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Financial close reached for Deutsche Bucht

By: Tom Russell 21/08/2017 Northland

General Windfarms

Northland Power Inc. (Northland) has announced that the €1.3bn Deutsche Bucht offshore wind farm project has reached financial close, with all of the equity contributed to the project and all debt required for the project now fully committed by the project lenders.

Northland owns 100% of the 252MW offshore wind farm which will be located in the German North Sea. It was originally developed by Highland Group Holdings Ltd. Northland completed its acquisition of the project last week.

Approximately 75% of the project's required costs will be provided from a €988m non-recourse construction and term loan and related loan facilities from ten international commercial lenders. Northland confirmed that financing was oversubscribed.

The lending group comprises Banco Santander, CIBC, Commerzbank, Helaba, KfW IPEX-Bank, National Bank of Canada, Natixis, Rabobank, Société Générale, and Sumitomo Mitsui Banking Corporation. The total estimated project cost is approximately €1.3bn (approximately CAD $1.9bn).

John Brace, CEO of Northland commented: "In only a few years Northland has become a leader in European offshore wind, as demonstrated by our 100% ownership of this high-quality project. We would like to thank the project's financiers and advisors for their thoroughness and proficiency. This achievement is another example of Northland's commitment to delivering sustained growth and exceptional results."

Deutsche Bucht is Northland's third offshore wind project and it is located 77km from another of Northland's wind projects, Nordsee One. Once completed, Deutsche Bucht is expected to generate enough sustainable energy to meet the needs of over 178,000 households.

It is entitled to receive a fixed feed-in tariff subsidy for approximately 13 years under the German Renewable Energy Act ("EEG"), equating to approximately €184/MWh for 8 years and EUR €149/MWh for the remainder. The majority of the project returns are expected to be earned during the 13 year feed-in-tariff period, with the remainder of the expected returns earned in the later years from the German wholesale electricity market.

The construction of the wind farm is expected to begin shortly, with project completion expected by the end of 2019. Like Northland's 600MW Gemini project, it will use a two-contract construction strategy. MHI Vestas Offshore Wind (MHI Vestas) will supply and install the project's 31 V164 8.0 MW wind turbines.

Van Oord, a Dutch marine contractor and the balance of plant contractor for Gemini, has now been awarded the balance of plant contract for the project. The scope consists of the design, engineering, procurement, construction and installation of the foundations, inter array cables and offshore high voltage station, and the transportation of the wind turbines.

The company will deploy its offshore installation vessel, Aeolus, for the installation of the wind turbine foundations and cable-laying vessel, Nexus, to install the electrical infrastructure. Offshore installation is envisaged to start in the second half of 2018.

MHI Vestas will also maintain the wind turbines under a long-term service contract. Deutsche Bucht will be connected to the 800MW BorWin Beta offshore converter station which has already been constructed.

The project is also investigating the development of two additional demonstration turbines utilising suction bucket foundations. The final investment decision for these two turbines is subject to achieving certain development milestones. If built, they will contribute an additional 17MW of capacity, and bring the total project cost to approximately €1.4bn (CAD $2.0 billion). Northland's investment would increase to approximately $425m, funded by cash and corporate debt, with the balance of incremental costs funded by additional project debt.

For more information, follow the links provided or view the project on our interactive map.

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Financial close reached for Deutsche Bucht

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