RWE-KKR Norfolk Vanguard windfarms draw £12.8bn from 35 lenders

The 2.8GW Norfolk Vanguard windfarms drew £12.8 billion of bank facilities from 35 international lenders for the project owned 50:50 by RWE and KKR, Net Zero Investor reported. The build will cost about £12 billion, making it the UK's biggest single investment in offshore wind. RWE describes the financing as the largest non-recourse project financing in UK offshore wind.

The package is £11.1 billion of cash facilities and £1.7 billion of ancillary facilities. The National Wealth Fund put in £1 billion, its largest offshore wind investment to date, and Euler Hermes and Denmark's EIFO supplied export credit cover. The equity commitments were not disclosed. As Private Wealth Daily previously reported, KKR bought a 50% stake in each project, and RWE leads construction.

Net Zero Investor reported that offshore wind deals are getting bigger and costlier and moving further out of reach for pension funds looking to invest directly. The revenue behind such a stake is contracted at a fixed, indexed price, which is what an allocator underwriting a fund position is buying.

Vanguard's two projects were financed together in one transaction; Dogger Bank, the previous record holder at 3.6GW, took two rounds, with phases A and B in 2020 and phase C in 2021. Phase C alone involved 28 banks and three export credit agencies. Dogger Bank cost roughly £2.5 million per megawatt and Vanguard about £4.3 million per megawatt, roughly 70% more. Some of the gap is general inflation since 2020; the rest reflects turbine prices, materials and financing costs, according to the report.

Revenue certainty made the projects bankable, according to Net Zero Investor: 20-year, inflation-linked contracts for difference from the government's seventh allocation round at £91.20 per megawatt hour in 2024 prices. Lenders get long-dated, inflation-linked cashflows from those contracts.