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Project Financing for Hornsea1 Offshore Electricity Transmission Project in U.K.
Supporting Overseas Business Expansion of Japanese Companies for Decarbonized Society

  • Region: Europe
  • Infrastructures
  • Environment
  • Overseas Investment Loans
  • Project Finance
 March 3, 2021
  1. The Japan Bank for International Cooperation (JBIC, Governor: MAEDA Tadashi) signed on March 2, loan agreements with Diamond Transmission Partners Hornsea One Limited (DTPH1), a British company invested in by Mitsubishi Corporation and Chubu Electric Power Co., Inc. JBIC will provide project financing*1 amounting to up to approximately GBP549 million (JBIC portion) for an offshore electricity transmission project for the Hornsea1 offshore wind farm in the United Kingdom. The loan is co-financed with private financial institutions including Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Limited, Shinsei Bank, Limited, The Norinchukin Bank, and Nippon Life Insurance Company, bringing the total co-financing amount to approximately GBP1,101 million.
      
  2. For this project, DTPH1 will own and operate facilities for offshore electricity transmission with a total generation capacity of 1,218MW, located 120 km off the Yorkshire Coast in southeastern Great Britain. DTPH1 will also transmit the electricity generated by the offshore wind farm to Great Britain over 25 years. This is JBIC’s first project financing extended for a project in the electricity transmission sector.
      
  3. In December 2020, the Government of Japan formulated the Infrastructure System Overseas Promotion Strategy 2025, in which it announced support for Japanese companies that offer advantages, technological or otherwise, for global energy transition and decarbonization. The Government is also pursuing a policy of actively utilizing public financial systems for renewable energy-related overseas investment. In addition, in the Strategic Energy Plan released in July 2018, the Government called for the strengthening of international competitiveness and overseas expansion of the energy industry through promotion of market entry by Japanese utility companies, supported by the use of policy-based finances. The loan is in line with these Government policies and will provide financial support for the overseas infrastructure project in which Japanese companies are participating, and will be utilized for operation and management over the long term, thereby serving to maintain and improve the international competitiveness of Japanese industry.
      
  4. The Government of the United Kingdom amended its Climate Change Act in 2019, setting a legal target of reducing CO2 emissions to net zero by 2050 and promoting the introduction of renewable energy. The project conforms with this energy policy of the Government, and the know-how gained from the electricity transmission service for the offshore wind farm is expected to be utilized in future projects in Japan and other countries in addition to the United Kingdom.
      
  5. As Japan’s policy-based financial institution, JBIC will continue to provide financial support to assist Japanese companies in the overseas expansion of their businesses toward decarbonization by drawing on its various financial facilities and schemes for structuring projects, and by performing its risk-assuming function.
      
Note
  1. *1 
    Project finance is a financing scheme in which repayments for a loan are made solely from the cash flow generated by the project.

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