£52m UK offshore cable project reaches close

The winning consortium has achieved financial close for the Gunfleet Sands offshore transmission project in the UK. All of the equity for the project is being provided by INPP, the London-listed infrastructure investor, while Barclays, BNP Paribas and Lloyds are providing senior debt.

The Transmission Capital Partners consortium has reached financial close for the £52 million (€59 million; $84 million) Gunfleet Sands offshore transmission project. The consortium comprises: International Public Partnerships Limited (INPP), the London-listed infrastructure investor; Amber Infrastructure, which is the investment adviser to INPP; and Transmission Capital, the UK-based transmission company.

The project involves owning and operating the transmission links connecting the mainland electricity grid network to the Gunfleet Sands offshore wind farm, which is located 7 kilometres off England’s Essex coast and which has a generation capacity of approximately 173 megawatts. The project has been operational since early last year, allowing an immediate yield to INPP.

INPP is providing 100 percent of the equity and subordinated debt for the project, up to £11 million. Senior debt is provided by Barclays, BNP Paribas and Lloyds, although further details about the breakdown of this debt have not been disclosed.

According to a press release issued by INPP, key details of the project include: 

*A 20-year revenue term, with the potential for extension after this initial period;
*An availability-based revenue stream, with protected downside (each year’s potential deductions capped at 10 percent of base revenue) and fully linked to the UK retail price index;
*No demand-based risk with no exposure (revenue or penalties) to wind farm performance or credit;
*Revenues guaranteed by a National Grid subsidiary in its statutory ringfenced role as national electricity systems operator.

The Gunfleet Sands project is one of nine transmission link projects worth a total of £1.1 billion that were the subject of an initial tendering process last year by Ofgem, the UK energy regulator. The Transmission Capital Partners consortium successfully bid for four of these, with the £65 million Robin Rigg project closed in March this year and the two others scheduled to reach financial close by the end of this year.

The consortium has also been shortlisted for another three projects forming part of a second round of tenders to be awarded this year and next year.