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3 for 3

by Jerome a Paris Sat Jul 25th, 2009 at 08:16:57 AM EST


Belgian and Dutch investors join EIB and banks in Belwind rescue (24 Jul 2009)

Banks have signed the most important European renewable energy project financing of 2009 so far, after a band of Low Countries investors bought the Belwind offshore wind farm from the failed Econcern group.

The deal, one of the most encouraging pointers so far that the worst of the credit crunch may be easing for clean energy, sees the European Investment Bank agree to lend EUR 300m towards a EUR 482.5m (USD 686.4m), 15-year debt package for Belwind.

The remaining EUR 182.5m of the long-term debt is being provided by [commercial banks]

This is the transaction I have been working on for over a year and a half and, between my bank's bailout, the credit crunch or my client's bankruptcy, it's been a rather stressful process - and an altogether too busy one, as may have attested my patchy presence on ET in recent months.

It's the biggest offshore wind farm to be project-financed, it's the first to be financed since the credit crisis, and it's the first time the EIB is involved in taking project risk in the sector, despite the clear push from EU governments over the past year. It took coordinating 6 banks (including a multilateral and two quasi-public institutions), 6 equity investors, 2 large contractors and 1 bankruptcy administrators, jointly with a client with excellent engineers and permits to a great project, but with no money and management in chaos. It took bringing together on the same terms at the same time people who were all indispensable to the deal, all knew they were indispensable and all too often were tempted into brinkmanship to get a better seat at the table.

Quite honestly, I'm still stunned that it actually happened. I never gave up, took up an obviously big role in keeping it alive throughout but at times the odds seemed overwhelming and it took its toll on my morale and energy. It's going to take more than a bit of time to stop obsessing about clauses of the financial documentation, or the conflicting conditions imposed by the various parties, and it's going to be hard to forget the past several months, toiling away day and night in desperate efforts, but t least now I can think it was worth it.

I DID IT!!!

I saved a windfarm (a collapse of the project this month would have delayed it by at least 2 years). I gave a significant, and much needed, boost to the nascent offshore wind project finance market. I bring my bank good publicity. I help save the planet. I'm quite proud. Downright giddy, in fact.

More later.

part of the Windpower series

Brought across by afew

Display:
3 for 3 | 41 comments (41 topical, 0 editorial, 0 hidden)
Re: 3 for 3 (4.00 / 30)
3 for 3 is a reference to the fact that 3 offshore wind farms were project financed, and I did all three. Given ET's ongoing interest as to what a "market" is, well, chew on the fact that one could say that I am the offshore wind project finance market...

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Jul 24th, 2009 at 04:46:45 PM EST
Congratulations and thank you! (4.00 / 9)
In the States, Rep. Earl Blumenauer usually wears a bicycle lapel pin to signify his advocacy and legislation for improving bike-infrastructure in the U.S.

If you're going to Netroots Nation this year, perhaps you should wear a wind turbine lapel pin? ;-) I know it's kind of tacky American-style, but it might be fun?

Anyway, since you are Mr. Offshore Wind Finance -- you, at least, need to get yourself a nice picture of yourself posing like this one of Rep. Jerry McNerney, but from the deck of a nice sailboat:

Anyways, I think you can rightfully be proud that you help make the world a better place. Congratulations and thank you!

by Magnifico on Fri Jul 24th, 2009 at 05:01:16 PM EST
[ Parent ]
like this? (4.00 / 16)


In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Jul 24th, 2009 at 05:11:57 PM EST
[ Parent ]
Yeah, like that! (4.00 / 7)
That's good... but it needs to have you better lit and posed to make you look more triumphant and/or visionary. *grin*

Plus, if my memory isn't playing tricks on me, I seem to recall that picture once having a turbine sprouting from your noggin...

by Magnifico on Fri Jul 24th, 2009 at 05:16:22 PM EST
[ Parent ]
sprouting from the noggin (4.00 / 2)
it was a cable from the boat...



In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sat Jul 25th, 2009 at 02:35:05 AM EST
[ Parent ]
Re: Yeah, like that! (4.00 / 2)
We'll just update it when Jerome runs for public office!

