Centrica Seeks Up to 450 Million-Pound Loan for U.K. Wind Farms

By Caroline Hyde and Paul Dobson

Feb. 25 (Bloomberg) -- Centrica Plc, the U.K’s biggest energy supplier, is seeking up to 450 million pounds ($650 million) in debt to finance three of its U.K. wind farms, according to two people with knowledge of the deal.

Bank of Tokyo-Mitsubishi UFJ is advising Centrica in arranging the loan with a 15-year maturity, according to the people, who declined to be named as the talks are private. The debt will be raised against two offshore wind farms that are already constructed and now undergoing commissioning work and one operational onshore wind park, the people said.

European Union governments are promoting wind turbines to help meet a target to get 20 percent of energy supplies from renewable sources by 2020, designed to combat climate change. Some lenders have stopped providing financing for turbines installed at sea because of increased costs, Thiess Harder-Heun, a director at Deutsche Kreditbank AG, said Feb. 11.

Windsor, England-based Centrica is looking to raise finance against Lynn and Inner Dowsing, two wind farms off England’s Lincolnshire coast with a combined capacity of 194 megawatts, and the smaller Glens of Foudland wind farm in Scotland, one of the people said.

Centrica spokesman Andrew Turpin declined to comment when contacted by phone, and a London-based spokesman for Bank of Tokyo Mitsubishi declined to comment on the financing.

Centrica has government approval to build the 250-megawatt Lincs wind farm adjacent to Lynn and Inner Dowsing. Phil Bentley, the managing director of Centrica’s British Gas retail unit, said Feb. 11 “the economics don’t quite work” at present for new offshore wind farms. Additional state subsidies may help to make them viable, he said.

To contact the reporter on this story: Caroline Hyde in London chyde3@bloomberg.net. Paul Dobson in London at pdobson2@bloomberg.net