FINANCING UK OFFSHORE WIND

Centrica, Siemens Seek Loans for 1 Billion-Pound U.K. Wind Deal
Sally Bakewell, August 19, 2011 (Bloomberg News)

"Centrica Plc (CNA), Siemens AG (SIE) and Dong Energy A/S invited commercial banks to join a 1 billion-pound ($1.7 billion) financing plan to build an offshore U.K. wind farm, the first deal of its kind in the country…The figure includes a 550 million-pound term loan and a 250 million-pound facility to pay for a link to bring the power to shore…

"The companies’ use of commercial loans and their own funds, instead of state financing, to construct the 270-megawatt Lincs project off east England sets a precedent…It would be the first time banks provided project finance loans to build a U.K. offshore farm…"

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"Centrica will offer a total of 333.3 million pounds for the funding facilities and Dong Energy 166.7 million pounds, while Siemens plans to contribute 75 million pounds through its Siemens Financial Services Ltd. arm. The companies invited banks to provide the balance of the financing for the project, which will power 200,000 U.K. homes a year…

"With the companies acting as “sponsor lenders,” the wind farm won’t need to use funds from the European Investment Bank or a guarantee facility from the EKF, Denmark’s export credit agency…Offshore wind projects, among the most expensive of the renewable-energy technologies, are typically the domain of utilities with balance sheets able to bear the cost…"