I can swear there ain't no heaven but I pray there ain't no hell. _ Blood Sweat & Tears
by Gringo (stargazing camel at aoldotcom) on Sun Jul 26th, 2009 at 12:13:44 AM EST
[ Parent ]
Re: like this? (4.00 / 2)
yeah, yippee!

be proud, you're making a real difference, it's worth it!

wonderful... maybe we'll see more of you here now, it's been strange you being away so long.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Fri Jul 24th, 2009 at 05:40:08 PM EST
[ Parent ]
Yes, the one with the windmill photoshopped (4.00 / 2)
out of your head.  

Fond memories of when that photo went up!
:)  

And, thank you for the update.  

The Fates are kind.

by Gaianne on Sat Jul 25th, 2009 at 01:53:11 AM EST
[ Parent ]
Re: 3 for 3 (4.00 / 10)
Kudos are in order, J! a well - earned success.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin
by Crazy Horse on Fri Jul 24th, 2009 at 05:18:36 PM EST
[ Parent ]
McNerney Photo (4.00 / 4)
For all techie wind bloggers, Jerry's photo appears to be in the Altamont Pass, sunrise (because the upwind turbines face west.) They're likely Micon, Nordtank or Bonus, turbines with approx 27m rotors. In any case from Denmark.  Erected back in the paleolithic (1984?) they are still running. One's missing a nacelle cover, but hey.

It's important to realize that these turbines have already outlived their planned lifetime by five years.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin

by Crazy Horse on Sat Jul 25th, 2009 at 10:28:29 AM EST
[ Parent ]
Re: 3 for 3 (4.00 / 7)
Kudos.

Now take a holiday while you can.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Fri Jul 24th, 2009 at 05:20:53 PM EST
Re: 3 for 3 (4.00 / 8)
It's gone on for so long, and the light at the end of the tunnel seemed to recede... Congratulations, Jérôme, this is fantastic news!

(Yes, totally oblivious restful holiday).

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Jul 24th, 2009 at 05:34:44 PM EST
Re: 3 for 3 (4.00 / 6)
Congrats, J.  Now go get some damned rest.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Fri Jul 24th, 2009 at 06:06:17 PM EST
yeah, I need it (4.00 / 3)
but it's going to take a few days to lower the pressure...

There's quite a bit of cleaning up to do (starting with unclogging the inbox, overwhelmed with more than 1,000 Mb of legal documents over the past 4 days, as drafts and comments flew around between the parties.

... and there are quite a few other offshore projects around the world that are going to be clamoring for my attention in the next few months now (which makes taking the holiday before all the more important!)

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sat Jul 25th, 2009 at 02:58:00 AM EST
[ Parent ]
Marvellous work! (none / 1)
Do take some vacation and enjoy the summer. :)

:: ::

Just one question.

The remaining EUR 182.5m of the long-term debt is being provided by [commercial banks].

If there are six banks and one of them is the EIB, then the five remaining commercial banks lent on average 36.5 million euros. This seems like a pretty small sum to me (who knows nothing of this particular market). Obviously banks don't want to put all their eggs in the same basket when it comes to lending, diversification is very important, but given the size of the banks involved, it still seems like small sums per bank. Is this level usual, or could a project like this be financed by fewer banks each lending larger sums, in more normal times?

:: ::

The same applies to the equity investment, especially if the debt-to-equity ratio is something like 90/10 or 80/20 which is about the range you've mentioned earlier when talking about wind investment. Then the total equity is something like 50-100 million euros, or maybe 8-17 million euros per equity investors. If the investors are privare individuals, it's certainly large chunks of cash, but if they are power companies?

:: ::

Obviously I'm not asking questions about this specific project as that might be sensitive in all kinds of ways, but I'm rather inquiring about the wind power market in general.

By the way...

Well done! :D

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Fri Jul 24th, 2009 at 06:54:34 PM EST
PF stuff (4.00 / 7)
It's actually 4 banks, so it's amount at risk in the 35-50 range, which is actually quite standard for project finance.

In normal times, for bigger deals, what would happen is that a small number of banks would underwrite the transaction (ie take a bigger chunk of risk) and then syndicate it to other banks to reduce their exposure. But the syndications markets have been dead or 2 years now, so you have to either do smaller deals, or find all the banks in the club from the start (which means involving more banks in the negotiations, which is not simple). In our case, the EIB's participation allowed to avoid the problem.

