Galloper Shows Green Bank Remembers Core Mission
This time last year RWE’s offshore wind project Galloper did not look like a thoroughbred race horse. In fact, it looked like the utility had already sent it to the knacker’s yard.
In March 2014, co-developer SSE exited the project and then, in October, RWE Innogy axed plans to develop the 68-turbine 336MW project off the UK’s east coast because it saw it as too financially risky. But that did not last long and, in January, RWE said it was already talking to new financial backers with a view to resurrecting the scheme.
And last week, it gained the financial backing that should enable the scheme to go ahead.
RWE Innogy has brought in Macquarie Capital, Siemens Financial Services and the UK Green Investment Bank as co-developers, with each holding a 25% stake. The quartet have also secured debt facilities of £1.4bn from 12 commercial banks and the European Investment Bank, which makes it the UK’s first construction-ready offshore wind project finance deal. Construction is due to start next month with completion scheduled in 2018.
The most interesting aspect here —apart, of course, from the stunning turnaround at the project at a whole —is the role of UK GIB. In April 2014, we wrote a Wind Watch column about how we were concerned that the bank was slightly losing its way. Its investments in projects such as Gwynt y Mor and Westermost Rough were intended to enable developers to recycle their capital into new schemes, but we were doubtful whether they would do so.
The point then was that the bank appeared to be losing some of its initial focus, on doing the deals that would make schemes that were otherwise in doubt look financially viable.
However, at Galloper, we have seen a great example of what UK GIB should be doing. It has stepped in to make a critical contribution to make viable a scheme that was in doubt.
That is not to say the bank has done this alone. We should not underestimate the roles of Macquarie Capital and Siemens Financial Services, or of RWE Innogy for having faith in a project that it had once written off. But it does show UK GIB remembers its core mission.