RWE Innogy renewables expansion gains pace

German electrical utilities company RWE is getting close to a financial deal for its planned £1.3 billion Galloper UK offshore wind park project.

According to one of the firm's executives, the company's expansion in renewable energy is gathering pace, reports Reuters.

As Germany's largest power producer, RWE was a latecomer to the renewables movement, but the company has recently made big advances and is working to replace the coal- and gas-fired power plants that make up most of its portfolio.

The company has established Innogy, a dedicated renewables unit that has around 3.6 GW of installed capacity. Its project pipeline includes another 3.5 GW of capacity. That's compared to the company's total capacity of around 50 GW.

The Galloper windfarm is planned to be located about 27 km off the coast of Suffolk and would generate 336 MW – enough to power thousands of British homes.

Project partners

In 2014, RWE came under pressure when its initial partner for the Galloper project, SSE, dropped out in a move to save money. That left RWE unable to cover the costs on its own – windfarms typically cost €1 billion or more – so the firm began a search for new partners.

Innogy's chief executive Hans Buenting said he expects the new deal to be completed in October or November, adding that the company is planning to work with three partners on the scheme. If the deal goes through as planned, RWE would have a 25 per cent stake in the project.

He noted that investors in offshore projects can usually expect a return on equity in the "low double-digit percentage range" – between 10 and 20 per cent.

Mr Buenting also explained that the European markets have a "certain saturation" in terms of renewable energy projects, so the company is considering growth in other locations – the Middle East is one potential option that is being considered.

On Friday (August 28th) in Frankfurt, RWE shares dropped slightly, by 0.14 per cent, bringing them to 14.02.