To Princess Amalia, a sister1 October 2009
Q7 (aka Princess Amalia) offshore wind farm was built by Econcern in 2007 and came on line in 2008. Now its sister project, Bligh Bank (aka Belwind) has been rescued from the wreckage of Econcern’s bancruptcy by backing from the Danish Export Credit agency, and in a slightly different form will go ahead as planned.
In May and June this year financing for the 275 MW Bligh Bank offshore wind farm was thrown into serious doubt when the project's main sponsor, pioneering renewables developer Econcern, filed first for bankruptcy protection in the Dutch courts and then for bankruptcy. But Dutch utility Eneco had bought some Econcern divisions and by 24 July had secured the backing of the Danish credit agency EKF, and with it new financing for the wind farm. Danish wind turbine manufacturer Vestas, the world’s largest, has since received a 165 MW offshore order from Belwind NV, Belgium, a company formed by Econcern’s development arm Evelop with a consortium of Belgian and Dutch investors specifically to develop Bligh Bank, which is located 46 km off the coast of Belgium near Zeebrugge. The contract for Phases I and II of the project is for 110x3MW Vestas V90 turbines, new total project capacity 330 MW. The new contract has deviated somewhat from the original plan, which was envisaged as being for 55x5 MW turbines, but 5 MW is a size that Vestas do not make. The contract for shore connection to the Belgian grid has gone to Nexans who will supply and install 52 km of 170 kV high voltage cable, with an optical fibre insert.
Vestas’ contract covers design, delivery, installation, testing and commissioning of the 55 V90s as well as a five-year service and availability agreement. Delivery and installation of the turbines, up to full power production, is expected to take place during 2010 with final completion expected in early 2011. At the time of writing construction had started, two of the monopiles having been put in place.
Van Oord Dredging and Marine Contractors bv are responsible for engineering, procurement and construction. ‘We are proud to be supplying turbines for the Bligh Bank offshore wind farm. Furthermore, we are very pleased to see this group of investors showing their confidence in the potential of offshore wind and we look forward to securing them a successful implementation of the project’ said Anders Soe-Jensen, president of Vestas Offshore. ‘Vestas is a leading, global player in the wind market and we have been driving the offshore wind industry from the very beginning. Being in the offshore market requires some very specific knowledge and skills – both of which Vestas possesses – and the Bligh Bank order truly shows Vestas’ dedication and commitment to remain strongly focused on this market.’
Frank Coenen of Belwind stated: ‘This 165 MW wind farm is the first phase of the 330 MW Belwind project. We look forward to working together with Vestas and Van Oord on the construction of the project which is a major step forward in realising the Belgian renewable energy targets. We are proud of our investors and banks, who enabled us to realise this investment in difficult financial times.’
Finance and revenue
The project is financed on a non-recourse basis. This is the first offshore transaction to be project financed since the financial crisis started and was made possible by the credit risk guarantees provided by Eksport Kredit Fonden (EKF), the Danish Export Credit Agency, and financing of r300 million provided by the European Investment Bank. Furthermore, a package of structured credit facilities has been provided by ASN Bank, Dexia Bank Belgium, Dexia Credit Local and Rabobank International.
Lenders’ engineer Mott MacDonald marked the financial close on what is in fact the largest offshore wind farm to be financed on a non-recourse basis in August. The management and engineering consultancy was appointed as lenders’ engineer by the various banks listed abov together with PMV, EKF and the European Investment Bank (EIB) for the r545 million credit facilities they arranged for the project.
Mott MacDonald will analyse the project, which has a total investment cost of r610 million, throughout the design and construction phases to identify any risks, and will make recommendations to mitigate those risks. In addition to providing a due diligence report, Mott MacDonald's team has provided technical assistance to the lenders up to financial close including negotiations of the main agreements for the contractors.
Vestas Offshore and marine contractor Van Oord will build, and Vestas will operate, the project under a medium term operations and maintenance contract. The electricity generated will be sold to Electrabel NV under a long term contract while the green certificates allocated to the project under Belgian law will be sold to Elia, the grid operator, under prevailing regulations (r107 per MWh for the next 20 years of operation).
The Belwind team includes many individuals and project partners who have gained useful experience from the Q7 (Princess Amalia) windfarm project, and to ensure that this knowledge would not be wasted a detailed ‘Lessons Learned’ register was set up and continuously updated during its construction. The maintenance of this register has become an integral part of the development and construction process for these projects. At the start of the Bligh Bank enterprise, the register was consulted and measures taken to help prevent the repetition of mistakes. It contains lessons learned in the fields of design, contracting, financing and planning, of which the following is a sample.
• Health, safety and environmental considerations were integrated in the early design process, to ensure adequate measures are taken where necessary..
• The design was based on the O&M strategy for the windfarm (for example, access systems)
• Wind farm layout planning should include both optimisation for production (wake studies) and construction (material cost and installation process). Example – it turns out that the shortest cable layout is by no means the best if it has crossover points.
• The location of vulnerable HV components was transferred to the substation onshore.
• The first pile driven into the seabed was equipped with a wireless internet connection.
• The insurance partner is in house and part of the design team, making it possible to calculate different scenarios very quickly. For example – how does a contract for standby jack-up (available within 6 weeks) affect the business interruption premium?
The object is to ensure that Belwind has been designed on the basis of experience with proven technical solutions, making active use of the Princess Amalia lessons learned register. This know how is kept up-to-date and is to be transferred to future projects.