World's largest offshore windfarm reaches £6bn financial close
Financial close has been confirmed on two phases of the world's largest offshore windfarm, Dogger Bank, with capital expenditure reaching around £6bn, which is the largest offshore wind project financing globally.
SSE Renewables and Equinor, the two firms behind the Dogger Bank windfarm, confirmed that the first two phases of the project will each require total capital expenditure of around £3bn, including offshore transmission capex of around £800m per phase.
With a capacity of 3.6GW, Dogger Bank will be the largest offshore windfarm in the world when operational off the North East coast of England. It consists of three 1.2GW phases and construction began on the Dogger Bank Wind Farm in January this year.
When fully operational, the windfarm will provide enough clean electricity to power more than 4.5 million UK homes and it is expected to trigger capital investments of around £9bn in total.
Despite the current economic struggles delivered by the coronavirus pandemic, the project was still able to secure a final group of lenders, consisting of 29 banks and three export credit agencies. The total senior debt facilities across the first two phases of the project have reached £4.8bn.
SSE’s chief executive Alistair Phillips-Davies 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.”
The third phase, Dogger Bank C, is being developed on a different timescale with financial close to follow at a later stage.
Dogger Bank has secured 15-year contracts with the Low Carbon Contracts Company (LCCC) through the UK Government’s Contract for Difference (CfD) auction. This was achieved in September 2019, when the auction delivered record low-strike prices. As such, Dogger Bank A has a strike price of £39.65/MWh, while phases B and C have secured a strike rate of £41.61/MWh.
The Government is aiming to double the amount of renewable energy procured through its CfD scheme, with 12GW of wind and solar energy being targeted.
The number of technologies supported by the scheme will also be expanded in the latest round, with offshore wind, onshore wind, solar, tidal and floating offshore wind projects all eligible to bid. It marks the first time that floating offshore has been eligible for the scheme and the first time since 2015 that onshore wind and solar have been included.
As part of the recently announced Ten Point Plan, the Government has vowed that the UK will host 40GW of offshore wind capacity by 2030.
Earlier this year, SSE and Equinor outlined plans to create 200 new jobs at the Port of Tyne. Equinor and SSE Renewables confirmed plans to build a new Operations and Maintenance (O&M) Base at the Port of Tyne.
The operations base will enable Equinor workers to run the wind farm, creating more than 200 jobs in the region. Recruitment activity will begin in early 2022, with the first phase of the wind farm due to start producing renewable electricity the following year.