Northland Power’s Deutsche Bucht Offshore Wind Farm Reaches Financial Close
August 18, 2017
Northland Power Inc. (“Northland”) (TSX: NPI) (TSX: NPI.PR.A) (TSX: NPI.PR.B) (TSX: NPI.PR.C) (TSX: NPI.DB.B) (TSX: NPI.DB.C) today announced that the EUR1.3 billion Deutsche Bucht (“DeBu”) 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 252 MW offshore wind farm which will be located in the German North Sea.
Approximately 75% of the project’s required costs will be provided from a EUR988 million non-recourse construction and term loan and related loan facilities from ten international commercial lenders. Reflecting the strength of Deutsche Bucht, the 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 EUR1.3 billion (approximately CAD $1.9 billion).
“Today’s announcement represents an important milestone for Northland’s offshore wind strategy,” noted John Brace, CEO of Northland. “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.”
DeBu is Northland’s third offshore wind project. It is located 77 km from Northland’s other German offshore wind project, Nordsee One. Once completed, DeBu is expected to generate enough sustainable energy to meet the needs of over 178,000 households. It will reduce C02 emissions by over 360,000 tonnes per year, supporting the German government’s CO2 reduction targets.
DeBu is entitled to receive a fixed feed-in tariff subsidy for approximately 13 years under the German Renewable Energy Act (“EEG”), equating to approximately EUR184/MWh for 8 years and EUR149/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 DeBu is expected to begin shortly, with project completion expected by the end of 2019. Like Northland’s 600 MW Gemini project, DeBu 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 been awarded the balance of plant contract for the project. They will deploy their offshore installation vessel, Aeolus, for the installation of the wind turbine foundations and cable-laying vessel, Nexus, to install the electrical infrastructure. MHI Vestas will also maintain the wind turbines under a long-term service contract. DeBu will be connected to the 800 MW BorWin Beta offshore converter station which has already been constructed.
Advisors in connection with the project financing were Green Giraffe (financial), CMS Hasche Sigle (financing – legal), Hogan Lovells (sponsor – legal), JCRA (hedging). The banks were advised by Watson Farley Williams (legal), SgurrEnergy (technical), Benatar (insurance), Mazars (model audit) and EY (tax).
NORTHLAND POWER’S OFFSHORE WIND STRATEGY
Northland Power’s objective in Europe is to build a leading offshore wind ownership and operations platform with a full range of operating, development and investment activities, supporting further growth on a continental basis. The acquisition of the DeBu project contributes to the further achievement of this objective.
Europe is a key focus for Northland, given its sizable share of the world economy and strong support for renewable energy policy.
DeBu will leverage Northland’s Gemini and Nordsee One experience and will bring Northland’s offshore net operating capacity to over 900 MW (net to Northland) over the next three years.