AMP completes £317m renewables transmission deal

The Greater Gabbard transmission project, owned by the firm alongside Balfour Beatty and Equitix, is the first UK asset to make use of the EIB’s credit enhancement scheme.

AMP Capital, the Australian fund manager, has been awarded a £317 million (€380 million; $518 million) transmission licence as part of the Greater Gabbard offshore transmission owner (OFTO) project.

Greater Gabbard OFTO is the high voltage transmission system that connects the 504-megawatt (MW) Greater Gabbard Wind Farm, located in the south-east of England, to the onshore transmission network. It comprises three substations – two offshore and one onshore – and more than 150 kilometres of sub-marine cable infrastructure.

AMP will jointly own and operate the OFTO assets as part of a consortium with UK developer Balfour Beatty and investment firm Equitix, with each organisation holding a one-third share. The project will operate under a perpetual licence with a 20-year revenue entitlement period, under which it will receive an inflation-linked, availability-based revenue stream.

Greater Gabbard is AMP’s first offshore transmission deal covered by the OFTO tender regime conducted since 2009 by Ofgem, the UK energy regulator, to transfer ownership of offshore wind transmission assets from wind farm developers to independent operators.

It is also the first OFTO project to raise debt financing from public markets, and the first UK asset to benefit from the European Investment Bank’s (EIB) Project Bond Credit Enhancement facility. Launched in 2012, the initiative aims at bolstering the capital markets contribution to project financing, with a view to plug the gap left by retreating banks.

The consortium yesterday priced the £305 million senior secured bond issue that will form part of the financing it needs to acquire the transmission assets. Rated A3 by Moody’s, the 19-year notes priced at 125bps over gilts, with a coupon of 4.137 percent.

The presence of the EIB’s credit enhancement facility allowed the bond issue to benefit from a one notch uplift, Moody’s said when it issued its provisional rating last week.