The Norwegian Export Credit Guarantee Agency (GIEK) has quadrupled its offshore wind portfolio to US$453M since late 2019 and is actively seeking new business worldwide as part of its mandate to bolster participation of Norwegian exporters in a burgeoning but capital-intensive sector
State-owned GIEK manages an international portfolio of export-related guarantees that today totals US$8.5Bn. While its focus has traditionally been oil and gas and shipbuilding followed by fisheries and aquaculture, it has widened its mission to include offshore wind, and more generally banks and investors participating in large international energy-infrastructure projects.
GIEK chief executive Wenche Nistad said, “Offshore wind is really gaining momentum and is a great example of how we can actively help Norwegian industry re-channel by opening the door to new markets for existing wind expertise and other companies looking to extend their reach into green technology.”
Her message is clear. “By choosing a Norwegian supplier you can count on receiving good financing from GIEK in support of the purchase,” she said, highlighting recent contracts won by the likes of Nexans Norway, Aibel and Fred Olsen Windcarrier.
GIEK’s core offering are AAA-rated guarantees for long-term loan financing, as well as contractual delivery guarantees that protect both buyers and suppliers in case of default.
“Norway can offer triple A-rated instruments, which are a key tool in reducing the cost of project financing,” said Nistad. “We work together with commercial banks to share project risk, so loans will be repaid.” Customers pay a risk premium on competitive commercial terms.
“We have a lot of experience, especially from offshore and shipping, in participating in complex international projects involving many players and financing institutions. We are bringing that expertise into the process for offshore wind. We are easy to work with, solution-oriented and flexible.”
GIEK believes that offshore wind will be a winner for Norwegian suppliers looking to maximise new opportunities in a changing energy landscape – and as activity in offshore oil and gas is projected to slacken after 2020 amid a lack of big new finds.
GIEK blazed a trail in the sector by providing service delivery guarantees totalling Nkr1.3Bn (US$14M) towards the end of last year that enabled Norwegian supplier Aibel to clinch two big European contracts. In February, it stepped in with a third guarantee package of an equal amount, this time on behalf of Fred Olsen Windcarrier for a project in Asia. Just in recent weeks it provided guarantee coverage amounting to around Nkr1.6Bn that helped cables specialist Nexans Norway secure a major contract with the Seagreen offshore windfarm under development off Scotland.
More projects are already in the pipeline, and GIEK is keen to hear from project owners and their banks worldwide. “We have high capacity and we are ready to take on a lot more business in this sector,” said Mrs Nistad.
“GIEK contributed financially to the development of a number of projects where we have supplied cables. This has been of great support to us as an exporter of Norwegian competence and technology to the global market,” said Nexans Norway chief executive Ragnhild Katteland.
The Fred Olsen Windcarrier deal involves a GIEK guarantee for a loan in Taiwanese dollars from Taiwanese banks. The Norwegian installation specialist will use its jack-up ships to install turbines on the 589-MW Changfang and Xidao windfarm off the coast of Changhua County.
“The GIEK guarantee strengthens our position as a key supplier to offshore wind projects in southeast Asia, and we hope to win more contracts in the region,” said Fred Olsen managing director Even Larsen.
Aibel is typical of Norwegian offshore equipment suppliers that GIEK is looking to support as they exploit new opportunities in wind. In December, the company clinched an engineering, procurement, construction, installation, and commissioning (EPCIC) contract to deliver two converter platforms with jackets for the Dogger Bank mega-project in the UK zone of the North Sea.
GIEK’s participation has been decisive for Aibel. The company’s chief executive Mads Andersen said, “It’s really important because guarantee requirements are higher in the European wind market than the Norwegian offshore market. This segment is much more demanding.”
In terms of risk capital, GIEK financing serves to extend the capacity of banks. “We can provide guarantees to anyone involved in putting together a wind project, and we are very competitive compared to what is available internationally,” Ms Nistad said.
What can GIEK provide in terms of capacity? “We do not calculate an amount based on a mathematical model. The rule of thumb is basically, the more you consider buying from Norway, the more you can count on getting guarantees from GIEK,” she concluded. “And right now, offshore wind has huge potential.”