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UK Green Investment Bank agrees its first offshore wind farm finance package

The UK’s state-backed Green Investment Bank (GIB) has struck its first deal in the offshore wind sector, contributing to a £224 million re-financing of OPW’s 24.8% stake in the 367 MW Walney offshore wind farm.

The GIB is one of five banks providing debt financing to OPW, a joint venture between Dutch pension fund PGGM and renewable energy investor Ampere Equity Fund. The GIB is lending £45m, around a fifth of the total amount. Lloyds Bank, the Royal Bank of Scotland plc, Santander, and Siemens Bank GmbH, are providing the rest.

Interest in the UK’s wind sector amongst institutional investors is growing, with the UK projected to overtake Spain as the most attractive location for institutional investment in the coming years.“Walney wind farm was the first project in the UK to be backed by institutional investors before it was built,” said Mads Skovgaard-Anderson, head of UK commercial partnerships at DONG Energy, which holds a majority 50.1% share in the project. “This further evidence of the success of DONG Energy’s partnership strategy within offshore wind – achieving financial close in the current economic climate – highlights the attractive qualities of these long term, stable assets for financial investors.”

The transaction is the first major deal to be agreed by the GIB since it was declared “open for business” by the UK government in November. The bank is backed by around £3bn of government money, and aims to bring around £15bn in private investment into the UK’s low-carbon industries Shaun Kinsgbury, CEO of the UK Green Investment Bank, said: “The UK Green Investment Bank is delighted to work with DONG Energy, OPW, SSE and the syndicate of banks on its first project in the UK offshore wind sector, which is a priority sector for us. Walney was particularly attractive as it ensures that capital is recycled in the marketplace, delivers a commercial return to the bank and reduces carbon emissions in the UK.”

The Walney offshore wind farm has been operational since February, with the opening of the second phase of the project, Walney II. Commissioning at the project was completed in July 2012, while the first phase of the project was completed in June 2011.

Located 14km off the north west coast of England, Walney I and Walney II each comprise 51 Siemens 3.6MW wind turbines. OPW acquired the Walney stake from DONG in 2010. SSE holds a 25.1% stake in the project. 

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Policy, investment and markets  •  Wind power