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Project Financing for NeuConnect, UK-Germany Interconnector Project
Supporting Overseas Business Expansion of Japanese Company for High Voltage Direct Current Transmission System

  • Region: Europe
  • Infrastructures
  • Environment
  • Overseas Investment Loans
  • Project Finance
July 28, 2022
  1. The Japan Bank for International Cooperation (JBIC; Governor: HAYASHI Nobumitsu), on July 21, signed loan agreements in project financing*1 amounting to up to GBP270 million and EUR156 million (JBIC portions) approximately with British company NeuConnect Britain LTD., German company NeuConnect Deutschland GMBH & CO. KG, and Dutch company NeuConnect Netherlands B.V., for NeuConnect, an interconnector project that will link between the United Kingdom and Germany. The loans are co-financed with the European Investment Bank, Sumitomo Mitsui Banking Corporation, Mizuho Bank, Ltd., etc., bringing the total co-financing amounts to approximately GBP1,069 million and EUR910 million.
      
  2. The project will construct a high voltage direct current transmission system that will link the eastern region of the United Kingdom and Northern Germany with a cable of total length of approximately 720 km and a capacity of 1,400 MW. The system will be operated for a duration of 25 years. For JBIC, this is the first project financing offered for an interconnector project.
      
  3. The United Kingdom and Germany are promoting effective use of renewable energy and decarbonization. In July 2021, British Prime Minister Johnson and then German Chancellor Merkel, in their meeting, affirmed the importance of this project in light of its objective. Also, in the Strategic Energy Plan, released in October 2021, the Government of Japan stated it would promote innovations in the energy and environmental technology fields and support efforts toward decarbonization by working toward realizing carbon neutrality in collaboration with developed economies such as Europe. The loans are in line with these policies and will financially support the overseas infrastructure project, where a Japanese company will invest and will be involved in its operation and management for the long term, thereby contributing toward maintaining and improving the international competitiveness of Japanese industry.
      
  4. In October 2021, the European Investment Bank and JBIC signed a memorandum of understanding to further strengthen cooperation between the two policy-based public financial institutions in areas such as climate and environmental change measures in which Japan and the EU will play a leading role*2. The project is the first one the European Investment Bank and JBIC have cooperated in since the signing of the memorandum of understanding.
      
  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 infrastructure 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.
  2. *2 

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