Polish oil and gas company Orlen and its Canadian partner Northland Power have secured C$5.2bn ($3.8bn) in project financing for the 1.2GW Baltic Power offshore wind farm, to be located off the coast of Poland in the Baltic Sea.
The non-recourse green financing, which has a term of 20 years, is being offered by 25 commercial banks as well as several export credit agencies and multilateral agencies. With the credit agreement in place, Orlen and Northland are targeting a financial close on the project in the coming days.
The financing will help meet nearly 80% of the offshore wind farm’s estimated cost of C$6.5bn ($4.83bn), while the remainder will be provided by the two partners.
The two companies have been co-developing Baltic Power since Northland picked up a 49% interest in the project in 2021, with Orlen holding the balance (51% stake).
Northland Power president and CEO Mike Crawley said: “Today’s announcement is a major achievement for Northland, our partners and the Baltic Power project. This milestone demonstrates the support from the global financial community and reflects their confidence in Northland and our ability to develop, procure, construct and finance large and complex offshore wind projects.
“Despite the recent challenges for the offshore wind sector in some markets, Northland continues to find a way to advance large-scale offshore wind projects with attractive economics.”
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To be located around 22km off the Polish coast near Plaża Wydmy Lubiatowskie, the offshore wind farm is anticipated to generate enough power for 1.5 million Polish homes when operational in the latter half of 2026.
It will feature up to 76 Vestas turbines, each with 15MW of power-generating capacity. In September 2022, Vestas was chosen as the preferred supplier for the project and will provide its V236-15.0MW turbines.
Baltic Power is supported by a 25-year contract for difference offtake agreement with the Polish Government. This agreement also has an inflation indexation feature, with 2021 as the base year.
Last month, Orlen made a conditional investment decision on the project. Construction activities have already commenced, starting with the onshore transmission infrastructure in the Choczewo municipality in Poland in May this year.