Debt:equity is more like 70:30. I can't really comment on the investors here, but offshore is now a big utility play, and not only do they usually have 50-100% of projects, but they don't even use project debt, funding it all on their balance sheets (which means multi-hundred million euro investments on their side).

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sat Jul 25th, 2009 at 02:48:29 AM EST
[ Parent ]
Ah, quite information ... uhmmm, what did you say? (none / 0)
but offshore is now a big utility play, and not only do they usually have 50-100% of projects, but they don't even use project debt, funding it all on their balance sheets (which means multi-hundred million euro investments on their side).

Who is "they" ... that is, in the "big utility play", who's playing? The utilities themselves? Or the amorphous "thems that does utility plays"?

And "funding it all on their balance sheets" ... is that all equity funding?


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sat Jul 25th, 2009 at 10:42:08 AM EST
[ Parent ]
they = big utilities (4.00 / 3)
offshore wind farms are billion euro investments (or a large fraction thereof). So it's mostly the big investors of the sector that do them. And they pay for the full investment on their balance sheets.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sat Jul 25th, 2009 at 11:59:08 AM EST
[ Parent ]
Re: they = big utilities (4.00 / 3)
How important is economies of scale in offshore (and onshore) wind?

Are the savings big when you build 100 turbines at a site compared to 10 or 1? Or are the savings marginal, and the reason that the big utilities build big wind farms just because they are used to working with big projects and that's where their competencies lay (like when big oil leaves small fields to be developed by independens)?

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sat Jul 25th, 2009 at 01:54:20 PM EST
[ Parent ]
economies of scale (4.00 / 4)
matter more offshore because some of the fixed costs are rather high. In particular, the cable and the offshore transformer station can cost several tens of millions of euros, which requires more than a few MW of capacity to bear if you want any kind of profitability. You also need specialized vessels and cranes for installation and then maintenance, so scale does matter, at least up to a certain point (which mostly depends on location and can vary depending on the regulatory framework - who pays for the cable, whether your permit gives you rights to a given area, to a number of turbines or to a given capacity)

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sat Jul 25th, 2009 at 02:29:15 PM EST
[ Parent ]
Ah, you answered the question at the ... (none / 0)
... Big Orange ... the "big investors" are the utilities themselves.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Sun Jul 26th, 2009 at 06:16:36 PM EST
[ Parent ]
Re: Ah, quite information ... uhmmm, what did you (4.00 / 3)
E.On, RWE (Innogy), Vattenfall, Scottish Southern Energy (Airtricity), Centrica, EnBW, EWE, who did i forget?  StatOil, Norsk Hydro, the early adapter DONG.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin
by Crazy Horse on Sat Jul 25th, 2009 at 12:14:35 PM EST
[ Parent ]
Re: 3 for 3 (4.00 / 2)
Way to go, Jerome!

Hey, Grandma Moses started late!
by LEP on Fri Jul 24th, 2009 at 08:37:31 PM EST
Re: 3 for 3 (4.00 / 2)
Congratualtions!  And in time for you to take the traditional August vacation.  Hope you can and do.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Jul 24th, 2009 at 10:25:48 PM EST
Excellent work. (4.00 / 3)
If you have time to answer, were there any governments involved via subsidies, tax breaks, feed-in tariffs, or such?

The reason that I ask is that I'm doing some research on the subject in preparation for a push next year in the WA state legislature. They've completely dropped the ball for the last three to four years. In fact they've actually weakened our citizens' initiative, I-937, in the last two legislative sessions.

paul spencer

by paul spencer (paulgspencer@gmail.com) on Fri Jul 24th, 2009 at 10:51:21 PM EST
subsidies (4.00 / 4)
In Belgium, there are two mechanisms to help offshore:
  • a "green certificate" mechanism allocated to green energy, which adds 10.7c/kwh for offshore wind projects, paid for by the grid operator (and passed on to power consumers) - the same exists for other renewable projects, with different values for the certificate depending on the technology
  • a specific subsidy to build the offshore cable, also provided by the grid operator


In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sat Jul 25th, 2009 at 02:51:36 AM EST
[ Parent ]
Re: 3 for 3 (4.00 / 2)
Good job!
Now, time to take the family off to vacation in August. We'll see you in September.
by Bernard (bernard) on Sat Jul 25th, 2009 at 07:15:06 AM EST
Re: 3 for 3 (none / 0)
Truly enviable. Congratulations.

