ICBC contributes $207.9 million USD to a £2.1 billion GBP syndicated loan for the 950 MW Moray East Offshore Windfarm Project (Linked to Record ID#89585)

Project narrative

On November 28, 2018, Moray Offshore Windfarm (East) Limited (MOWEL) — a special purpose vehicle that, at the time of the financial closure, was jointly owned by the Spain-based renewable energy company EDP Renováveis, S.A. (EDPR) (43.4% equity stake), French utility company ENGIE (23.3% equity stake), Diamond Green Limited (33.4% equity stake) — signed senior debt facility agreements worth approximately £2.1 billion GBP ($2.6 billion USD; €2.37 billion EUR), another debt facility agreement worth approximately £0.5 billion GBP ($636 million USD; €565 million EUR), and an equity bridge loan facility agreement with a syndicate of 16 commercial banks, Denmark's Eksport Kredit Fonden (EKF) and the Japan Bank for International Cooperation (JBIC) for the 950 MW Moray East Offshore Windfarm Project. Financial close was reached on December 6, 2018. The project was financed according to a debt-to-equity ratio of 80:20, although the deal included an equity bridge loan (EBL). The breakdown of the £2.56 billion GBP ($3.27 billion USD) debt financing component for the £2.9 billion GBP project was as follows a £743 million GBP JBIC direct loan via its Quality Infrastructure Investment for Environmental Preservation and Sustainable Growth (QI-ESG) facility; a £251 million GBP EKF-wrapped tranche – provided by Banco Santander (£100.43 million GBP), Caixabank (£75.3 million GBP) and Norinchukin Bank (£75.3 million GBP); a £516.5 million GBP term loan; a £387.9 million GBP Offshore Transmission Owner (OFTO) loan which matured in 2026, unlike the 2038 maturity on the rest of the debt; a £19.6 million GBP VAT facility which matured in 2023, unlike the 2038 maturity on rest of the debt; a £193.9 million GBP OFTO revolver; a £159.6 million GBP standby debt facility; a £92.6 million GBP debt service reserve; a £27 million GBP working capital tranche; and a £90 million GBP L/C and a €91.5 million EUR L/C. The loan carried a tenor (maturity) of 20 years and four months (maturity in April 2038) and an interest rate of 195 basis points (1.95%). The deal also included a consumer price index (CPI) swap as an inflation hedge against the relatively low strike price of the power from the wind farm. The Industrial and Commercial Bank of China (ICBC) contributed $207.9 million USD as debt. In addition to ICBC, JBIC and EKF, the following institutions contributed to the project’s debt financing component: MUFG Bank, Ltd., Banco Santander, S.A., Credit Agricole Corporate and Investment Bank (CACIB), CaixaBank, S.A., COMMERZBANK Aktiengesellschaft, Landesbank Hessen-Thüringen Girozentrale (Helaba), ING Bank N.V., Mizuho Bank, Ltd., National Australia Bank Limited, Natixis, The Norinchukin Bank, Societe Generale, Sumitomo Mitsui Banking Corporation (SMBC), Sumitomo Mitsui Trust Bank, Limited, and Banco Bilbao Vizcaya Argentaria, S.A. This purpose of this debt was to finance a 950 MW offshore wind farm located in the North Sea off the northeast Coast of Scotland. The total wind farm area was 295 square kilometers. The project site was located in the Moray Firth Zone (split between Moray East and the currently undeveloped Moray West wind farm), which is adjacent to the Beatrice Offshore Windfarm (BOWL). Moray East is 22 kilometers (14 miles) from shore at its closet point and exists in water depths of up to 57 meters (190 feet). The project also features 54 kilometers of offshore cables and 33 kilometers of onshore cables. These cables, totaling 86 kilometers, would be underground and stretch to a new substation at New Deer in Aberdeenshire. The wind turbines for the project had nacelles weighing 390 tons, measuring 20 meters long and eight meters wide, with a blade weight of 35 tons, and the hub and tip heights of the turbines at 105 meters and 187 meters respectively. The wind farm was intended to provide 40% of Scotland's electricity, save 1.7 million tons of carbon missions annually, and power 950,000 homes throughout the United Kingdom. In September 2017, the UK’s Department for Business, Energy & Industrial Strategy (BEIS) awarded