Policy & Market


Update: Bard 1 backer walks away from troubled project

SüdWestStrom washed its hands of the 400MW Bard Offshore 1 because construction delays meant it was not allowed to invest in the project quickly enough, the group tells Recharge.

In July 2010, SüdWestStrom — a collective of German municipal utilities — committed to buying a 70% equity stake in the project, with a group of investors backed by WV Energie to buy the remainder.

SüdWestStrom was ready to pour in up to €500m ($641m), but it had two demands, says managing director Bettina Morlok.

The first was that the Bard group would find surer footing. “It was clear to us they were too small, and didn’t have the capital to survive a project like this on their own,” Morlok says.

For a time, the company appeared to be stabilising. HypoVereinsbank — Germany’s sixth-largest private bank, owned by Italy’s UniCredit — had thrown its weight behind Bard 1 as sole project financier and legal owner of Bard Offshore 1.

But it soon became clear that the second demand — being able to deploy its capital within a reasonable time frame — would not be met.

SüdWestStrom initially believed that it would be able to buy into Bard 1 as early as mid-2011, when it was slated for completion. But as construction dragged on, it was told that it may not be able to buy in until completion, possibly as late as 2014, Morlok says.

Its decision to walk away frees up capital that SüdWestStrom can deploy elsewhere, with an immediate focus on onshore wind farms in southern Germany. But the group has not given up on offshore wind, and is in early negotiations for stakes in other projects.

Bard 1, which is being built farther from shore and in deeper water than any other existing wind farm, has been riddled with problems and is at least two and a half years behind schedule. About 25 of Bard Group’s 5MW turbines are in place.

HypoVereinsbank reportedly sank an initial €1bn in debt finance into Bard 1 in 2008, and has had to loosen its purse strings repeatedly to keep the project moving ahead.

Earlier this year, the bank increased its loss provisions for Bard 1 to €710m due to construction delays. One estimate sees Bard 1 ultimately costing €2.9bn, even though it will probably sell for less than €2bn.

It is understood that HypoVereinsbank has engaged in several inconclusive discussions with other potential buyers, both German and international.

WV Energie tells Recharge it is discussing the situation and "will not make a rash decision". But for now the group is still interested in buying into the project and is willing to talk with other partners.