Barclays offers £95.5 m loan to wind farm due to generate 50% of Scotland’s electricity

Barclays offers £95.5 m loan to wind farm due to generate 50% of Scotland’s electricity
06 / 07 / 2023
By Marwa Nassar - -

Barclays decided to offer a £95.5 million loan to support Moray West wind farm  which is expected to supply 50 percent of Scotland’s electricity and save around 1.1 million tons of co2 emissions by the time the project completes in 2025.

The wind farm, which is a major offshore wind farm development 22km off the coast of the Moray Firth, will generate enough power for up to 1.33 million homes in Scotland.

The loan will support the wind farm’s next phase of the project’s construction as part of a wider syndicated £2 billion loan injection which closed in April 2023.

Barclays acted as a sole pre-hedge execution for the project executing interest rate, inflation and FX hedges, protecting the project and its stakeholders from adverse market movements in a volatile macroeconomic backdrop.

Financial close has ensured that the project can move to the next phase of supply chain activity, with installation works due to commence later this year.

Adam Morrison, project director at Moray West, said “The support of Barclays has contributed to Moray West reaching financial closure. This means we are now on track to commence the next phase of the project which will see the installation of the wind farm in late 2023.”

“Our close working relationship with Barclays has given us the support required to meet the UK and Scottish government renewable energy targets.”

Barclays remains as one of only seven banks which have supported two project-financed offshore wind farms involved in the Contract for Difference allocation rounds in the UK looking to innovate with sophisticated offtake agreement strategies.

It executed the hedges at the point the project was awarded the Contract for Difference in July 2022 and then syndicated them to the lending banks at financial close. Barclays has particular expertise around the inflation hedge which is highly illiquid, however it is able to place on the back of its first in class distribution platform.

Jamie Grant, Managing Director of Barclays Corporate Banking in Scotland, added “Barclays expertise and sophisticated approach to the financing of such a major development in Scotland’s green economy reinforces our ability to support key clients in the renewables sector which look to innovate with revenue offtake strategies.  With the commodity cost escalations that have been experienced recently, it is likely that more renewable developers will also consider innovation with their offtake strategies and we are well placed to support projects like Moray West.”

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