CORRECTED - PFI - Offshore wind gets pricey

(Corrects second paragraph to read "Siemens (SIEGn.DE)" instead of "E.ON EONGN.DE" )

* Financing costs at £1bn for 270MW

* Centrica seeking funds

* Financing package due shortly

LONDON, March 16 (Project Finance International) - Centrica (CNA.L) is seeking £1bn in debt to finance its 270MW Lincs offshore wind farm. At £4 a MW, this would mean the cost of the UK government's plan to install 33GW of offshore wind by 2020 would be £132bn - which is quite a lot of money.

Centrica and its partners on the Lincs scheme - DONG [DOENRY.UL] and Siemens (SIEGn.DE) - are seeking a £630m term loan from banks, £200m for the ancillary loan elements plus a further £200m in connection with the cabling to the project. Under the offshore transmission organisation (OFTO) regime, the cabling tranche likely to be refunded once the cable is built, but this still leaves a £830m debt package plus the sponsors' equity investment on top.

Offshore wind farm costs have been increasing in the UK. The fall in sterling has been an important factor, given the turbine equipment is imported from overseas. Siemens (SIEGn.DE) is currently the main supplier of offshore wind turbines and indeed the competition needed to push offshore turbines prices down has not yet really began. Offshore costs are expected to come down over time as the supply chain for the projects grows to meet the 33GW challenge. The cost of meeting the bill to pay for the offshore wind revolution will be met via customer bills.

Last year Centrica raised £350m of debt for a 220MW portfolio of offshore wind. However in that deal the assets were already built. Lincs is a new project. Banks which have expressed an interest in financing the Lincs scheme will be sent a full funding package shortly.