C-Power’s Thornton Bank wind farm reached financial close in November 2010, representing the world's largest offshore wind financing to date.

The €1.3 billion financing package [Transactions Database] allowed for the construction of the project’s phases II and III, which will bring the wind farm’s total capacity up to some 325MW. The deal also refinanced the first, 30MW phase of the project which closed a €153 million financing in May 2007.

The project is a collaboration between four Belgian shareholders - SRIW Environnement, Socofe, Nuhma, DEME - and two European strategic partners, EDF and RWE Innogy. The shareholders own the following stakes in the C-Power SPV:

• SRIW – 11.26 per cent
• Socofe – 11.26 per cent
• DEME – 11.67 per cent
• EDF – 18.28 per cent
• Nuhma – 20.8 per cent
• RWE – 26.73 per cent

Financing

The finance comprised €1,007 million in debt, of which €913 million are long term facilities (including contingencies).

The financing structure includes the following facilities:

• €869 million in long term facilities
• €44 million in contingent facilities
• €36 million in stand-by letters of credit
• €58 million in equity bridge facilities

The long term and contingent facilities have a tenor of 18 years including a three year construction period, with the equity bridge loan being lent across the construction period.

The €869 million in long term debt for the project breaks down in to three facilities:

• €450 million facility from the EIB, of which commercial banks take the risk on €255 million, the EIB takes commercial risk on €150 million and Danish ECA Eksport Kredit Fonden (EKF) guarantees €45 million
• €400 million facility of which €380 million is guaranteed by Euler Hermes, with all the debt provided by commercial banks
• €19 million uncovered commercial debt facility

The €44 million in long term contingent facilities is also provided by the club of commercial banks, whose commitments across all facilities for the project are as follows (with total risk taking in to account the Euler Hermes and EIB facilities in brackets):

• KBC - €97.97 million (€64.20m)
• Société Générale - €97.97 million (€61.65m)
• KfW Ipex-Bank - €97.97 million (€61.65m)
• Rabobank - €84.46 million (€71.16m)
• Commerzbank - €56.30 million (€41.10m)
• Dexia - €34.25 million (€34.25m)
• ASN Bank - €21.90 million (€3.92m)

The average weighted cost of debt across all facilities is fixed via swaps at 5 per cent, and the debt service cover ratio is 1.30 at a wind production estimate of P90.

The deal is also structured to include cash sweeps, while the contingency facilities are there to cover any potential cost overruns or delays.

C-Power was advised by Green Giraffe Energy Bankers (financing) and Allen & Overy (legal). The lenders were advised by Mott MacDonald (technical), Watson, Farley Williams and Loyens Loeff (legal), Jardine, Lloyd Thomson (insurance), with Kromann Reumert advising EKF and White & Case advising the EIB on legal matters, and Ernst & Young/AHB acting as Independent Chartered Auditor for the Federal Republic of Germany.

Construction

Construction has begun on phases II and III of the project situated 30km off the Belgian coast near Zeebrugge. Completion is slated for 2013.

The project will see 48 jacket foundations and 48 REpower 6M wind turbines (with rated power output of 6.15MW) installed, supported by the laying of infield cables and a second 150kV export cable, and the construction of an offshore high voltage substation.

The use of 6MW offshore wind turbines will be a world première: the 6M REpower offshore wind turbine is a more powerful evolution of the existing and currently operating 5M turbines. These 48 REpower 6M wind turbines will collectively have a total additional capacity of 295MW, bringing the completed wind farm total capacity to 325MW.

The project is the first whereby banks finance the installation and operation of 6M turbines.

Phase I 

The first phase of C-Power’s Thornton Bank wind farm was Belgium’s maiden venture in offshore wind. [Transactions Database]

The originally proposed project was rejected at the start of the decade, after failing to overcome local planning hurdles. The originally proposed site was located some 6km off the coast. In 2004 the project was approved for construction at the current site.

In June 2009, phase I was complete and the 30MW stage was fully commissioned. The pilot project consisted of 6 turbines of 5MW each.

Dexia provided the senior debt and Rabobank the mezzanine tranche on the first deal.