Dogger Bank milestone places wind in sails of climate goals
Written by Rother Radio News on 26/11/2020
A major landmark in construction of the world’s biggest offshore wind farm was achieved today when the power generator SSE and Equinor, its Norwegian partner, reached ‘financial close’ on the first two phases of the project on Dogger Bank in the North Sea.
The two phases will cost £6bn and, once all three phases are complete in March 2026, Dogger Bank will be able to produce enough clean, renewable electricity to supply 5% of the UK’s demand amid efforts to tackle climate change.
SSE said this was the equivalent to being able to power six million UK homes. The first phase is expected to become operational in 2023.
Alistair Philips-Davies, chief executive of SSE, said: “We are proud to be leading on the construction and development of Dogger Bank Wind Farm, which has been 10 years in the making.
“We are putting our money where our mouth is on delivering net zero and reinforcing the UK’s position as a world leader.
“This investment will help drive a green recovery from coronavirus through the project’s construction over the next five years, creating jobs and boosting the local economy.
“Achieving financial close for the first two phases of the world’s largest wind farm is a huge accomplishment.”
He said the move represented significant progress towards achieving SSE’s goal of trebling its renewable output by 2030.
Reaching financial close, or ‘closing the books’, means that accountants at both companies have reviewed and recorded every transaction involved in the project.
Equinor, which is two-thirds owned by the Norwegian government, is the new name for Statoil – the company founded by Oslo 48 years ago to tap the country’s oil and gas riches in the North Sea.
It controversially changed its name two years ago in an attempt to reduce the emphasis on oil and gas and to highlight its strategic shift towards renewable energy sources.
It is hoping to extend two of its existing two UK wind farms – Sheringham Shoal and Dudgeon – off the north coast of Norfolk. This would double wind capacity there.
SSE, meanwhile, has already committed to investing a total of £7.5bn in renewable energy. Its current work includes developing what will be Scotland’s largest offshore wind farm at Seagreen, off the coast of Angus, with the French energy giant Total.
When completed, Dogger Bank A and Dogger Bank B, both of which lie around 130km (81 miles) off the English coast, will connect to the Creyke Bank substation near Cottingham in east Yorkshire. Initial construction work on the onshore cable route in east Yorkshire has already begun.
One of the most significant aspects to Thursday’s announcement was the detail on the financing. Some 29 banks and three export credit agencies – from France, Norway and Sweden – are providing finance to the vast project.
The pair said that, due to the strong appetite from lenders, the project was being financed on “competitive terms” despite them having to raise the debt “during unprecedented economic circumstances arising from the global coronavirus pandemic”.
They added: “The level of interest achieved reflects the high quality of the project and enables strong returns on shareholder capital to be delivered.”
The news comes just days after SSE and Equinor said they had secured 15-year power purchase agreements for the first two phases of the wind farm.
Orsted, the Danish wind power specialist, has said it will trade 40% of the electricity generated by Dogger Bank A and B with Shell, Danish bank Danske and the energy supply arm of SSE itself will be marketing the remainder.
Dogger Bank A and B are emblematic of the huge investment currently taking place in UK offshore wind.
The Department for Business, Energy and Industrial Strategy recently published figures suggesting that, at the end of June, some 8.055 gigawatts of renewable energy projects were in construction in the UK. Of this, 6.117 gigawatts related to offshore wind capacity, including 2.4 gigawatts alone at Dogger Bank A and B.
There are also mega-projects under way elsewhere, including Orsted’s work at Hornsea off the coast of Essex and Triton Knoll, which is being built off the coast of Lincolnshire by Innogy, part of the German energy giant EON.
It is easy to criticise politicians. But it is worth praising the policy decisions of past UK governments for setting a clear direction of travel and for encouraging the regulator to put in place a mechanism enabling financial backers to invest with confidence of seeing a reasonably predictable return. That has brought about a dramatic fall in the cost of constructing offshore wind farms – encouraging, in turn, further investment.
Questions remain about the composition of the supply chains for all this work and the extent to which UK manufacturing will benefit from all this investment.
And Boris Johnson’s recent claim to want to make the UK the ‘Saudi Arabia of wind’ may be hyperbole.
But the investment being carried out by SSE, Equinor and others means that the prime minister will certainly be able to look other world leaders in the eye when, next year, the UK hosts the COP26 UN climate summit.
© Sky News 2020