Equinor and partner reach financial close on the third phase of the world’s biggest offshore wind farm

“Reaching financial close on the third phase of Dogger Bank is a significant milestone as it demonstrates that we are on track with developing what will become the world’s largest offshore wind farm. The significant appetite from lenders underpins the attractiveness of UK offshore wind assets and the confidence in SSE and Equinor as developers. The level of interest achieved reflects the quality of the project and combined with capturing significant value from divestments enables a strong return on equity. As the wind farm’s future operator, we will leverage our offshore capabilities and continue to deliver value for years to come,” says Pål Eitrheim, Equinor’s executive vice president of Renewables.

The total senior debt facilities are GBP 2.5 billion, plus ancillary facilities of around GBP 0.4 billion. Dogger Bank C is being project financed with gearing of approximately 70% for the generation assets. Gearing on the transmission facilities is approximately 90% in anticipation of Offshore Electricity Transmission (OFTO) sale post construction.

With the strong interest from lenders, Dogger Bank C was able to secure highly competitive terms, despite continued impact from the coronavirus pandemic on the macroeconomic environment. The final group of lenders, comprising 28 banks and 3 export credit agencies, includes experienced lenders in the sector, many of which are relationship lenders of both SSE and Equinor. The majority of lenders were the same as for Dogger Bank A and B.

Equinor and SSE announced earlier this month that Eni has entered into an agreement to purchase a 20% (10% each) interest in Dogger Bank C. Extended partner alignment will enable further synergies, both in the construction and operations phase of Dogger Bank wind farm.

Eni will enter the asset effective from financial close of project financing. The farm down transaction is expected to close in Q1 2022, subject to regulatory and lenders approvals and customary purchase price adjustments. Once the transaction is complete, the new overall shareholding in Dogger Bank C will be SSE Renewables (40%), Equinor (40%) and Eni (20%).

“Equinor is committed to being a leading company in the energy transition and deliver profitable growth within offshore wind. We are an offshore energy company playing to our strengths. We have achieved a competitive project financing, contributing to a nominal equity return within the interval of 12-16%, including farm downs”, says Eitrheim.

The Dogger Bank wind farm will enable the UK Government to reach its ambitious renewables targets and will generate renewable electricity for British homes, whilst creating jobs and attracting significant investment to the UK. The project is being built in three 1.2 GW phases, with Dogger Bank C being third in line. Dogger Bank C will require total capital expenditure of around GBP 3 billion, including the capex for the offshore transmission station (OFTO).

The project is located over 130 km off England’s north-east coast.

Due to its size and scale, the site is being built in three consecutive phases: Dogger Bank A, Dogger Bank B and Dogger Bank C. Each phase will have an installed capacity of 1.2 GW and is expected to generate around 6 TWh of electricity each annually. In total the Dogger Bank Wind Farm can provide approximately 5% of the UK’s estimated electricity generation.

Dogger Bank Wind Farm was awarded exclusive development rights 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 (LCCC) through the UK Government’s Contract for Difference (CfD) auction:

• Dogger Bank A (1,200MW) with a strike price of £39.65/MWh (in 2012 prices, CPI-indexed) for delivery in 2023/24. 
• Dogger Bank B and C (1,200MW each) with strike prices of £41.61/MWh (in 2012 prices, CPI-indexed) for delivery in 2024/25.

Onshore cable installation civils works for Dogger Bank C will start in Q1 2022; construction of the onshore convertor station will commence in Q2 2022. Offshore export cable installation will commence in Q1 2024; Offshore platform installation will commence in Q2, 2024; foundation installation will commence in Q3, 2024; Turbine installation will commence in Q2, 2025. First power is anticipated in Q3, 2025 and full power in Q1, 2026. 

Dogger Bank C will connect to the grid at Lackenby.

Onshore construction is currently underway for Dogger Bank A and Dogger Bank B, with offshore construction on Dogger Bank A due to begin in Q2 2022. First power is expected in Summer 2023 and Summer 2024 for Dogger Bank A and B, respectively, with commercial operations to follow around six months later. 

Equinor powers over one million European homes with renewable electricity from offshore wind. In the UK, the company currently operates three offshore wind farms, including the world’s first floating wind farm, Hywind Scotland. As well as progressing Dogger Bank, Equinor plans to extend two of its UK wind farms, doubling its offshore wind capacity off the coast of Norfolk.

SSE Renewables is a leading developer, owner and operator of renewable energy across the UK and Ireland, with a portfolio of around 4 GW of onshore wind, offshore wind and hydro. Part of the FTSE-listed SSE plc, its strategy is to drive the transition to a net zero future through the world class development, construction and operation of renewable energy assets.