TIDMSSE
RNS Number : 3494U
SSE PLC
02 December 2021
SSE plc
DOGGER BANK C REACHES FINANCIAL CLOSE
SSE Renewables, together with its joint venture partner Equinor,
has reached financial close on Dogger Bank C, the third phase of
what will be the world's largest offshore wind farm.
The two companies are already constructing the first two phases
of Dogger Bank Wind Farm, a ground-breaking project off the north
east coast of England which, once all three phases are complete in
March 2026, will be the largest in the world.
Total investment in Dogger Bank Wind Farm will be around GBP9
billion (around GBP3 billion for phase C including offshore
transmission). SSE's share of investment forms part of its recent
Net Zero Acceleration Plan, which included fully funded GBP12.5bn
strategic capital investment plans to 2026 alongside ambitious 2031
targets, aligned with net zero and 1.5 degrees. Large scale
projects like Dogger Bank C are made possible by the financial
strength and shape of the SSE group with its integrated net zero
infrastructure strategy.
Dogger Bank C has a capacity of 1,200MW and will generate around
6,000GWh a year. In total, Dogger Bank will produce enough clean,
renewable electricity to supply 5% of the UK's demand, equivalent
to powering six million UK homes. SSE is leading on construction
across all three phases and Equinor will operate the wind farm
thereafter.
On 2 November 2021 SSE and Equinor announced the sell down of a
combined 20% share in Dogger Bank C to Eni (10% each) for a total
consideration of GBP140m. Eni will enter the asset effective from
financial close of project financing. The transaction is expected
to complete in Q1 2022, subject to regulatory and lenders approvals
and customary purchase price adjustments. Once the transaction is
complete, the new overall shareholding in Dogger Bank C will be SSE
Renewables (40%), Equinor (40%) and Eni (20%).
SSE is currently leading the construction of more offshore wind
than any other company in the world and aims to enable the delivery
of over 25% of the UK's 40GW offshore wind target by 2030, whilst
also exporting its capabilities overseas. SSE's recent Net Zero
Acceleration Programme is targeting an increase of 4GW of
renewables installed capacity (net) over the 5 years to 2026,
doubling installed renewables capacity to 8GW (net). This provides
a platform for ambitious new 2031 targets including a fivefold
increase in renewables output to 50TWh, maintaining a sustained
renewables pipeline in excess of 15GW, and a trebling of SSE's
owned renewables capacity to over 13GW (net) from c.4GW today.
Dogger Bank Wind Farm is the largest of SSE Renewables' projects
currently in construction. SSE Renewables is currently also leading
the construction of the Seagreen offshore wind farm (1,075MW, SSE
Renewables share 49%), which will be Scotland's largest and the
world's deepest fixed bottom offshore wind farm on completion.
SSE's offshore wind development project Berwick Bank (up to 4.1GW,
fully owned) would also be one of the world's largest when
completed later this decade.
Alistair Philips-Davies, SSE Chief Executive , said: "It is a
fantastic achievement to be reaching financial close on the third
phase of the world's largest offshore wind project, just weeks
after COP26 concluded in Glasgow and today marks an important early
milestone in the delivery of our own Net Zero Acceleration
Programme. Our plans will enable delivery of over 25% of UK's 2030
40GW offshore wind target, whilst also expanding overseas,
delivering over 20% of upcoming UK electricity networks investment
and deploying the critical flexibility technologies to provide
security of supply.
"Construction is well underway on the first two phases of Dogger
Bank with work on the third phase already progressing and we look
forward to this ramping up in the New Year. As well as providing
clean, green power, Dogger Bank is enabling the planned GE blade
manufacturing plant in Teesside and a huge number of direct and
indirect jobs."
Further details
Dogger Bank Wind Farm was awarded exclusive development rights
in 2010 by The Crown Estate as part of its third seabed licensing
round. The project secured planning consent in 2015. In September
2019, Dogger Bank Wind Farm secured the following 15-year contracts
with the Low Carbon Contracts Company (LCCC) through the UK
Government's Contract for Difference (CfD) auction:
-- Dogger Bank A (1,200MW) with a strike price of GBP39.65/MWh
(in 2012 prices, CPI-indexed) for delivery in 2023/24.
-- Dogger Bank B and C (1,200MW each) with strike prices of
GBP41.61/MWh (in 2012 prices, CPI-indexed) for delivery in
2024/25.
Dogger Bank C will require total capital expenditure of around
GBP3bn, including offshore transmission capex in the range of
GBP900-1000m. SSE's equity investment to date of around GBP140m has
been repaid in full at financial close, with no equity
contributions forecast to be required until Q2 2025.
Dogger Bank C is being project financed with gearing of c.70%
for the generation assets. Gearing on the transmission facilities
is set at 90% of the forecast OFTO sale proceeds, in line with
standard market practice in the sector. Total senior debt
facilities is around GBP2.5bn plus ancillary facilities of around
GBP435m. The debt will be equity accounted and as a result will not
be consolidated on SSE's balance sheet.
With the strong interest from lenders, Dogger Bank C was able to
secure competitive terms. The final group of lenders, comprising 28
banks and 3 export credit agencies, includes experienced lenders in
the sector along with relationship lenders of both SSE and Equinor.
The majority of lenders are the same as for Dogger Bank A and
B.
Onshore cable installation civils works for Dogger Bank C will
start in Q1 2022; construction of the onshore convertor station
will commence in Q2 2022. Offshore export cable installation will
commence in Q1 2024; Offshore platform installation will commence
in Q2, 2024; foundation installation will commence in Q3, 2024; GE
Haliade-X 14MW Turbine installation will commence in Q2, 2025.
First power is anticipated in Q3, 2025 and full power in Q1,
2026.
Onshore construction is currently underway for Dogger Bank A and
Dogger Bank B, with offshore construction on Dogger Bank A due to
begin in Q2 2022. First power is expected in Summer 2023 and Summer
2024 for Dogger Bank A and B, respectively, with commercial
operations to follow around six months later.
SSE Renewables is currently leading the construction of more
offshore wind capacity than any other company in the world. As part
of its Net Zero Acceleration Programme, SSE plans to double its
installed renewables capacity to 8GW (net) by 2026 , supported by a
sustainable secured pipeline in excess of 15GW providing the
platform for 1GW (net) installed additions per year thereafter.
In addition to Dogger Bank Wind Farm, SSE Renewables is
currently leading the construction of the Seagreen 1 offshore wind
farm (1,075MW, SSE Renewables share: 49%) and is developing the
Berwick Bank offshore wind farm (up to 4,100MW, fully owned by SSE
Renewables) in Scotland, North Falls (up to 504MW, SSE Renewables
share: 50%) in England, and Arklow Bank Wind Park Phase 2 (520MW)
in Ireland. Onshore it is constructing the Viking wind farm (443MW)
in Shetland and has a further 1GW of onshore wind in
development.
SSE Renewables has recently expanded into Japan with the
formation of SSE Pacifico, a Joint Ownership Company, and
acquisition of an 80% stake in an offshore wind development
platform.
End
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