Masdar nails London Array finance

Masdar has refinanced its 20% stake in the London Array offshore wind project after reaching a deal with an international group of lenders that includes the UK’s Green Investment Bank (GIB).

The Abu Dhabi state-owned clean-energy venture said it has secured a 12-year limited-recourse project finance deal for £266m ($424m) on its stake in the 630MW  first phase of the Thames Estuary plant.

The lenders are the Bank of Tokyo-Mitsubishi UFJ, KFW-IPEX Bank, Siemens Bank, Sumitomo Mitsui Banking Corporation, and the UK GIB.

The UK government-backed GIB said its share of the refinancing amounts to £58.6m.

GIB CEO Shaun Kingsbury said the capital released by the deal will be ploughed back into the UK offshore sector by Masdar – in line with the bank’s strategy of helping investors to move on.

Kingsbury said: "The UK has taken an early lead in realising the promise of offshore wind. A number of domestic and international parties have moved quickly to develop and construct several of the world’s largest offshore wind farms which are now operating efficiently and profitably in our waters.

“The UK government has ambitions to go further and to see the development of new projects. For that to happen it is important that those best placed to take early stage development and construction risk can get their money out of operating assets and reinvest it.”

The GIB in April signed a memorandum of understanding with Masdar to explore joint investment opportunities in British clean energy projects.

Masdar said the London Array deal marked the first time that a limited-recourse structure has been used for an unincorporated joint venture in the renewables industry.

Dong Energy with 50% and E.ON with 30% are Masdar’s fellow stakeholders in the giant project.

Masdar CEO Sultan Ahmed Al Jaber said: “Reaching financial close on a project of this scale and complexity marks another milestone in Masdar’s dedication to breaking new ground within the renewable energy sector.

“While the London Array financing is a great success, it is critical to the future of the renewable energy industry that we see a deepening level of engagement from the financial sector.

“We need increased collaboration between institutional investors and the renewable energy industry to drive down cost and accelerate adoption.” 

The Siemens-equipped London Array was completed earlier this year and inaugurated by UK Prime Minister David Cameron in July.

A London Array second phase, which is currently seeking approval, would take the total project to 870MW.