Skanska and Ecotricity will invest up to £500m in onshore wind through a new 50/50 joint venture, with their first three projects all based in Scotland.
The firms have created a JV called Skylark, which Skanska Infrastructure Development executive vice-president Steve Cooper told Construction News would predominantly develop onshore wind projects in Scotland.
Mr Cooper admitted there were political uncertainties around onshore wind and renewables, but projects already in the pipeline in Scotland would ensure the JV would not make losses on its investment, should support for the technology be scaled back in 2015.
Skylark will aim to build 350 MW of wind farm projects in the first five years, which would represent a potential investment of £500m if the schemes receive planning consents.
It has already made applications for three onshore wind developments, totalling around 100 MW, of which the first could get planning consent within a year, having been started by Ecotricity before the JV was formed.
The JV partners had been “exchanging ideas” for more than two years, Mr Cooper said, having first held discussions over waste schemes that “didn’t come to pass”.
He said the pipeline was a “specific window of opportunity” over which Skanska was already being cautious about political promises and potential changes in government next year.
“We think there is sufficient potential for Contracts for Difference [mechanisms for energy firms to receive guaranteed prices for electricity generated] which will see us through the next few years.
“Most of what we do will be in Scotland where there seems to be a more open and progressive agenda,” he added. “We’re being realistic, it’s a five-year, 350 MW business plan.”
Carillion lands wind connection deal
Carillion has been awarded the £30m contract to design and build the UK’s longest onshore high-voltage connection for an offshore wind farm in Norfolk.
The contractor will design, supply, install and test a twin circuit onshore 132 kV cable for Dudgeon Offshore Windfarm.
Carillion will undertake all civil engineering and cable installation activities, including crossing a number of watercourses and strategic roads using trenchless techniques.
The onshore cabling project will start later this year and is scheduled to be commissioned in 2016.
Dudgeon Offshore Windfarm Limited is a joint venture between Statoil, Statkraft and Masdar. It will invest around £1.5bn in the offshore wind farm, which will provide enough energy to power 410,000 homes each year.
The firm had looked at other renewables schemes such as biomass plants but had “not been able to make them work”, Mr Cooper said.
The companies held talks with Scottish Government representatives prior to the independence referendum last month to seek assurances that there would still be a solid platform for investment in the sector.
Development costs will be met through a mixture of bank debt and equity, split between the JV partners on a 50/50 basis.
In the longer term, once revenue from CFDs starts to flow through to the JV, Skanska is likely to seek to divest of its stake in the assets, Mr Cooper added.
The contractor has already developed the Sjisjk and Mullberg onshore wind farms (pictured), which completed in 2012 and 2014.
Current investment and commercial director Peter Sharpe will lead the JV as Skylark general manager.
Ecotricity mulls Hinkley Point C challenge
Ecotricity founder Dale Vince this week told the Guardian the firm would consider challenging the European Commission’s decision to grant state aid approval to the new nuclear plant being developed by EDF Energy at Hinkley Point C.
The Austrian government has already confirmed it will launch a legal challenge to the EC decision.
EC Harris partner Mark Stewart told Construction News several large-scale utility developers would be pulling out of renewable schemes, slimming down their pipelines or diverting investment into large-scale offshore wind projects, following the decision.
He said the EC was likely to face further challenges to its decision to grant approval to Hinkley Point C, the cost for which is now estimated at £24.5bn including financing over the 10-year construction phase and excluding contingency of almost £10bn.
EDF Energy said the construction (£10bn) and associated development (£2bn) costs remained the same for the construction phase of the project.
It has further delayed its final investment decision on Hinkley until the end of 2014.