MUFG is pleased to confirm the financial close of the long-term limited-recourse financing for the Seagreen Wind Energy Limited. This follows SSE Renewables taking a final investment decision to proceed with the 1,075MW Seagreen 1 offshore wind farm located off the Angus Coast in Scotland.
The successful closing of this financing marks the end of a two-year mandate, during which MUFG supported SSE Renewables as Financial Advisor in optimising their Contract-for-Difference (CfD) strategy, in exploring funding options beyond the existing boundaries of subsidised renewables' project financing and in navigating through the challenges and uncertainties derived from a global pandemic towards financial close.
Upon completion, this £3.0bn offshore wind electricity generation project will be amongst the first offshore wind projects to be equipped with 10MW turbines whilst raising limited-recourse financing, with 114 x V164-10MW wind turbines supplied by MHI Vestas Offshore Wind, capable of delivering power to one million homes in aggregate annually and offsetting around 1.6m tonnes of CO2 emissions each year.
Seagreen was awarded CfDs for an aggregate capacity of 454MW during the third round of allocations. With the lending community having historically financed fully-contracted projects under the CfD framework, Seagreen, in partnership with MUFG, engineered a new approach to cashflow risk mitigation, utilising the 40% contracted output as a revenue stabilisation mechanism, allowing Seagreen to leverage the remaining output exposed to electricity power prices whilst providing lenders with sufficient certainty on cash flow projections.
Building on SSE plc's track record in raising green and sustainable capital – being the UK's largest corporate issuer of green bonds – and with support from MUFG, Seagreen's debt financing obtained Green Loan certification from Sustainalytics. This achievement is testimony to SSE's sustainability strategy and focus on Environmental, Social and Governance (ESG) principles and to MUFG's market leading position in issuing, underwriting and arranging Green, Social, Sustainability and ESG loans and bonds.
Guillaume Leprieur, Director within MUFG EMEA's Power and Renewables' team responsible for Seagreen's advisory mandate said:
"We are proud to have advised Seagreen Wind Energy Limited and SSE Renewables in their strategy to bid for a CfD in 2019 and in closing the senior financing of the Project, and congratulate the team for achieving this important milestone."
Stephen Jennings, Head of Energy and Natural Resources at MUFG EMEA said:
"We are delighted to have supported SSE Renewables and Seagreen Wind Energy Limited over the past two years.
"This project is a fantastic achievement which pioneered many firsts and we are proud to have brought innovative solutions to the table, meeting the needs of our client and adding to our strong track record in the renewables space."
Barry O'Regan, Finance Director of SSE Renewables, said:
"We are delighted to have taken a final investment decision on the Seagreen offshore wind farm, and we thank everyone involved including the team at MUFG for their support in reaching this important milestone. We are looking forward to delivering this important low carbon infrastructure project for the UK.
"Investments like Seagreen are exactly what we need to get on the right road to a green economic recovery, creating green jobs and generating the zero-carbon power we need to reach net zero."
MUFG acted as Financial Advisor, Mandated Lead Arranger, Hedging Bank, Interceditor and ECA Agent, Security Trustee, LC Issuing Bank and mezzanine Private Placement Agent for this project.
MUFG's expertise in the Offshore Wind and Renewables financing is widely recognised. MUFG was named as the number one financer of clean-energy projects in 2018, according to Bloomberg's annual New Energy Finance league table. MUFG was also named as the winner of two awards at the European Wind Investment Awards, acknowledging work done in the European wind sector during 2019, which includes involvement in financing the world's largest wind farm, Hornsea 1, and the first offshore wind project ever procured in France, the Saint-Nazaire offshore wind farm.