The peak-to-trough part of the business cycle is an outlier. Carnot would have died laughing.
by Carrie (migeru at eurotrib dot com) on Sat Jul 25th, 2009 at 08:30:30 AM EST
Re: 3 for 3 (none / 1)
Awesome.

You can't be me, I'm taken
by Sven Triloqvist on Sat Jul 25th, 2009 at 08:43:55 AM EST
Re: 3 for 3 (none / 0)
Congratulations!

You should be proud of the accomplishment.  What you did is what investment banking is supposed to be all about: getting the financing to support the Real Economy.

Again, congratulations.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sat Jul 25th, 2009 at 09:01:11 AM EST
Re: 3 for 3 (4.00 / 2)
My heartiest congratulations. I am so pleased for you. I am sick with jealousy that there doesn't appear to be one individual with such vision and determination to be found in the UK power sector.

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Sat Jul 25th, 2009 at 09:16:09 AM EST
Don't despair yet (4.00 / 5)
the UK is actually the largest offshore market in Europe now and will remain so for at least a couple years, given what's being built. And I expect to be able to have announcements to make about UK projects in the near future!

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sat Jul 25th, 2009 at 09:45:03 AM EST
[ Parent ]
Re: 3 for 3 (none / 1)
Congratulations, Jérôme.  That's fantastic -- for you, and for renewables, and for the planet!

Truth unfolds in time through a communal process.
by marco on Sat Jul 25th, 2009 at 12:06:16 PM EST
Re: 3 for 3 (none / 1)
I add my congratulations. Well done !
by sidd on Sat Jul 25th, 2009 at 11:37:06 PM EST
Re: 3 for 3 (none / 1)
I'll be bordering on the cliché by now, but many congratulations of course.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
by Cyrille (cyrillev domain yahoo.fr) on Sun Jul 26th, 2009 at 03:05:00 AM EST
Re: 3 for 3 (4.00 / 2)
I think they call it a "hat trick".  Giddy indeed.  For whatever reason, the image of Snoopy dancing came into my head.  Have a great Sunday.
by Andhakari on Sun Jul 26th, 2009 at 03:20:10 AM EST
Re: 3 for 3 (none / 0)
Congratulations, Jerome! There are times when one just must blow his/her own horn - this is one of those times. Fantastic! Perseverance furthers...

"Once in awhile we get shown the light, in the strangest of places, if we look at it right" - Hunter/Garcia
by whataboutbob on Sun Jul 26th, 2009 at 05:27:13 AM EST
Blowing your own horn (4.00 / 9)
All in favour of presenting Jerome with a vuvuzela at the September Paris ET Meetup, please rate this comment.

The peak-to-trough part of the business cycle is an outlier. Carnot would have died laughing.
by Carrie (migeru at eurotrib dot com) on Sun Jul 26th, 2009 at 05:30:08 AM EST
[ Parent ]
Re: Blowing your own horn (4.00 / 4)
It's a good thing J is not Scandinavian, or he would just have made himself socially impossible. ;)

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sun Jul 26th, 2009 at 05:38:38 AM EST
[ Parent ]
Re: 3 for 3 (4.00 / 2)
Congratulations Jérôme. I wish you can loose the monopoly of this market shortly ;)

luis_de_sousa@mastodon.social
by Luis de Sousa (luis[dot]de[dot]sousa[at]protonmail[dot]ch) on Mon Jul 27th, 2009 at 03:21:12 AM EST
Re: 3 for 3 (none / 0)
Congrats to you Jerome (and your over-dimensioned ego...)
by jayjay (jeremy [at] will-hier-weg.de) on Tue Jul 28th, 2009 at 12:09:28 PM EST
3 for 3 | 41 comments (41 topical, 0 editorial, 0 hidden)


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