Dogger Bank wind farm owners, Equinor and SSE, have announced financial close on the third phase of the project, Dogger Bank C. The terms achieved are some of the best ever for a construction offshore wind project in the UK.
“Reaching financial close on the third phase of Dogger Bank is a significant milestone as it demonstrates that we are on track with developing what will become the world’s largest offshore wind farm. The significant appetite from lenders underpins the attractiveness of UK offshore wind assets and the confidence in SSE and Equinor as developers. The level of interest achieved reflects the quality of the project and combined with capturing significant value from divestments enables a strong return on equity. As the wind farm’s future operator, we will leverage our offshore capabilities and continue to deliver value for years to come,” says Pål Eitrheim, Equinor’s executive vice president of Renewables.
The total senior debt facilities are GBP 2.5 billion, plus ancillary facilities of around GBP 0.4 billion. Dogger Bank C is being project financed with gearing of approximately 70% for the generation assets. Gearing on the transmission facilities is approximately 90% in anticipation of Offshore Electricity Transmission (OFTO) sale post construction.
With the strong interest from lenders, Dogger Bank C was able to secure highly competitive terms, despite continued impact from the coronavirus pandemic on the macroeconomic environment. The final group of lenders, comprising 28 banks and 3 export credit agencies, includes experienced lenders in the sector, many of which are relationship lenders of both SSE and Equinor. The majority of lenders were the same as for Dogger Bank A and B.
Equinor and SSE announced earlier this month that Eni has entered into an agreement to purchase a 20% (10% each) interest in Dogger Bank C. Extended partner alignment will enable further synergies, both in the construction and operations phase of Dogger Bank wind farm.
Eni will enter the asset effective from financial close of project financing. The farm down transaction is expected to close in Q1 2022, subject to regulatory and lenders approvals and customary purchase price adjustments. Once the transaction is complete, the new overall shareholding in Dogger Bank C will be SSE Renewables (40%), Equinor (40%) and Eni (20%).
“Equinor is committed to being a leading company in the energy transition and deliver profitable growth within offshore wind. We are an offshore energy company playing to our strengths. We have achieved a competitive project financing, contributing to a nominal equity return within the interval of 12-16%, including farm downs,” says Eitrheim.
The Dogger Bank wind farm will enable the UK Government to reach its ambitious renewables targets and will generate renewable electricity for British homes, whilst creating jobs and attracting significant investment to the UK. The project is being built in three 1.2 GW phases, with Dogger Bank C being third in line. Dogger Bank C will require total capital expenditure of around GBP 3 billion, including the capex for the offshore transmission station (OFTO).