The challenge
In 2011 a group of private investors in Belgium and the Netherlands kick-started the negotiations for the establishment of the hitherto largest offshore wind farm off the coast of Belgium.
The plan was to make the new offshore wind farm, Northwind, even larger than the first offshore wind farm, Belwind, which was initiated by the same group of owners back in 2006.
Offshore wind farms typically require loans with a credit period of 15-17 years to ensure a proper balance between repayment and earnings. But the financial crisis turned the loan finance into a major challenge for Northwind.
”We found that it had become more difficult as well as more expensive to involve the banks in long-term financing. However, the banks would be willing to finance the project if we were able to present a strong business case”, says Francois van Leeuw, CFO, Northwind Offshore Energy.
”We were therefore forced to provide security for the financing before initiating negotiations with banks and financial partners. This was to be achieved by obtaining fool proof contracts with suppliers, guarantees from ECAs and com-mitments regarding insurance of the wind farm,” says Francois van Leeuw.
The process
The group of owners behind Northwind had positive experience with EKF, Vestas and other Danish suppliers from the Belwind offshore wind farm. The very first thing the management of Northwind did was therefore to contact EKF to discuss various guarantee solutions.
”EKF has lots of experience with wind energy and having EKF as a guarantor was crucial to the financing as that would ensure a sense of security among the financial partners and owners”, says Francois van Leeuw, CFO, Northwind Offshore Energy.
EKF informed Northwind that we could offer a guarantee up to EUR 300 million but at the same time EKF emphasised the importance of involving the commercial banks as much as possible in order to reduce the share of EKF´s commitment.
In view of this, Northwind initiated negotiations with both suppliers, bankers, investors, ECAs and insurance companies.
“Prior to the negotiations with the final group of partners regarding the financing, we had a busy period during which we met with all potential suppliers and financial partners. Our aim was to clarify as many questions as possible before settling down around the negotiation table”, says Francois van Leeuw.