Cash return on cards as SSE sells wind farm stakes for £635m

Perth-based power giant SSE is to sell a stake in two major Scottish wind farms for £635 million to help fund a programme to buy back shares from investors.

SSE - 'onshore wind makes a huge contribution to supplying low carbon electricity to the GB market'. Picture: Ian Rutherford

The utility group has agreed to sell a 49.9 per cent holding in its Stronelairg and Dunmaglass wind farms to Greencoat UK Wind in partnership with a major UK pension fund.

Stronelairg, which has 66 wind turbines, is located near Fort Augustus and has an installed generating capacity of 228 megawatts. It was commissioned in December.

Dunmaglass, meanwhile, is located 15 miles south of Inverness and has an installed generating capacity of 94 megawatts from 33 turbines.

SSE said that up to £200m of the proceeds will be used to fund the share buy-back programme with the remainder used to reduce the group’s debt.

The £635m consideration equals to around £4m per megawatts generated by the wind farms, which SSE will continue to operate.

The deal is in line with the company’s strategy announced last November to sell stakes in its portfolio of onshore and offshore wind farms in order to create value from development and operation, as well as ownership, of assets.

Greencoat UK Wind said it had entered into agreements to acquire the 49.9 per cent stakes in the wind farms from SSE, in partnership with the UK pension fund whose investment is managed by Greencoat Capital. Greencoat UK Wind is raising up to £131m.

Gregor Alexander, SSE’s finance director, said: “Both Stronelairg and Dunmaglass are a testament to SSE’s ability to design, develop, construct and operate first-class renewable energy assets. Onshore wind makes a huge contribution to supplying low carbon electricity to the GB market and to meeting the UK’s carbon reduction targets.

“The sale of stakes in these wind farms to Greencoat is a continuation of SSE’s longstanding approach of partnering and securing value for shareholders at appropriate times.”

Laurence Fumagalli of Greencoat Capital said: “We are pleased to add two more large wind farm investments to our portfolio, located close to our existing capacity in the Highlands. We continue to see a strong pipeline of acquisition opportunities, and our independence and our proven track record in execution and operations makes us an attractive partner for utility vendors looking to recycle capital.”