MOWEL a 15-year Contract for Difference (CfD) for the delivery of 950 MW of offshore wind generation at £57.5 GBP/MWh (2012 tariff-based). A pair of long-term power purchase agreements (PPAs) with ENGIE – 23.3%, proportionate to its stake in the project – and Centrica 76.7%, was the mechanism for selling power for the Moray East Offshore Windfarm. Siemens Energy was contracted to connect three of its AC offshore substation platforms Offshore Transformer Modules (OTM), supply onshore substations including three SVC PLUS (STATCOM), three offshore substation platform topsides, and install the underground export cable to the substation at New Deer in Aberdeenshire. DEME Offshore (formerly GeoSea) was responsible for the installation of the foundation systems for 100 MHI Vestas V164-9.5 MW turbines and the three offshore substations of the wind farm. Burntisland Fabrications Ltd. (BiFab) was responsible for the supply of 150 of the pin piles for the project. PSG Marine & Logistics Ltd was responsible for the management of onshore handling works at the marshalling harbor. MHI Vestas Offshore Wind, a 50:50 joint venture between Vestas Wind Systems A/S and Mitsubishi Heavy Industries (MHI), was responsible for the manufacture and installation of 100 Vestas V164-9.5 MW wind turbines, as well as a 15-year long service agreement. NKT A/S was responsible for the manufacture, commissioning, and installation of three 220 kV HVAC power cable systems for the wind farm. Lamprell supplied the jackets for the wind farm. Smulders Group, in a joint venture with DEME Offshore, manufactured 55 85-meter tall, 1,000-ton jackets for the project. Global Energy Group (GEG) was awarded an offshore wind contract worth up to £12 million GBP to allow its Port of Nigg facility, on the Cromarty Firth in the Highlands, to handle the receipt of the completed jacket foundation structures for the wind farm. VBMS was selected for the supply and installation of inter-array cables for the wind farm in October 2017. The onshore cables were manufactured by TELE-FONIKA Kable Group (TFKable Group). VolkerInfra Ltd., a firm with experience horizontal directional drilling, served as a subcontractor under Siemens Energy to limit the environmental impact of construction. JGC Engineering & Technical Services Ltd. (JGC) fabricated eight of 12 containers that were set to be fitted with either high voltage transmission equipment or electrical monitoring and control equipment for the three offshore substation platforms. Smulders selected ENGIE Fabricom to connect, test, commission the containers with high-voltage equipment. Close Up Inspection LTD provided onsite inspection and survey services on behalf of the DEME Group for the project. Renewable Energy Systems (RES) won a contract to provide control point, balancing, and asset monitoring services during the wind farm's commissioning and early operations. In July 2021, Vilicom was announced as the provider of a Cloud-enable private mobile network for the wind farm, which would allow communication between vessels and workers at sea. As part of this contract, Vilicom hired Mavenir to provide its Open Virtualised Radio Access Network (Open vRAN) to support the private offshore long-term evolution (ETE) network for the wind farm. Athonet provided the core network allowing access to 5G-SA, 5G-NSA, LTE and IMS or VoLTE & VoNR in a single component. The project had a planned commissioning date in April 2022. Commencement of construction was announced on May 24, 2019. The outbreak of the COVID-19 pandemic caused implementation issues, with a demobilization of work at the onshore sites in Aberdeenshire announced on March 27, 2020, and then a limited return to work on the project on May 11, 2020 after the announcement of new health guidance from the Government of Scotland. The first power generated by the wind farm was exported to the national grid via the new substation south of New Deer in Aberdeenshire on June 5, 2021. During construction from June 2021 and March 2022, the wind farm was able to meet the total annual electricity needs of all households in the cities of Aberdeen and Edinburgh. The project received its full-contracted output of 900 MW in early April 2022.