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Banks and corporates to supplant utilities for offshore funding

GLOBAL: Utilities will not be the sole financial source of funding for future offshore wind, with banks and corporates increasingly involved, a London conference was told today.

Fintan Whelan, CFO of Mainstream Renewable Power
Fintan Whelan, CFO of Mainstream Renewable Power

Fintan Whelan, CFO of Mainstream Renewable Power, told a Green Power event that utilities were now "cash strapped" and that as the North Sea's Round Three offshore projects progressed, "wind developers will need access to deep pools of capital."

He pointed to two current nuclear-power projects in Europe that were examples of funding from corporate customers. "There are precedents for this form of project financing, with the TVO nuclear project in Finland and Exeltium in France," suggested Whelan. "Both are being supported by eventual corporate consumers of the electricity they will produce."

Banks are also coming to the fore with project finance. Nicholas Gourvitch, a director at Green Giraffe Energy Bankers, told the conference that project finance was now a "European story" with four Europe-based financial institutions leading the way in offshore investment.

"EKF from Denmark is offshore financing's best-kept secret," he said. "The European Investment Bank offers cheaper debt than most. Euler-Hermes, the German export credit agency, offers attractive financing outside Germany. And Germany's KfW provides a financing model that should be followed by other countries."

With offshore developments supported by project finance now operating in the waters off Belgium, Britain, Holland and Germany, Gourvitch said that the next project-financed offshore farms would be Lincs, London Array and Walney in the UK, Baltic 1, Meerwind, Gode Wind , Globaltech and Nordergrunde in Germany and Cape Wind in the US. Other projects in France, Norway, Italy, Spain and Belgium may follow.

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