The owners of the Dogger Bank Wind Farm, SSE Renewables and Equinor, have reached financial close on the first two phases of the project, representing in aggregate the largest offshore wind project financing to date globally
With a capacity of 3.6 GW, Dogger Bank will be the largest offshore windfarm in the world when operational.
The project is being built in three 1.2-GW phases, with the first two phases being constructed at the same time to maximise the synergies resulting from their geographical proximity and to use common technology and contractors. As such, the two phases are being financed concurrently with all lenders participating in each phase in equal proportions.
The third phase, Dogger Bank C, is being developed on a different timescale with financial close to follow at a later stage.
SSE Renewables and Equinor state that, with strong interests from lenders, Dogger Bank A and B were able to secure competitive terms, despite unprecedented economic circumstances arising from the coronavirus pandemic.
The final group of lenders, comprising 29 banks and three export credit agencies, includes the most experienced lenders in the sector along with many relationship lenders of both SSE Renewables and Equinor.
The companies said the level of interest achieved reflects the high quality of the project and enables strong returns on shareholder capital to be delivered.
Dogger Bank A and B will each require total capital expenditure of around £3Bn (US$4Bn), including offshore transmission capex of around £800M per phase.
The total senior debt facilities for the two phases is £4.8Bn, plus ancillary facilities of around £0.7Bn. Dogger Bank A and B are being project financed with gearing of between 65% and 70% for the generation assets. Gearing on the transmission facilities is set at 90% of the forecast OFTO sale proceeds.
SSE chief executive Alistair Phillips-Davies said, “We are proud to be leading on the construction and development of Dogger Bank, 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 windfarm 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.”
Equinor executive vice president new energy solutions Pål Eitrheim said, “Reaching financial close on the two first phases of Dogger Bank is a major milestone, demonstrating our commitment to profitable growth within offshore wind.
“The extensive interest from lenders underpins the attractiveness of UK offshore wind assets and confidence in SSE and Equinor. As the windfarm’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 windfarm we will continue to deliver value to the UK for years to come.”
Located more than 130 km off the northeast coast of England, Dogger Bank will be the first project to use the largest commercially available turbine in the world, the 13-MW GE Haliade-X. When fully completed in 2026, each phase of Dogger Bank Wind Farm will be able to produce 6 TWh of renewable electricity, totalling 18 TWh annually – enough to supply 5% of the UK’s demand and equivalent to powering 6M UK homes each year.
Dogger Bank Wind Farm was awarded exclusive development rights for 50 years in 2010 by The Crown Estate as part of its third seabed licensing round. The project secured planning consent in 2015. In September 2019, Dogger Bank Wind Farm secured the following 15-year contracts with the Low Carbon Contracts Company through the UK Government’s Contract for Difference (CfD) auction: Dogger Bank A (1.1 GW) with a strike price of £39.65/MWh (in 2012 prices, CPI-indexed) for delivery in 2023/24; Dogger Bank B and C (1.2 GW each) with strike prices of £41.61/MWh (in 2012 prices, CPI-indexed) for delivery in 2024/25.
Onshore construction is currently underway for Dogger Bank A and Dogger Bank B, with offshore construction for Dogger Bank A due to begin in Q2 2022. For both phases, onshore and offshore cable and all turbine foundations will be installed by 2023. First power is expected mid-2023 and mid-2024 for Dogger Bank A and B, respectively, with commercial operations to begin the following year.