ESSEN/SWINDON (dpa-AFX) - Energy group RWE has emerged successful in the latest offshore wind auction in the United Kingdom. In total, RWE received awards for a capacity of 6.9 GW in the seventh auction round (AR7), the company announced Wednesday in Essen. The stock rose by 3 percent. Analysts see the DAX-listed group as the major winner of this auction round.
In the auction, RWE secured 20-year contracts for difference at £91.20 per megawatt hour for five wind farms: The Norfolk Vanguard East and West wind farms located in the British North Sea, two projects in Dogger Bank South, and the RWE project Awel y Môr in the Irish Sea.
Contracts for difference are designed to promote the expansion of renewable energy. They provide planning security by guaranteeing wind farm operators a fixed electricity price over a set period. If the market price falls below this reference price, the state compensates the difference; if it rises above, the operator must pay back the difference.
According to Jefferies analyst Ahmed Farman, the auction price now agreed has risen by 10 percent compared to the sixth auction round and thus significantly exceeded his expectations, as well as those of RWE's awarded contracts. In his view, the capacities won are likely to help underpin the group's long-term growth targets. However, investors require transparency regarding RWE's planned implementation and capital discipline.
RWE has also entered into a long-term partnership with investment firm KKR to jointly develop the Norfolk projects. KKR will take a 50 percent stake in each of the wind farms. Subject to regulatory approval, the transaction is expected to close in the summer. Further collaboration on additional projects is under review.
RWE is not developing the other three wind farms alone either, but is working with Siemens, Munich City Utilities, and energy group Masdar from the United Arab Emirates./lew/err/stk
