Situated approximately 14 km west of the island of Walney in the northwestern part of the UK, some claim that this is one of the windiest areas in the entire country. For most part of the year, the wind sweeps over the turbulent sea. Although this is not the most obvious location for a beach holiday, it is the perfect place for the world’s largest offshore wind farm.
When the Walney Extension offshore wind farm is commissioned in the second half of 2018, the wind farm will overtake London Array and become the world’s largest offshore wind farm. With a capacity of 659 MW, the wind farm will be able to supply energy to more than 500,000 UK homes.
Wind farms of this size are complex and not the least, expensive to construct. They involve giant loan amounts and long tenors making it impossible for one bank alone to handle the financing. In these cases, different institutions are needed to secure financing. This is why the parties involved in the construction of wind farms often approach EKF who is the world’s leading public financing partner in wind farm projects.
In the case of Walney Extension Ørsted (the former DONG Energy) is in charge of the construction whereas a consortium consisting of PFA and PKA, two leading Danish pension funds, have taken over 50% of the ownership.
What: Offshore wind farm 14 km west of the English coast
Owners: Ørsted, PFA, PKA.
Suppliers: Siemens Gamesa Renewable Energy og MHI Vestas
Size: 659 MW 87 turbiner
Construction period: 2015 - 2018
Total sum: Approx. GBP 2 billion (PFA and PKA's share)
EKF's role: EKF provides a guarantee of approx. GBP 342 million
EKF product: Securitization/Project financing guarantee
Coverage: 16 years
As a part of the financing, PKA and PFA have issued rated project bonds to a consortium consisting of Aviva Investors, BlackRock Investment Management (UK) Limited, Legal & General Investment Management Real Assets and Macquarie Infrastructure Debt Investment Solutions.
EKF provides a guarantee of more than GBP 300 million to cover one of the tranches of the bond. The debt is structured as a so-called green bond where the proceeds from the issuance are used to finance green investments. The green bonds are linked to the inflation in the UK, which helps reduce the financial risks in the project.
This is the first time that an offshore wind farm in the UK is financed via a green bond.
”We are definitely the leading ECA in public financing of wind farms. We are ready to break new ground in order to succeed with wind farms and to support Danish export. The solution with green bonds linked to the inflation in the UK is an example of this. At the same time, it is satisfying to know that a Danish wind partnership can help provide green energy to 500,000 British households”, says Christian Ølgaard, Deputy CEO of EKF.