Seagreen Offshore Wind Farm

SSE plc

SEAGREEN OFFSHORE WIND FARM

3 JUNE 2020

Financial close

SSE Renewables has reached financial close on its Seagreen 1 offshore wind project. Located in the Firth of Forth, Seagreen 1 will be Scotland's largest wind farm once complete. Its capacity will be 1,075MW, and it will generate around 5,000GWh annually.

In September 2019, SSE Renewables secured a 15-year contract with the Low Carbon Contracts Company (LCCC) through the UK Government's Contract for Difference (CfD) auction for 454MW of Seagreen 1 at a strike price of £41.61/MWh (in 2012 prices) in the delivery year 2024/25.

The LCCC-contracted capacity represents around 40% of the total project capacity. An additional c. 30% of the project will be contracted with the SSE Group. Across the Group, SSE is well positioned to optimise the route to market for its renewable output, including through developing opportunities to meet its customers' growing demand for long-term fixed price green power.

Equity sell down

SSE Renewables has entered into an agreement to sell a 51% stake in its Seagreen 1 offshore wind farm project to Total for an initial consideration of £70m. The sale includes an equivalent stake in a potential extension opportunity at the site of up to 360MW. SSE Renewables will continue to lead on the development and construction of Seagreen 1 and will operate the asset on completion, which is expected in 2022/23.

The project will require a total spend of around £3bn, including offshore transmission capex of around £500m. In addition to sale proceeds, historical capital investment of around £250m in the project will be repaid in full to SSE at financial close from project financing. SSE's future equity investment is expected to total around £850m over the years 2020 to 2022, with the equity contribution for 2020/21 financial year expected to be less than £50m. This will form part of SSE's updated capital expenditure plans which will be set out as part of its preliminary results on 17 June. Seagreen will be project financed with gearing of around 42%. This will be equity accounted and as a result will not be consolidated on SSE's balance sheet. 

Jim Smith, Managing Director of SSE Renewables, said: "Following the agreement with Total we are looking forward to delivering the Seagreen offshore wind farm which will contribute towards building a cleaner, more resilient economy as we pursue a green recovery from coronavirus by unlocking £3bn low carbon investment, creating green jobs and generating the zero-carbon power we need to reach net zero."

Julien Pouget, Senior Vice President Renewables at Total, said: "We are glad to join the Seagreen project to contribute to the development of the renewable energy in Scotland alongside the leading offshore wind developer in the country. As one of the main players in the country's energy sector, we're confident that Total's strong expertise in the offshore operations and in-depth understanding of the local supply chain will help ensure the success of the project."

SSE Renewables continues to develop its wholly owned Seagreen 2 and 3 projects (combined up to 3,200MW), which were awarded exclusive development rights by The Crown Estate in 2010.

Notes

SSE Renewables was advised by Jefferies International Limited and Linklaters LLP on this transaction.