KfW IPEX-Bank boosts Transition with UK Offshore Transmission Asset Finance

KfW IPEX-Bank boosts Transition with UK Offshore Transmission Asset Finance

KfW IPEX-Bank has taken a significant step towards supporting the UK’s transition to net zero by arranging and providing funding for a portfolio of operational offshore transmission assets (OFTOs).

Acting as the Sole Underwriter and Bookrunner, KfW IPEX-Bank structured a financial package that includes a £248 million Term Loan and a £45 million Revolving Credit Facility. Of the total amount, £194 million has been syndicated to three other banks.

This portfolio is managed by the listed infrastructure investment company International Public Partnerships Limited (INPP), with advisory from Amber Infrastructure Group, and features key OFTO assets like the Lincs OFTO.

Financing Offshore Transmission Assets

The offshore transmission owners (OFTOs) hold and manage the critical transmission infrastructure that connects offshore wind farms to the onshore national grid. These assets are essential in ensuring the reliability and efficiency of power transmission from renewable sources located offshore to the broader electricity network on land.

Andreas Ufer, Member of the Management Board of KfW IPEX-Bank, emphasized the strategic importance of this financing: “Providing financing for OFTOs fits perfectly with our agenda to support critical infrastructure for the transition to net zero. We are delighted to continue supporting INPP while retaining these assets in our portfolio.”

Enhancing Investment in Renewable Energy

Amber Infrastructure’s Jesper Green Bredengen expressed satisfaction with the collaboration, stating: “Amber is delighted to again have worked with KfW IPEX-Bank to further optimise INPP’s investment portfolio in the OFTO sector. Working with KfW IPEX-Bank, Amber was able to re-allocate senior debt from INPP to KfW IPEX-Bank and further syndication to other relationship banks. The financing helped INPP recycle capital into the acquisition of Moray East OFTO, further increasing its contribution to the UK’s net zero transition, while maintaining its 100% equity stake in the portfolio of offshore transmission assets.”

The Role of Offshore Wind in the UK’s Energy Strategy

The UK is at the forefront of offshore wind energy development, a cornerstone in the country’s strategy to meet its ambitious environmental targets. Offshore wind is pivotal in the UK’s plan to fully decarbonize its power system by 2035 and achieve net zero carbon emissions by 2050.

The support from financial institutions like KfW IPEX-Bank is critical in maintaining momentum towards these goals.

Key Benefits of the Financing Arrangement

This financing arrangement brings several benefits:

• Capital Recycling: Allows INPP to re-invest in new renewable energy projects, such as the Moray East OFTO.
• Sustainable Investment: Supports critical infrastructure essential for the UK’s net zero ambitions.
• Economic Development: Contributes to the growth and stability of the renewable energy sector in the UK.

KfW IPEX-Bank’s role in financing the UK’s offshore transmission assets underscores its commitment to supporting the transition to a greener, more sustainable energy future. By backing vital infrastructure projects, the bank is not only helping to decarbonize the energy sector but also promoting economic development and investment in renewable energy.

This collaboration with INPP and Amber Infrastructure highlights the power of strategic financial partnerships in achieving national and global environmental targets.

As the UK continues to lead in offshore wind energy, such investments are crucial in ensuring that the country meets its net zero objectives, setting an example for the rest of the world to follow.