SSE and Equinor invest £6 billion to construct world’s largest offshore wind farm
Dogger Bank Wind Farm, which takes its name from its location, a large sandbank in a shallow area of the North Sea – will be the largest offshore wind farm in the world. When fully completed in 2026, the wind farm will create 320 skilled jobs and be able to produce enough electricity to supply 5% of the UK’s demand, equivalent to powering six million UK homes each year*.
SSE Renewables, a leading developer, owner and operator of renewable energy across the UK and Ireland with a portfolio of around 4GW of onshore wind, offshore wind and hydro, and Norwegian firm Equinor, a leading energy provider, which already operates two offshore wind farms off the East Coast of England, Dudgeon and Sheringham Shoal, have committed to invest £6 billion in the project, with each holding a 50% stake.
The joint venture partners are developing Dogger Bank Wind Farm in three phases: with onshore construction currently underway for Dogger Bank A and Dogger Bank B. Onshore and offshore cable and all turbine foundations will be installed for both phases by 2023, with Dogger Bank A expected to be operational in 2023. The third phase, Dogger Bank C, will be delivered on a different timescale.
Located over 130 km off the north east coast of England, Dogger Bank Wind Farm will also make history as the first user of the largest commercially available turbine in the world (248m high). One rotation of its blades can power one UK home for more than two days.
In September last year, SSE and Equinor secured 15-year Contracts for Difference (CfD) to fix the price of power generated by Dogger Bank A and B. This CfD was won through the UK Government’s Contract for Difference auction and achieved a new record low price.
NatWest plays lead arranger role on the £5.5 billion financing and provides significant risk management support
In order to fund their £6 billion investment, SSE Renewables and Equinor were seeking attractive financing options and turned to long-standing banking partner NatWest, who had supported – amongst many other SSE transactions – both of SSE’s recent offshore renewable deals, Seagreen, Scotland’s largest offshore wind farm, which will be completed in 2022/2023, and Beatrice Offshore Wind Farm in Scotland, which started operating in 2019.
Acting through our Project Finance team, the Bank was a lead arranger of the transaction, which comprised 29 banks and three export credit agencies providing senior debt facilities of £4.8 billion and ancillary facilities of £0.7 billion, making this the largest offshore wind project financing to date globally.
In addition, we provided insights and solutions to the sponsors on how to efficiently manage the project’s Foreign Exchange (FX) and interest rate risks in the lead up to the financial close. As part of this role, we executed FX of a total volume of £2.5 billion, helping to manage a highly complex process effectively. This marked the bank’s fifth FX execution role with SSE across three transactions.
Trebling renewable output by 2030
Commenting on the financial close of the world’s biggest wind farm transaction:
Bruce Riley, Project Finance, NatWest, said:
We’re delighted to have supported SSE and Equinor with financing and risk management solutions on the world’s biggest offshore wind farm project. Climate is of paramount importance to NatWest and this project will make a material contribution to the UK’s transition to a low carbon economy and the target of net zero by 2050.
Kushagra Khanna, Currencies Sales, EMEA said:
Delivering such a landmark transaction of this size and scale for SSE, a key customer of NatWest, involved significant cross bank collaboration across multiple teams and product specialists. It’s a great example of how we are collaborating, thinking and acting as one bank to deliver the very best outcomes for our customers and exemplifies our purpose in action.
Alistair Phillips-Davies, SSE Chief Executive, said:
We are proud to be leading on the construction and development of Dogger Bank Wind Farm, which has been 10 years in the making. We are putting our money where our mouth is on delivering net zero and reinforcing the UK’s position as a world leader. This investment will help drive a green recovery from coronavirus through the project’s construction over the next five years, creating jobs and boosting the local economy.
Achieving financial close for the first two phases of the world’s largest wind farm is a huge accomplishment and, alongside reaching Seagreen 1 financial close earlier this year, represents significant progress towards achieving our goal of trebling our renewable output by 2030.
Pål Eitrheim, Equinor EVP of New Energy Solutions, said:
As the wind farm’s future operator, we are proud to take this big step forward in delivering what will be the backbone of a growing wind hub in the North Sea. Through the sheer scale of the project we have delivered record-low contract prices for the UK market, and as operator of the wind farm we will continue to deliver value to the UK for years to come.
Championing potential and supporting the transition to a zero-carbon economy
Our mandated lead arranger role for the Dogger Bank Wind Farm financing represented the bank’s third such recent role with SSE and marked our ninth offshore wind project finance transaction in the UK in the past four years. We have been the number one provider of finance to the UK renewables sector over the last 10 years – by total number of transactions over that period – with 79 transactions totalling £3.86 billion**, and after this deal we’ll be supporting more than 8GW of offshore wind development.
The transaction also highlights how we’re delivering on our purpose helping people, families and businesses to thrive and to support the transition to a zero-carbon economy. We’ve pledged to provide £20 billion of Climate and Sustainable finance between now and 2022. In addition, we’ve committed funding of £10 billion to the Sustainable Energy sector by the end of 2020 to help our customers, such as SSE and Equinor, to achieve their ambition of net-zero emissions by driving forward innovations in wind technology and other crucial energy infrastructure and have advised a number of customers on raising green debt to assist the transition to a lower carbon future.
We’ve also pledged to make our own direct operations climate positive by 2025 and to at least halve the climate impact of our financing activity by the end of this decade.
*6 million UK homes powered per annum based on Typical Domestic Consumption Values (Medium Electricity Profile Class 1, 2,900kWh per household; OFGEM, January 2020) and projected total generation output of 18TWh by 3.6GW Dogger Bank Wind Farm.
**Source: Inframation Deals (Acuris). Based on the aggregated totals for the United Kingdom for the 10yr period 03/12/2010-03/12/2020.