Delegates are invited to meet and discuss with the poster presenters during the poster presentation sessions between 10:30-11:30 and 16:00-17:00 on Thursday, 19 November 2015.
Lead Session Chair:
Stephan Barth, ForWind - Center for Wind Energy Research, Germany
Martin Sandgren (1) F
(1) Ince, London, United Kingdom (2) Siemens Wind Power, Hamburg, Germany
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Presenter's biographyBiographies are supplied directly by presenters at EWEA 2015 and are published here unedited
Martin Sandgren is an energy projects lawyer and an of Counsel with the international law firm Ince & Co. He has been involved in many ground breaking transactions throughout Europe and the rest of the world. Prior to joining Ince & Co, Martin was a Co-Head of Legal with Siemens Wind Power A/S. Martin regularly speaks at industry and professional conferences and publishes articles within the energy sector and edits leading industry publications. He is a committee officer of the IBA. He is a member of BIMCO’s drafting committee for WINDTIME and is participating in FIDIC’s new renewables contract initiative.
PosterDownload poster (15.74 MB)
Financing the floating turbine unit - navigating towards a registerable security interest and novel financing structures increasing availability and lowering cost of capital
The ability to register a floating wind turbine in a ships or similar register, creating a clear and first ranking security interest, can be expected to increase investors,’ appetite for offshore wind and increase the availability of capital, lower the cost of capital and credit risk. It will also show how the use of ships and offshore like financing model has the potential to open up for novel financing structures, bringing in new types of investors and amounts of capital, compared to traditional project financing.
Main body of abstract
As the number and size of offshore wind farm projects located in deeper waters increase, FTUs can be expected to become increasingly important in the future. The availability of project finance and other sources of finance will be of increasing importance for the development and growth of the FTU market. One of the key factors in procuring necessary financing will be the ability of the lenders to take a strong security interest over the assets financed. While a share pledge in the project company, assignment of revenue streams and insurance, and other means of security not directly related to the wind turbines themselves provide some security for the lenders and may be sufficient for purposes of fixed foundation offshore wind farms, it may not be sufficient for FTU financing. This is partially due to the more mobile nature (and intrinsic independent value in foreclosure) of FTUs in comparison to the traditional fixed foundation offshore wind farms. Self-evidently, the ability to take a registerable security interest in FTUs will be more important in relation to larger wind farms and wind farms where the FTUs may be moved between different jurisdictions for purposes of manufacture, installation, operation and/or maintenance.
The concept of floating wind turbines as vessels and registration and financing as ships or offshore assets is novel. The proposer of the session has co-authored an article with Alexander Severance from Siemens Wind Power in Germany, entitled “Flagging the Floating Turbine Unit: Navigating Towards a Registerable, First-ranking Security Interest in Floating Wind Turbines”. It was recently published as the lead article in Volume 39 of the worlds’ leading academic maritime law journal, the Tulane Maritime Law Journal 2014 (39 TUL. MAR. L.J. 2014). The conclusion is that legislation should be clarified to the effect that FTUs shall be treated as ship for purposes of registration or a separate statutory provision could be enacted providing for a separate FTU register.
The ability to register an FTU as a ship should also open doors to novel types of project and finance structures, potentially inspired by ship finance and offshore oil&gas models and including arrangements by which the project company leases the FTUs, rather than buy them, and provide tax advantages from registering the FTUs in a country other than that where the project is located and ship building subsidies. This is novel and have not been published before.
The legal status of FTUs is uncertain and new clarifying legislation should be enacted, including ability to register as vessels. That would remove the uncertainty as to how to take title and security therein and make large scale FTU projects more bankable. This also opens the door to new types and sources of financing inspired by ship finance and offshore oil&gas, including lease arrangements and tax advantages. This has the potential to lower cost of financing and widen the range of sources of funding.
Participants will learn that the bankability issues as a result of the uncertainty regarding the legal status of FTUs, how the uncertainty can be resolved and how resolving that through registration as ships also creates the opportunity for additional funding at different terms/lower costs.