French oil and gas major Total will buy a 51% stake in SSE Renewables' giant Seagreen 1 offshore wind farm project for an upfront payment at closing of 70 million pounds and earn-outs up to 60 million pounds in aggregate subject to performance conditions.
The 1,140 MW project has reached simultaneously a final investment decision and financial close. The purchase agreement also covers a potential extension opportunity of up to 360 MW.
Worth noting, some reports say Seagreen's capacity is 1,075MW while others say it's 1,140 MW.
SSE explained to Offshore Engineer that the project has a grid connection for 1,075MW, but that the company has opted to overplant by 65MW to give it the option "to make the most cost-efficient use of our grid connection capacity."
Located 27 kilometers from the coastline in Scottish waters of UK North Sea, Seagreen 1 has secured all necessary major permits and onshore construction began in Q1 2020.
Designed to cover the energy needs of around 1 million homes, the project will start producing renewable electricity from end of 2022. Once completed, it will be Scotland’s largest offshore wind farm. The project represents a global investment of more than $3.7 billion.
Total has secured close to 70% of external financing for its 51% stake.
SSE’s Chief Executive, 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."
Total CEO: Major change of scale in offshore wind activity
"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,” said Patrick Pouyanné, Chairman & CEO of Total.
"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."
According to the companies involved, Seagreen 1 benefits from a 15-year CfD (Contract for Difference) awarded by the UK Government for 454 MW, representing 42% of the total project capacity. An additional 30% of the project capacities will also be contracted under a private CfD with the SSE Group. Both contracts contribute to securing project revenues.
The transaction remains subject to conditions precedent, including public authorities' approval, and should be finalized by July 2020.
In a separate statement on Wednesday, offshore installation and construction firm Subsea 7 said it has won a major contract for the engineering, procurement, construction and installation (EPCI) of the foundations and inter-array cables for the Seagreen Offshore Wind Farm project.
Also, following on from the news that Seagreen has achieved Final Investment Decision, SSE Renewables has completed and signed the turbine supply contract which had been subject to the FID with MHI Vestas Offshore Wind for the Seagreen offshore wind farm.
Further, Petrofac has won a firm contract to design, build, and install the High Voltage Alternating Current (HVAC) onshore and offshore substations for the project.
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