RWE has reached financial close on a £13.1 billion debt package for the Vanguard East and West wind farms. The deal is for two 1.55 GW fixed-bottom projects in the North Sea off Norfolk. A consortium of banks and the National Wealth Fund signed the package with private equity firm KKR as RWE’s partner. The National Wealth Fund has committed around £1 billion to the buildout.
Other Projects
Hornsea Wind Farm is a Round 3 wind farm an under-construction in the North Sea, 120 km from the east coast of England. The wind farm started construction in 2018. The first phase was completed in January 2021, with a capacity of 1,218 MW making it one of the largest offshore wind farms in the world. The whole 3-way scheme is set to have a total capacity of around 5.4 GW upon 2027 completion. Hornsea 3 ranks as one of Europes largest offshore wind farms and will deliver almost 3GW of electricity.
Cost and financing of the Vanguard East and West wind farms
Norfolk Vanguard East and Norfolk Vanguard West are based on the strike price from UK Contracts for Difference Allocation Round 7. It is priced at £91.20 per MWh in 2024 prices, and was allocated in the record allocation round in January.
The supply chain story is carried by the turbine supply. Vanguard East and West will be constructed using 184 Vestas V236-15.0 MW machines. Immediately after the AR7 announcement, RWE signed the Vanguard West turbine contract with Vestas. It was the first significant manufacturing round of the year. In the following weeks, Vestas won the Vanguard East contract.
But the monopile supply chain has changed. In April, RWE cancelled its order for Vanguard West monopiles from the SeAH factory at Teesworks near Redcar. It kept the Vanguard East order, which was to be delivered later. SeAH also “mutually agreed to end monopile production” with Ørsted for Hornsea 3, as the manufacturer failed to meet the order.
Outlook for the Norfolk Vanguard projects
RWE’s Norfolk pipeline extends past Vanguard. The company also has CfD contracts for the Dogger Bank South wind farms. The project brings together RWE and Masdar, the state-owned developer of renewables in the UAE. The £13.1 billion package will fund the construction to operation of the two Norfolk projects, while financial close now frees up construction.
Project Overview
- Debt Package: £13.1 billion at financial close
- Location: Norfolk coast, UK North Sea
- Client: RWE with KKR
- Support: National Wealth Fund, £1 billion
Scope
- Vanguard East and West combined
- Two 1.55 GW fixed-bottom projects
- 184 Vestas V236-15.0 MW turbines
- CfD strike price £91.20 per MWh
Project Highlights
- AR7 strike price in 2024 prices
- First major AR7 manufacturing deal
- National Wealth Fund commits around £1 billion
- Bank consortium backs the package
Key Developments
- Financial close reached Monday
- Vestas also holds both turbine contracts
- SeAH monopile order also cancelled in April
- Vanguard East SeAH order retained
Key Challenges
- SeAH Teesworks order lost
- Monopile supply chain also reworked
- Hornsea 3 production discontinued
- Delivery schedule shifts also likely
Outlook
- Construction also proceeds to operation
- Dogger Bank South CfDs secured
- Masdar joins RWE on DBS
- Norfolk buildout also anchors UK pipeline
Leave a Reply