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The European Offshore Wind Industry Key Trends and Statistics 1st half 2016

Industry
Typography

1. Turbines Grid-Connected 

Ownership

Four commercial wind farms connected wind turbines to the grid totalling 511 MW. Figure 2 shows the share of connected MW per developer from 1 January to 30 June 2016 taking into account each company’s share in the projects.

Multiple owners exist at the sites with grid connections. Power producers still account for the majority share, but infrastructure and pension funds account for 25.2% of the installed MW this year.

Wind Turbines Ownership

All 114 turbines grid-connected in the first half of 2016 were provided by Siemens. They ranged in size between 3 MW and 6 MW. The average wind turbine installed during the first six months of the year is  4.8 MW, representing a 15% increase over the same period last year. Only three out of the 13 sites under construction in 2016 will use 3MW class turbines, with two sites using 4 MW turbines, seven sites using 6 MW class turbines, and one site using the first 8 MW turbines.

2. Construction Carried Out Summary

During the first six months of the year work was carried out on 13 offshore wind farms.Foundations and turbines were installed and/or grid connected in four coun- tries: Belgium, Germany, the Netherlands and the United Kingdom.

 

Offshore Wind Installations

Seven out of 13 projects with construction activity are new starts in 2016, representing 2.9 GW of additional capacity upon their completion. As of 30 June, the status of projects with construction activity is as follows:

3. Financing Activity

New investments in offshore wind in Europe continue to grow strongly during the first half of 2016. A total of seven projects across four countries reached Final Investment Decision (FID), for an estimated record-breaking investment value of around €14bn. This will finance 3.7 GW of new capacity, a doubling from the first half of 2015 (1.8 GW).

Debt Finance

Power producers continue to be substantial providers of equity capital. Very few power producers have so far made use of non-recourse finance structures, and this trend has continued throughout 2016. Consequently, the markets were heavily dominated by balance sheet financing

Project finance has remained an important tool given the scale of the offshore wind sector. This is the case in particular for independent power producers, new market entrants and refinancing transactions. Non-recourse debt stood at €4.7bn, with the successful closing of Beatrice (588 MW) offshore wind farm, and the refinancing of Luchterduinen (129 MW) and Dudgeon (402 MW) offshore wind farms.

Financial markets have supported the offshore wind sector through a variety of investors and financial structures. More commercial banks are entering  the  sector, with larger financing volumes. New lenders also include institutional investors, who have been attracted to the debt side in the recent years. While liquidity levels have been on the rise, debt-to-equity ratios have remained in the margins of 70:30, indicating no appetite for more aggressive structures.

Government-supported banks, export credit agencies and multilateral banks remain important, in particular for larger Greenfield projects. Offshore wind projects have featured predominantly in the European Investment Bank (EIB) financing, backed also by the European Fund for Strategic Investments (EFSI). Notably in the first half of 2016, the EIB alone provided €674m for the financing of Beatrice (588 MW) offshore wind farm.

Equity Finance

Equity markets have remained active, with two main factors at play: the corporate asset disposal of power producers with a view to freeing up capital, and the need to refinance projects in operation. In total, 1.6 GW have been divested during the first half of 2016, the majority during pre-construction phase. Transactions during this period have reflected a diversifying equity mix with both corporate, financial and in particular overseas investors. Notable deals include:

Project finance has remained an important tool given the scale of the offshore wind sector. This is the case in particular for independent power producers, new market entrants and refinancing transactions. Non-recourse debt stood at €4.7bn, with the successful closing of Beatrice (588 MW) offshore wind farm, and the refinancing of Luchterduinen (129 MW) and Dudgeon (402 MW) offshore wind farms.

Financial markets have supported the offshore wind sector through a variety of investors and financial structures. More commercial banks are entering  the  sector, with larger financing volumes. New lenders also include institutional investors, who have been attracted to the debt side in the recent years. While liquidity levels have been on the rise, debt-to-equity ratios have remained in the margins of 70:30, indicating no appetite for more aggressive structures.

Government-supported banks, export credit agencies and multilateral banks remain important, in particular for larger Greenfield projects. Offshore wind projects have fea- tured predominantly in the European Investment Bank (EIB) financing, backed also by the European Fund for Strategic Investments (EFSI). Notably in the first half of 2016, the EIB alone provided €674m for the financing of Beatrice (588 MW) offshore wind farm.

Equity Finance

Equity markets have remained active, with two main factors at play: the corporate asset disposal of power producers with a view to freeing up capital, and the need to refinance projects in operation. In total, 1.6 GW have been divested during the first half of 2016, the majority during pre-construction phase. Transactions during this period have reflected a diversifying equity mix with both corporate, financial and in particular overseas investors. Notable deals include:

• China Three Gorges’ acquisition of an 80% stake in Meer wind (288 MW) offshore wind  farm

• SDIC Power of China’s acquisition of Repsol’s offshore wind business and consequently a 100% stake in Inch Cape (784 MW) offshore wind farm and a 25% stake in Beatrice (588 MW) offshore wind  farm

• PKA and KIRKBI A/S jointly acquiring a 50% stake in Burbo Bank Extension (258 MW) wind farm

Transmission Assets

Investments in transmission assets in the first half of 2016 stood at €1.2bn. In June 2016, TenneT issued its second consecutive €1bn green bond. The proceeds will be used to finance four offshore wind transmission projects in the German North Sea for a total capacity of 3.5 GW. Earlier this year, Wester most Rough transmission assets reached financial close in the UK.

Outlook for H2 2016 And 2017

WindEurope expects €5.2bn and 1.4 GW in Final Investment Decisions (FIDs) by June 2017. This compares to €10bn and 2.2 GW for the same period last year. Transactions that are approaching financial close are Rentel (300 MW), Norther (370 MW), Deutsche Bucht (252 MW), EnBW Hohe See (492 MW)

Credit: WindEurope (windeurope.org)