Renewable Energy Finance: EnBW, Iberdrola achieve key milestones for their respective flagship offshore wind projects in Germany

published on 21 June 2023

EnBW has secured a $544mn syndicated loan from a consortium of banks, including LBBW, KfW IPEX-Bank, and Commerzbank, for the construction of the 960 MW He Dreiht offshore wind farm in the North Sea. Construction of the wind farm began in Mar’23, following the acquisition of $648mn from the European Investment Bank (EIB) in the same month. With the current financing, which is guaranteed by the Danish export credit agency EIFO, EnBW expects to bring the project into commercial operation by the end of 2025. Meanwhile, Iberdrola has made progress on its second major offshore wind project in the Baltic Sea, the 476 MW Baltic Eagle, by signing a 50 MW corporate power purchase agreement (PPA) with steel manufacturer Stahl Holding Saar. The 15-year contract follows Iberdrola's previous agreements with Amazon, Salzgitter Group, and Holcim for PPAs with the project. This PPA will support Iberdrola in bringing the project to commercial operation by the end of 2024.

German Offshore wind landscape: Despite facing supply chain constraints and increased financing costs, the country is witnessing a rising demand from developers for zero-subsidy offshore wind projects. In a recent auction involving around 7 GW of projects, multiple developers have demonstrated their confidence in the market by submitting bids without subsidy. The rising interest is attributed to the country's surging electricity demand, which has been further amplified by the halt in fossil fuel energy imports due to the Russia-Ukraine war. Consequently, operation of several combined cycle gas projects in the country has been affected, prompting developers to seize the opportunity and focus on offshore wind projects to meet the current market demand. To support and foster this increasing interest, the country recently increased its offshore wind targets, aiming to achieve a minimum of 30 GW by 2030, at least 40 GW by 2035, and a minimum of 70 GW by 2045.

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.

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