Generating power for thousands of European households by blowing in the wind

Societe Generale will continue to explore opportunities around windfarms and renewable energy following successful involvement in several high-profile projects in the space for the benefit of hundreds of thousands of households.

Most notably, the bank accompanied the Dudgeon windfarm in the financing of what will become one of the most important wind energy generators in the UK.

Once complete, by the end of 2017, Dudgeon will see 67 turbines situated 32km off the North Norfolk coast.  These are expected to generate power for 410,000 UK households and will replace 893,000 tonnes of CO2 per annum. Importantly, more than 50% of the total costs of construction will be fed back into the UK economy.

Dudgeon is the first offshore wind project to be completed under the UK government’s Contract for Difference (CFD) scheme, which is designed to incentivise investment in low-carbon energy by ensuring future revenue streams are stable and predictable.  This is achieved through a simple contract; when the market price for electricity generated exceeds a pre-agreed limit, the generator pays money back to a low carbon contracts company (LCCC), but when the price generated falls below the pre-agreed minimum, the LCCC pays back to the generator.

These contracts are a key aspect of the UK government’s drive to reduce carbon emissions by 80% by 2050.

CFDs are currently only applicable to offshore wind projects, but, as part of a plan to double its financing for renewable energy over the five years to 2020, Societe Generale is also looking at a host of other options.

According to Allan Baker, Global Head of Power Advisory & Project Finance at Societe Generale, the bank is actively involved in projects in geo-thermal, solar and floating offshore wind. “We are looking at tidal, but financing of tidal is some way in the distance at the moment,” he added.

Dudgeon alone raised £1.3bn with the debt maturing in 2032. Allan Baker hailed it as, “the first offshore wind deal on which Societe Generale has acted as both advisor and lender.”

Beyond filling both those roles, the deal was also the first time the UK platform had operated as hedging co-ordinator.

A European leader in windfarm financing

"The bank is actively involved in projects in geo-thermal, solar and floating offshore wind."
Allan Baker, Global Head of Power Advisory & Project Finance at Societe Generale

Dudgeon has been accompanied by a host of other recent successes in the windfarm space, including Beatrice, a development of 84 turbines off Scotland’s east coast; and Clover, a portfolio of three separate onshore farms (Rusholme, Glassmoor II and Green Rigg) acquired by CGN using bridge financing from SG Hong Kong and a subsequent project finance take out by Societe Generale’s London team.  Societe Generale acted as mandated lead arranger and hedge provider for both.

Outside of the UK, the bank has also been involved in leading the financing for Valorem, an established renewable energy producer in France; Rentel a 309MW (42 turbine) offshore wind farm in Belgium; and Merkur, a 66-turbine offshore farm in the German North Sea. Further projects are on the horizon, including Kriegers Flak in the Baltic Sea off Denmark and Borssele in the Netherlands, where Societe Generale is again acting as financial advisor.