Fid Financial Close

The Renewable Advisory Board’s July 2009 report to the UK Secretary of State for Energy and Climate Change records that Greater Gabbard, a 500 MW offshore wind project, had reached financial close in the previous year. The report notes that, despite rising capital costs for offshore wind, several projects successfully secured financing and were progressing towards completion; Greater Gabbard is listed alongside Sheringham Shoal, Thanet, Gunfleet Sands II and Ormonde in this group. The weighted average capital cost across these recent offshore schemes is cited at approximately £3.2 million per megawatt, illustrating the higher investment requirements offshore developers were facing at the time.[1] This financial close occurred against the backdrop of changes to the UK Renewables Obligation (RO) banding. From 1 April 2009 offshore wind projects earned 1.5 ROCs/MWh, and in the 2009 Budget the Government proposed temporarily increasing ROC multiples for projects reaching financial close in the subsequent two years to reflect increased costs and support continued investment.[1] The report highlights that some projects which achieved financial close shortly before the Budget announcement were unhappy that they would not benefit from the higher ROC multiples, even though their costs were likely similar to later projects, and that such announcements risk being seen as discriminatory.[1] As a member of the cohort of offshore projects that closed financing in 2008, Greater Gabbard exemplifies early investors committing capital under the original RO support assumptions before the enhanced banding was proposed.