GIEK (The Norwegian Export Credit Guarantee Agency) has quadrupled its offshore wind portfolio to NOK 4.2Bn ($453m) since the tail end of last year. With ample capacity and competitive rates, it is actively seeking new business worldwide as part of its mandate to bolster the participation of Norwegian exporters in a burgeoning but capital-intensive sector.
State-owned GIEK manages an international portfolio of export-related guarantees that today totals $8.5Bn. While its focus has traditionally been oil and gas and shipbuilding followed by fisheries and aquaculture, it has widened its mission to include offshore wind, and more generally banks and investors participating in large international energy-infrastructure projects.
“Offshore wind is really gaining momentum and is a great example of how we can actively help Norwegian industry re-channel by opening the door to new markets for existing wind expertise and other companies looking to extend their reach into green technology,” said GIEK chief executive Wenche Nistad. “By choosing a Norwegian supplier you can count on receiving good financing from GIEK in support of the purchase,” she added, highlighting recent contracts won by the likes of Nexans Norway, Aibel and Fred Olsen Windcarrier.
GIEK’s core offering are AAA-rated guarantees for long-term loan financing, as well as contractual delivery guarantees that protect both buyers and suppliers in case of default. “Norway can offer triple A-rated instruments, which are a key tool in reducing the cost of project financing. We work together with commercial banks to share project risk, so loans will be repaid,” said Nistad. Customers pay risk premium on competitive commercial terms.
Nistad continued, “We have a lot of experience, especially from offshore and shipping, in participating in complex international projects involving many players and financing institutions. We’re bringing that expertise into the process for offshore wind. We’re easy to work with, solution-oriented and flexible. And I’m proud to say our existing partners are very satisfied”.
Offshore wind promises to be a winner for Norwegian suppliers looking to maximize new opportunities in a changing energy landscape – and as activity in offshore oil and gas is projected to slacken after 2020 amid a lack of big new finds. GIEK blazed a trail in the sector by providing service delivery guarantees totalling NOK 1.3bn towards the end of last year that enabled Norwegian supplier Aibel to clinch two big European contracts. In February, it stepped in with a third guarantee package of an equal amount, this time on behalf of Fred Olsen Windcarrier for a project in Asia. Just in recent weeks it provided guarantee coverage amounting to around NOK 1.6bn that helped cables specialist Nexans Norway secure a major contract with the Seagreen offshore wind farm under development off Scotland.
More projects are already in the pipeline, and GIEK is keen to hear from project owners and their banks worldwide. “We have high capacity and we’re ready to take on a lot more business in this sector,” said Nistad.
In terms of risk capital, GIEK financing serves to extend the capacity of banks. “We can provide guarantees to anyone involved in putting together a wind project, and we are very competitive compared to what is available internationally,” Nistad added.