Vattenfall buys rights to build £780M offshore wind farm

Sweden's Vattenfall AB is set to become one of the largest providers of wind power in the U.K. with the just-announced acquisition of the rights to build the Thanet Offshore Wind project off Margate, Kent.

The £35 million ($55.6 million USD) deal with CRC Energy Jersey 1 Limited allows Vattenfall to build the 300-megawatt wind farm, estimated to have a construction cost of £780 million. Vattenfall expects to complete construction in 2010.

The wind farm is expected to be about the same size as the Horns Rev project in Denmark, in which Vattenfall has a majority stake. Vattenfall is Europe’s fifth-largest electricity generator.

"Vattenfall has a very ambitious wind expansion plan in Northen Europe," Anders Dahl, head of Vattenfall's wind power division, told the Cleantech Group. "Our current capacity in operation is 620 MW, whereof 90 MW is in the U.K." 

In the U.K., Vattenfall operates the 90-MW offshore Kentish Flats wind farm near Whitstable. In September and October, Vattenfall acquired two companies with wind holdings in the U.K.: AMEC Wind Energy and Eclipse Energy UK (see Vattenfall buys AMEC Wind Energy for £126M and Masdar makes another move in cleantech).

"Great Britain is ideal for wind power with good wind conditions and a long coastline," Dahl said.

Worldwide, 419 MW of offshore wind is expected to be installed this year led by the U.K., and with major projects in Belgium, Denmark, Germany, and China, according to the European Wind Energy Association (EWEA) (see Siemens, E.ON sign €275M deal for offshore wind).

By the end of this year, Denmark and the U.K. are expected to account for 1 GW of offshore wind, or 80 percent of Europe's market, the EWEA says (see Walney wind farm gets UK approval and U.K. unveils clean energy plan). Europe's tally is predicted to hit 50 GW by 2020, the group says.   

The state-owned Carbon Trust has invested £10 million in an industry consortium to cut the cost of offshore wind energy by 10 percent or more through a combination of wind farm cost reductions and performance improvements.

The Carbon Trust published a report on the hurdles in developing offshore wind power in the U.K., saying that offshore wind has the greatest potential of all renewable energy technologies to deliver the U.K.'s target to get 15 percent of its energy from renewables by 2020 (see Cutting the cost of offshore wind). The U.K. now gets 3 GW of electricity from offshore and on-shore wind power.

Vattenfall aims to become the fastest-growing wind-power developer and operator in North Europe. The company wants to increase its wind-power production from approximately 1.5 terawatt-hours today to 50 TWh by the year 2030. 

To accomplish that goal, Vattenfall has made a number of acquisitions in recent months. Just last week, Vattenfall bought an 18.7 percent stake in Polish state-owned energy company ENEA SA for SEK 5.5 billion ($703 million).

ENEA, one of Poland's four state-owned power companies, generates 13 tWh of energy annually, or 8 percent of the country's supply, and serves 2.3 million customers. ENEA generates power mostly through coal but has a few small-scale hydro projects and has plans for wind generation.

Vattenfall was already the largest foreign energy company operating in Poland before the acquisition.

Vattenfall plans to contribute its carbon capture and storage (CCS) technology to ENEA to address emissions from the coal plant. Vattenfall opened its first CCS facility in September at the Schwarze Pumpe power station in the state of Brandenburg (see Vattenfall to build CCS demonstration plant in Germany).

The company, owned by the Kingdom of Sweden, initiated CCS concept research in 2001, with the goal of developing commercial concepts for power plants by 2020.

Vattenfall also generates electricity, produces heat and supplies energy to several million customers in the Nordic countries and northern Europe. Its major customers are industrial plants, energy companies, municipalities, property companies and homes.