In its annual Deals of the Year awards, the London-based publication Project Finance Magazine has named the Jädraås wind farm in Sweden as European Onshore Wind Deal of the Year 2011 and the Meerwind wind farm in the German part of the North Sea as European Offshore Wind Deal of the Year 2011. EKF has been crucially instrumental in the financing of both projects, which have meant DKK-billion orders for Vestas and Siemens Wind Power.
When financing has to be arranged for major new wind farms, it is often difficult to get banks and other private-sector lenders to bear the entire risk themselves. That is particularly true of offshore wind farms, but also applies to onshore projects. There is therefore often a need for a state guarantee for at least a part of the loan required in addition to the project owners’ own contribution, if a project is to be realised. That was precisely the situation with the award-winning Jädraås and Meerwind wind farm projects.
Unique public-private partnership backing for Swedish wind farm
The Jädraås financing is the largest wind financing seen in the Nordic region so far, but the project gained the Deal of the Year award thanks to a completely new type of public-private partnership between EKF and Danish pension fund PensionDanmark. It was only after PensionDanmark – with guarantee coverage from EKF – offered to cover half the DKK 2 bn loan financing necessary for the project that the financing fell into place, allowing the project, which comprises sixty-six 3-MW Vestas wind turbines, to be realised. The balance of the financing will be furnished by Norwegian DNB and Swedish SEB.
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EKF leads the world in offshore wind turbine financing
When completed in 2013, the Meerwind project will be an offshore wind farm consisting of eighty 3.6-MW wind turbines located a little north of Helgoland in the North Sea. The wind turbines will be supplied by Siemens Wind Power’s factory in Brande, Denmark.
One of the reasons why Project Finance Magazine chose Meerwind as the Offshore Wind Deal of the Year was the great commitment to making the project succeed shown by both the German development bank KfW and EKF. EKF is providing a EUR 264 million guarantee to a group of commercial lenders, and KfW will furnish a loan of the same amount.
Meerwind highlights the special part played by EKF in offshore wind financing. Project financing of offshore wind farms is a market that is considered particularly risky by the majority of financial players, and there are only a few project-financed offshore wind farms that have been built and financed without EKF participation.
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Project Finance Magazine and project financing
Project Finance Magazine is the leading international news magazine on project financing. Project financing is a special form of financing in which the lenders’ and guarantors’ primary risk is that involved in the project’s being realised and becoming able to generate income to repay the loan.