Company Announcements

SSE plc

DOGGER BANK C REACHES FINANCIAL CLOSE

SSE Renewables, together with its joint venture partner Equinor, has reached financial close on Dogger Bank C, the third phase of what will be the world's largest offshore wind farm.

The two companies are already constructing the first two phases of Dogger Bank Wind Farm, a ground-breaking project off the north east coast of England which, once all three phases are complete in March 2026, will be the largest in the world.

Total investment in Dogger Bank Wind Farm will be around £9 billion (around £3 billion for phase C including offshore transmission). SSE's share of investment forms part of its recent Net Zero Acceleration Plan, which included fully funded £12.5bn strategic capital investment plans to 2026 alongside ambitious 2031 targets, aligned with net zero and 1.5 degrees. Large scale projects like Dogger Bank C are made possible by the financial strength and shape of the SSE group with its integrated net zero infrastructure strategy.

Dogger Bank C has a capacity of 1,200MW and will generate around 6,000GWh a year. In total, Dogger Bank will produce enough clean, renewable electricity to supply 5% of the UK's demand, equivalent to powering six million UK homes. SSE is leading on construction across all three phases and Equinor will operate the wind farm thereafter.

On 2 November 2021 SSE and Equinor announced the sell down of a combined 20% share in Dogger Bank C to Eni (10% each) for a total consideration of £140m. Eni will enter the asset effective from financial close of project financing. The transaction is expected to complete in Q1 2022, subject to regulatory and lenders approvals and customary purchase price adjustments. Once the transaction is complete, the new overall shareholding in Dogger Bank C will be SSE Renewables (40%), Equinor (40%) and Eni (20%).

SSE is currently leading the construction of more offshore wind than any other company in the world and aims to enable the delivery of over 25% of the UK's 40GW offshore wind target by 2030, whilst also exporting its capabilities overseas. SSE's recent Net Zero Acceleration Programme is targeting an increase of 4GW of renewables installed capacity (net) over the 5 years to 2026, doubling installed renewables capacity to 8GW (net). This provides a platform for ambitious new 2031 targets including a fivefold increase in renewables output to 50TWh, maintaining a sustained renewables pipeline in excess of 15GW, and a trebling of SSE's owned renewables capacity to over 13GW (net) from c.4GW today.

Dogger Bank Wind Farm is the largest of SSE Renewables' projects currently in construction. SSE Renewables is currently also leading the construction of the Seagreen offshore wind farm (1,075MW, SSE Renewables share 49%), which will be Scotland's largest and the world's deepest fixed bottom offshore wind farm on completion. SSE's offshore wind development project Berwick Bank (up to 4.1GW, fully owned) would also be one of the world's largest when completed later this decade.

Alistair Philips-Davies, SSE Chief Executive, said: "It is a fantastic achievement to be reaching financial close on the third phase of the world's largest offshore wind project, just weeks after COP26 concluded in Glasgow and today marks an important early milestone in the delivery of our own Net Zero Acceleration Programme. Our plans will enable delivery of over 25% of UK's 2030 40GW offshore wind target, whilst also expanding overseas, delivering over 20% of upcoming UK electricity networks investment and deploying the critical flexibility technologies to provide security of supply.

"Construction is well underway on the first two phases of Dogger Bank with work on the third phase already progressing and we look forward to this ramping up in the New Year. As well as providing clean, green power, Dogger Bank is enabling the planned GE blade manufacturing plant in Teesside and a huge number of direct and indirect jobs."  

Further details

Dogger Bank Wind Farm was awarded exclusive development rights in 2010 by The Crown Estate as part of its third seabed licensing round. The project secured planning consent in 2015. In September 2019, Dogger Bank Wind Farm secured the following 15-year contracts with the Low Carbon Contracts Company (LCCC) through the UK Government's Contract for Difference (CfD) auction:

·    Dogger Bank A (1,200MW) with a strike price of £39.65/MWh (in 2012 prices, CPI-indexed) for delivery in 2023/24.

·    Dogger Bank B and C (1,200MW each) with strike prices of £41.61/MWh (in 2012 prices, CPI-indexed) for delivery in 2024/25.

Dogger Bank C will require total capital expenditure of around £3bn, including offshore transmission capex in the range of £900-1000m. SSE's equity investment to date of around £140m has been repaid in full at financial close, with no equity contributions forecast to be required until Q2 2025.

Dogger Bank C is being project financed with gearing of c.70% for the generation assets. Gearing on the transmission facilities is set at 90% of the forecast OFTO sale proceeds, in line with standard market practice in the sector. Total senior debt facilities is around £2.5bn plus ancillary facilities of around £435m. The debt will be equity accounted and as a result will not be consolidated on SSE's balance sheet.

With the strong interest from lenders, Dogger Bank C was able to secure competitive terms. The final group of lenders, comprising 28 banks and 3 export credit agencies, includes experienced lenders in the sector along with relationship lenders of both SSE and Equinor. The majority of lenders are the same as for Dogger Bank A and B.  

Onshore cable installation civils works for Dogger Bank C will start in Q1 2022; construction of the onshore convertor station will commence in Q2 2022. Offshore export cable installation will commence in Q1 2024; Offshore platform installation will commence in Q2, 2024; foundation installation will commence in Q3, 2024; GE Haliade-X 14MW Turbine installation will commence in Q2, 2025. First power is anticipated in Q3, 2025 and full power in Q1, 2026.

Onshore construction is currently underway for Dogger Bank A and Dogger Bank B, with offshore construction on Dogger Bank A due to begin in Q2 2022. First power is expected in Summer 2023 and Summer 2024 for Dogger Bank A and B, respectively, with commercial operations to follow around six months later.

SSE Renewables is currently leading the construction of more offshore wind capacity than any other company in the world. As part of its Net Zero Acceleration Programme, SSE plans to double its installed renewables capacity to 8GW (net) by 2026, supported by a sustainable secured pipeline in excess of 15GW providing the platform for 1GW (net) installed additions per year thereafter.

In addition to Dogger Bank Wind Farm, SSE Renewables is currently leading the construction of the Seagreen 1 offshore wind farm (1,075MW, SSE Renewables share: 49%) and is developing the Berwick Bank offshore wind farm (up to 4,100MW, fully owned by SSE Renewables) in Scotland, North Falls (up to 504MW, SSE Renewables share: 50%) in England, and Arklow Bank Wind Park Phase 2 (520MW) in Ireland. Onshore it is constructing the Viking wind farm (443MW) in Shetland and has a further 1GW of onshore wind in development.

SSE Renewables has recently expanded into Japan with the formation of SSE Pacifico, a Joint Ownership Company, and acquisition of an 80% stake in an offshore wind development platform.

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