Financial risk management is important for winning contracts in the offshore wind market

Aibel AS will be delivering two transformer platforms to Ørsted’s Hornsea 3 offshore wind farm project in the United Kingdom. In the long-term, the wind farm could supply two million households in the United Kingdom with electricity.

Guarantees from Eksfin extend the capacity of banks

Aibel’s offshore wind contracts require the provision of somewhat higher guarantees than the company’s traditional contracts for the oil and gas industry, in addition to longer maturity periods. Stricter requirements for guarantees and maturity periods put pressure on bank credit lines, therefore Eksfin’s contribution is important. In connection with this contract, Aibel provides bank guarantees as security for completion of that equivalent to ten per cent of the contract value and a substantial advance payment guarantee. DNB issues the bank guarantees and has applied for a 50 per cent counter-guarantee from Eksfin. The maturity periods of the completion guarantees are 64 and 70 months, respectively. 

See also: The guarantee was important for Aibel winning the offshore wind contract in the North Sea.

Completion guarantee 

The ‘completion guarantee’ product safeguards the co-contractor against losses if the Norwegian exporter fails to meet their obligations according to the signed contract or given offer. The exporter’s bank sends the risk mitigation application to Eksfin. In this case, Eksfin relieves DNB through a counter-guarantee.

Good financial risk management is crucial for this type of project. The fact that Eksfin is there to assist is extremely supportive for Norwegian industry in a tough European market.

Mads Andersen, Group Chief Executive at Aibel

Key role in offshore wind

The two platforms that Aibel will be delivering, named Hornsea 3 Link 1 and 2, are so-called HVDC platforms or transformer platforms. They will play a key role in the offshore wind farm, which will be developed with up to 231 wind turbines producing an alternating current directed to the transformer platforms. Here the power will be converted to a high voltage direct current (thus HVDC for High Voltage Direct Current). This gives significantly lower transmission losses in long undersea cables. Transformers are therefore a prerequisite for profitable production of offshore wind a long distance to shore. At the coastline, the direct current is converted back to an alternative current for the UK high voltage network.