Saint Nazaire: has France entered the era of offshore wind power?
Questions to François Troesch, Infrastructure & Energy Finance EMEA, Natixis CIB
“Floating turbines are notably the future of offshore wind power in France. Located further from the coast they capture more powerful winds, and they are becoming increasingly commercially viable as production costs are falling.”, François Troesch
France's first offshore wind turbine was installed last April off Saint-Nazaire, as part of a wind farm that will host a total of 80 turbines by the end of 2022. Natixis Corporate & Investment Banking acted as lead arranger for the consortium led by EDF. We asked François Troesch, an expert in the financing of renewable energy infrastructure, about this emblematic transaction and the importance of the offshore wind energy sector in the energy transition.
Why is the Saint Nazaire offshore wind farm so emblematic?
Saint Nazaire is France’s first wind farm installed in the sea. There have previously been installations of demonstration turbines, but this is the first offshore wind farm that will actually be put into operation. It is located 12 km off the Guérande peninsula in Loire-Atlantique. The project is led by EDF Renewables, Enbridge Inc and CPP Investments. A total of 80 wind turbines will be installed by the end of this year, with a total capacity of 480 MW, which represents 20% of the electricity consumption of the Loire-Atlantique region. Natixis Corporate & Investment Banking, as Mandated Lead Arranger, coordinated the response of four Groupe BPCE banks: Caisse d'Epargne Bretagne Pays de Loire, Caisse d'Epargne Normandie, Caisse d'Epargne Ile-de-France and Banque Populaire Grand Ouest. The direct contribution of Groupe BPCE amounts to 100 million euros.
Are there any specific features to offshore wind financing in France?
The Saint-Nazaire offshore wind farm tender was awarded to the consortium led by EDF in 2013, with financial closing six years later. In France, tenders are awarded very early on, which means that it is up to the successful company to carry out the administrative procedures to obtain the permits and complete the project. This leads to particularly long development periods between the tender and commissioning - almost 10 years - making the support of experienced financial partners especially vital.
Has France entered the era of offshore wind power?
Yes, Saint Nazaire marks the first milestone in the emergence of offshore wind power in France. France aims to install 2.4 GW of capacity by the end of 2023 and between 5.2 GW and 6.2 GW by 2028 under its Multiannual Energy Program (Programmation Pluriannuelle de l’Energie). With 11 million square kilometers of maritime area and four mainland coastlines, France has the second largest maritime area in the world and is therefore very well placed to benefit from this renewable energy source. After a relatively long initial phase, we observe an acceleration since 2019. The six projects selected at the 2011 and 2013 tenders, representing 2.9 GW, in Normandy, Brittany and the Vendée, have entered the construction phase. In addition, two new tenders are planned for 2022, one for 1 GW of fixed wind in the Channel and the other for 250MW of floating wind in Southern Brittany - marking a willingness to move forward.
What are the advantages of offshore wind?
Offshore wind turbines capture stronger and more regular winds than onshore wind turbines and produce twice as much energy, on average. In addition, offshore wind can accommodate much larger capacities: current wind farms amount to an average of 500 MW according to the PPE, compared to 10 MW for onshore wind farms. Within offshore wind you have both fixed turbines and floating. The floating wind technology offers promising prospects: farther from the coast, it can capture even stronger winds, reduce the visual impact for local residents and find space for new installations. Notably in France, where the narrowness of the continental shelf limits the potential of fixed offshore wind power, especially in the Mediterranean. The floating technology, which is more recent, is now sufficiently mature to allow commercial development. The main obstacle lies in the production costs: they are still about three times higher than those of land-based wind power but are falling rapidly thanks to the economies of scale achieved with the increase in the number of projects. In order for the sector to emerge, major investments are required and we at Natixis CIB have the know-how to structure viable project financings.
Does Natixis CIB finance floating wind farms?
Yes, we do. There have been only a few such projects in the world so far. We financed one of the very first, the 50 MW Kincardine floating wind farm off the coast of Scotland in 2020. In France, Natixis CIB and Groupe BPCE are financing two of the four pilot farm projects awarded by The French ministry for the environmental transition, ADEME.
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