RWE THOR OFFSHORE WIND FARM GREEN LOAN

Promoter – Financial Intermediary

RWE AG

Location

• Denmark

Description

The project concerns the design, implementation and operation of a 1000MW offshore wind farm, including offshore substation and export cable, in the North Sea West of Nissum Fjord, at about 20 km from Jutland shore.

Additionality and Impact

This operation consists of the construction and operation of a new offshore wind farm that will contribute to (i) the achievement of the 2030 decarbonisation targets set out in the National Energy and Climate Plan (NECP) of Denmark and (ii) the REPowerEU Action Plan.

The financing of this project contributes to Bank's lending priority objectives on Energy (Renewable Energy), Climate Action (transversal) and Environmental Sustainability.

In terms of addressing market failures, the offshore wind farm primarily reduces carbon and air pollution externalities, through the reduction of carbon emissions and air pollution.

The project will mainly rely on revenues from the market (the wholesale market and unsubsidised commercial power purchase agreements), as the 20-year support from the contract for difference support scheme is on a near-zero subsidy basis. Multiple developers bid in the 2021 auction at the lowest possible ("near zero") price (0.01 øre/kWh, or ~1.3 cEUR/MWh) for the Thor concession. It thereby contributes to the policy objective of supporting market integration of renewable energy projects.

The operation is expected to yield 'very good' quality and results, thanks to avoided GHG emissions, knowledge externalities, fair employment creation and governance arrangements. Overall, the financing through the EIB will strengthen the promoter's capability to increase its capacity of renewable energy, complement other financing sources and improve its credit risk profile by extending the debt maturity profile. EIB's favourable customised terms are highly appreciated by the company. Therefore, the loan is expected to provide a positive signalling effect in the market and crowd in complementary financing sources. 

Objectives

The offshore wind farm will primarily reduce carbon and air pollution emissions, which are externalities the market fails to address. It will rely on revenues from the wholesale market, as the 20-year support from the contract for difference support scheme is on a near-zero subsidy basis. The project will therefore improve market efficiency and competition.

Sector(s)

• Energy - Electricity, gas, steam and air conditioning supply

Proposed EIB finance (Approximate amount)

EUR 1200 million

Total cost (Approximate amount)

EUR 3235 million

Environmental aspects

A Strategic Environmental Assessment (SEA) was carried out for the plan of the offshore wind farm and its offshore and onshore grid connection. Offshore wind farms fall under Annex II of the Environmental Impact Assessment (IEA) Directive 2014/52/EU (amending 2011/92/EU), requiring the competent authorities to determine whether an EIA is required. The competent authorities have screened-in the project and its grid connection infrastructure. The project's offshore EIA process is ongoing at the time of appraisal. Compliance of the permitting process with relevant EU Directives will be verified during appraisal.

Procurement

In 2021, a dedicated offshore wind tender was organised for the concession of the 1 GW Thor project. The promoter was awarded winning bidder. The promoter is deemed to be a private company without special or exclusive rights. Therefore, private sector procurement procedures are expected to apply. This will be further reviewed during appraisal.

Status

Signed - 27/12/2023