SeaEnergy pulls out of wind farm projects

Published on Friday 18 June 2010 20:44

SEAENERGY, the Aberdeen group, yesterday announced it was pulling out of offshore wind farm development citing difficulties in raising the cash needed to fund projects.

It is a dramatic about-turn for the company, formerly oil and gas group Ramco, which became the UK's first quoted pure offshore wind business last September.

Shares in the Aim-listed company fell 9p, or 25.4 per cent, to 26.5p on yesterday's news, although it is thought that the company's offshore wind interests in Scotland will attract considerable interest from potential buyers.

RWE npower, SeaEnergy's utility partner on the planned Inch Cape wind farm in the Outer Tay Estuary, withdrew from the development last month.

SeaEnergy Renewables had been looking to increase its stake after RWE's withdrawal, but concluded that raising the funds needed to develop the project was too difficult in the current climate.

SeaEnergy chairman Steve Remp said: "This is a business that needs deep pockets and we had hoped we could stay with it at least through financial close, but we've tested the marketplace and institutional investors are just not ready for it."

Remp said he hoped to retain a minority stake in SeaEnergy Renewables. In February the company valued the business, which SeaEnergy owns 80 per cent of, at 104 million.

The company added that it had already seen interest in the business from a number of third parties over the past year.

Peter Madigan, head of offshore renewables for trade association RenewablesUK, stressed it was not unusual for ownership of stakes in projects to change hands.

"There are challenges and we do need to attract more finance into the industry, but that will come as people get more comfortable with the technology," he said.

Nomura Code Securities analyst Ken Rumph said SeaEnergy Renewables could represent a "unique opportunity" for major power firms that missed out on the recent UK offshore wind farm licensing rounds.

As well as Inch Cape, the firm is also involved in the Beatrice offshore wind farm project off the North-east coast of Scotland with SSE Renewables and holds a 20 per cent stake in a site in the Moray Firth, where it is working with Portuguese wind energy giant EDP Renovaveis.

In total the three wind farms would provide total capacity of more than 3,000 megawatts.

Remp said that SeaEnergy would now look to use its oil and gas experience to provide specialist vessels and services to reach offshore wind farms for servicing and maintenance.

"We're trying to win contracts now, and if the concept is viable and if the operators like it, then we would be in business by early next year," he said.

Yesterday's announcement came as SeaEnergy posted a wider annual loss of 6.5m for 2009, up from 3.4m the previous year. It had cash balances of 2.8m at the year end.

House broker Ambrian said the decision to sell down its holding in SeaEnergy Renewables "must be a bitter pill for management to swallow".