Perth-based energy giant SSE plc said on Wednesday its SSE Renewables business agreed to sell a 51% stake in its massive Seagreen 1 offshore Scottish wind farm project to French major Total SA for an initial consideration of £70 million.
Located in the Firth of Forth, Seagreen 1 will be Scotland’s largest wind farm once complete.
“The project will require a total spend of around £3bn, including offshore transmission capex of around £500m,” said SSE.
“In addition to sale proceeds, historical capital investment of around £250m in the project will be repaid in full to SSE at financial close from project financing.
“SSE’s future equity investment is expected to total around £850m over the years 2020 to 2022, with the equity contribution for 2020/21 financial year expected to be less than £50m.
“This will form part of SSE’s updated capital expenditure plans which will be set out as part of its preliminary results on 17 June.
“Seagreen will be project financed with gearing of around 42%.
“This will be equity accounted and as a result will not be consolidated on SSE’s balance sheet.”
SSE Renewables managing director Jim Smith said: “Following the agreement with Total we are looking forward to delivering the Seagreen offshore wind farm which will contribute towards building a cleaner, more resilient economy as we pursue a green recovery from coronavirus by unlocking £3bn low carbon investment, creating green jobs and generating the zero-carbon power we need to reach net zero.”
Julien Pouget, Senior Vice President Renewables at Total, said: “We are glad to join the Seagreen project to contribute to the development of the renewable energy in Scotland alongside the leading offshore wind developer in the country.
“As one of the main players in the country’s energy sector, we’re confident that Total’s strong expertise in the offshore operations and in-depth understanding of the local supply chain will help ensure the success of the project.”
SSE Renewables said it continues to develop its wholly-owned Seagreen 2 and 3 projects which were awarded exclusive development rights by The Crown Estate in 2010.
SSE Renewables was advised by Jefferies International Limited and Linklaters LLP on this transaction.
On Seagreen 1, SSE added: “Its capacity will be 1,075MW, and it will generate around 5,000GWh annually.
“In September 2019, SSE Renewables secured a 15-year contract with the Low Carbon Contracts Company (LCCC) through the UK Government’s Contract for Difference (CfD) auction for 454MW of Seagreen 1 at a strike price of £41.61/MWh (in 2012 prices) in the delivery year 2024/25.
“The LCCC-contracted capacity represents around 40% of the total project capacity.
“An additional c. 30% of the project will be contracted with the SSE Group.
“Across the group, SSE is well positioned to optimise the route to market for its renewable output, including through developing opportunities to meet its customers’ growing demand for long-term fixed price green power.”
Total CEO and chairman Patrick Pouyanné said: “Total builds up a strong position in the world’s largest offshore wind market, as it becomes a majority stakeholder in the Seagreen 1 project, one of the largest offshore wind farms in the UK North Sea.
“This move represents a major change of scale for Total’s offshore wind activity in line with our strategy of profitable growth in renewables and low carbon electricity.
“As one of the main actors in the UK energy sector, Total will leverage its extensive expertise in offshore operations and maintenance to contribute to the success of the project alongside country’s leading offshore wind developer, SSE Renewables.”
SSE CEO Alistair Phillip-Davies said: “We are delighted to be partnering with Total to deliver Scotland’s largest offshore wind farm, Seagreen, which will make a significant contribution to the UK’s green recovery from coronavirus by unlocking £3bn of low carbon investment and generating the low carbon power we need to reach net zero.
“Today’s announcement is the result of great efforts by both teams to successfully complete this transaction in the current challenging circumstances.
“Total’s extensive global experience in the offshore environment combined with their clear ambition to contribute to the development of renewable energy worldwide is a strong fit with SSE Renewables’ strategic objective to treble our renewable output by 2030.”