Barclays Supports Moray West Offshore Wind Farm, Aiming to Supply 50% of Scotland's Electricity
Posted 04/07/2023 11:18
Moray West, a significant offshore wind farm development located 22km off the coast of the Moray Firth, is set to provide 50% of Scotland's electricity, powering up to 1.33 million households annually with low-carbon energy. The project, expected to be completed in 2025, will save approximately 1.1 million tonnes of CO2 emissions.
As part of a £2 billion syndicated loan injection closed in April 2023, Moray West, operated by Ocean Winds, has secured a loan of £95.5 million from Barclays to support the next phase of construction. Barclays played a vital role as the sole pre-hedge execution for the project, executing interest rate, inflation, and foreign exchange hedges. This has safeguarded the project and its stakeholders against adverse market movements in a volatile macroeconomic environment.
With financial close achieved, the project can progress to the next phase of supply chain activities, and installation works are scheduled to commence later this year.
Adam Morrison, project director at Moray West, expressed gratitude for Barclays' support, highlighting that it played a significant role in securing financial closure and enabling the project to proceed to the installation phase. Morrison also emphasized the importance of their collaboration with Barclays in meeting the renewable energy targets set by the UK and Scottish governments.
Barclays stands out as one of only seven banks that have supported two project-financed offshore wind farms participating in the UK's Contract for Difference allocation rounds, aiming to innovate with sophisticated offtake agreement strategies. The bank executed the hedges when the project was awarded the Contract for Difference in July 2022 and subsequently syndicated them to the lending banks upon financial close. Barclays possesses particular expertise in the inflation hedge, which is highly illiquid, but its first-class distribution platform allows it to provide solutions.
Jamie Grant, Managing Director of Barclays Corporate Banking in Scotland, highlighted the bank's expertise and sophisticated approach to financing major green economy developments in Scotland. Grant emphasized their ability to support key clients in the renewables sector seeking innovative revenue offtake strategies. As renewable developers may consider innovative approaches to their offtake strategies, particularly in light of recent commodity cost escalations, Barclays is well-positioned to support projects like Moray West.
The deal team at Barclays Corporate Banking was led by Neil Fleming, Infrastructure and Project Finance Director.