Integration of the Banking Sector into the Offshore Wind Industry •
Kriegers Flak, an offshore electricity transmission grid linking the electricity grids of Denmark, Germany and Sweden and connecting offshore wind turbines at Kriegers Flak with the electricity grids on land. This project received EU Commission approval for €150million in December 2009 and a feasibility study is now in progress.
Complexity of Projects and Associated Construction Risk Offshore projects are more complex and require far more co-ordination and project management than onshore wind projects. Construction techniques that have been in application for a limited time coupled with unpredictable weather conditions contribute to a high level of construction risk. The consequences of potential accidents on project duration can be extremely severe. The fact that offshore wind projects are moving further away from the shore and into deeper waters will pose new challenges for project developers, construction companies and financiers.
However, where this is a will there is a way. Unwillingness to provide wrapped Engineering, Procurement and Construction (EPC) contracts due to different risks and parties involved has led to the construction process being arranged on a split-contract basis. Although negotiating detailed contracts that involve multiple parties can take a long time and is extremely laborious, the example of Belwind offshore wind farm proves an agreement can be achieved. According to one of the participating parties, co-ordination took place between six banks, six equity investors, two large contractors and the bankruptcy administrator of the original developer. Construction risks are also becoming better understood as experience is
increasing. Large industrial players experienced in the offshore industry are now getting involved. In addition, local governments are keen to understand and help the emerging offshore wind industry
Table 1: Project-financed Offshore Wind Farms Project
Princess Amalia
(formerly Q7) Netherlands C-Power
2007, Belgium
Year/Country Capacity Major Lenders Owners 2006, The
120MW Rabobank, Dexia, EKD
Eneco, Econcern
30MW Dexia, Rabobank EDF EN, RWE as mezzanine lender
Innogy,
Dredging and regional investors
Belwind 2009, Belgium 165MW Rabobank, ASN Consortium of
Bank, Dexia, EIB, Belgian and EKF; Rabobank, Dutch investors, PMV as mezzanine including PMV, lenders
Meewind and Rabo Project Equity
Centrica Energy
Boreas portfolio (comprises the Lynn [97MW], Inner Dowsing [97MW] and Glens of Foudland [26MW]
onshore wind farms)
Sources: Dexia, Rabobank, EIB, websites of companies.
2009, UK
220MW Dexia as the Centrica
technical bank Energy within a banking consortium, which included BBVA, Bank of Tokyo- Mitsubishi, BNP Paribas Fortis, Bank of Ireland, Calyon, KfW IPEX Bank, NIBC, etc.
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