UK Announces Winners of Huge Offshore Wind Tender

The U.K. Friday took a step forward in boosting offshore wind power capacity, enhancing energy security and meeting emissions targets as it announced successful bidders to develop 32 gigawatts of offshore wind energy.

The cost of developing the new generation capacity could require investment of around GBP100 billion, according to the Crown Estate, owner of the U.K. seabed. Ahead of Friday's announcement, it was expected that 25 GW of new offshore wind capacity would be awarded.

Winners of the nine sites off the U.K. coast--the world's largest offshore wind tender to date--included major European utilities such as RWE AG (RWE.XE), E.ON AG (EOAN.XE), Centrica PLC (CNA.LN), Scottish and Southern Energy PLC (SSE.LN), Iberdrola SA (IBE.MC), Vattenfall, EDP Renovaveis (EDPR.LB), and others such as Statoil (STO), Siemens AG (SI) and Fluor (FLR).

U.K. Prime Minister Gordon Brown said the announcement would provide a substantial new platform for investing in U.K. industrial capacity.

"The offshore wind industry is at the heart of the U.K. economy's shift to low carbon and could be worth GBP75 billion and support up to 70,000 jobs by 2020," Brown said.

The largest development will be in the Dogger Bank zone, where 9 GW of generation is to be installed by a consortium equally owned by each of SSE Renewables, RWE Npower Renewables, Statoil (STO) and Statkraft (SKT.YY).

The scale of the challenge is significant. Wind farm developers face engineering and technology challenges as well as massive costs from an industry still in its infancy, developers and analysts have said.

Sarwjit Sambhi, managing director of gas and electricity supplier Centrica said the sector would need a long-term stable support mechanism to make the investments commercially viable.

"Round 3 should send a strong signal to the renewables supply chain in the U.K. and a suitable support mechanism would incentivize its creation to increase competition, reducing costs and creating thousands of new jobs," Sambhi said.

Centrica was Friday awarded exclusive rights to develop 4.2 GW in the Irish Sea zone.

The Round 3 tender significantly boosts the amount of offshore wind capacity to be installed in the U.K. Capacity put up for development in the Round 1 and 2 tenders totaled 8 GW.

-By Selina Williams, Dow Jones Newswires [phone]; [e-mail]