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Proof of performance: Q7 Offshore wind farm

A lack of experience with offshore wind technology meant that no single party was willing to take full construction risk. Rabobank and Dexia took the initiative to arrange the world’s first non-recourse project financing for an offshore wind farm to enable the realisation of the Q7 wind farm off the coast of IJmuiden, the Netherlands.

Q7 Tombestone

Rabobank was awarded the title 'Project Financing Deal of the year 2006' by Euromoney in London on March 8 2007 and the deal was honoured with a 'Runner Up' title by Environmental Finance in September 2007.

Deal characteristics

  • Long-term credit of € 188 million and letter of credit facilities for the construction period of € 160 million 
  • Contingent facility of € 30 million to finance cost overruns and delays 
  • € 67 million in export guarantees from EKF         

 

 

 

Rabobank leveraged its out-of-the box thinking and expertise to initiate a tailor-made solution for   financing the Q7 Wind Farm. A group of banks, including Rabobank and Dexia, extended a loan in advance to deal with cost overruns and delays. The world’s first non-recourse project financing for an offshore wind farm marks a milestone in the development of offshore wind energy. Rabobank was awarded the title ‘Project Financing Deal of the year 2006’ by Euromoney in London on March 8 2007 and was honoured with a ‘Runner Up’ title by Environmental Finance in September 2007.

            

Deal in a nutshell

What was the issue

The high risks linked to building and operating offshore wind farms meant that no single party was prepared to accept the entire risk, including possible setbacks, and as a result it was difficult to obtain bank financing for the project. 

Which solution was chosen

In addition to a loan to finance part of the investment costs, the involved banks provide an additional loan that makes it possible to absorb cost overruns and delays. Rabobank is the facility agent, security agent and hedging bank for the transaction. Dexia and Rabobank provide the construction facilities. Syndication of the long term facilities to a small number of additional banks is realised in January 2007.

Who were the parties involved

Econcern, Energy Investment Holdings, ENECO, Dexia Crédit Local (mandated lead arranger), Eksport Kredit Fonden (export credit agency) and Rabobank (mandated lead arranger).

When

25 October 2006

Where

IJmuiden, the Netherlands