three shareholders in the big wind project, along with German utility E.ON (OTC: EONGY) and Denmark's state-controlled DONG Energy.

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