Siemens AG won an order from Dong Energy A/S to supply turbines to a U.K. offshore wind farm. The deal may be worth as much as $1.2 billion, according to an analyst.
Siemens will supply 91 of its 6-megawatt turbines the Race Bank farm to be built on Britain’s east coast, the company said in a statement on its website Friday. Installation is expected to start in 2017 and the project set to begin working in 2018, when it will produce enough power for about 400,000 homes.
The project may cost as much $2.6 billion and the deal be worth up to $1.2 billion based on today’s costs, according to Tom Harries, an analyst at Bloomberg New Energy Finance.
Siemens didn’t provide financial details on the deal.
Offshore wind is one of the most expensive clean-energy technologies, costing about $175.6 a megawatt-hour compared with about $90.7 for coal, Bloomberg estimates show. U.K. developers plan to cut the renewables figure to about $156 a megawatt-hour by the turn of the decade. Costs have already dropped as much as 11 percent over five years, Siemens said in the statement.
Dong also chose Siemens as favored supplier to its Hornsea Project One offshore wind farm off the U.K. coast, the developer said Friday in a separate release. If the order proceeds, 171 of Siemens 7-megawatt turbines will be installed, making the project the largest sea-based wind farm in the world.
Project investment may be as high as $6.36 billion and the deal worth as much as $2.86 billion, Harries said. Dong plans a final investment decision on the facility in the second half of next year. It declined to disclose any financial details.
The U.K. has the largest amount of installed offshore wind capacity in Europe, with a total of 4,494.4 megawatts, according to European Wind Energy Association estimates.