Baltic Power secures credit facility agreements for Poland’s first offshore wind farm
The ORLEN Group and Northland Power have entered into credit facility agreements to finance their joint Baltic Power project, the first wind farm, which will be constructed in the Polish waters of the Baltic Sea. The agreements have been signed with a syndicate comprising 25 Polish and international financial institutions, marking one of the key stages in the project preparation process.
‘We are in the final stages of preparing a large-scale project that will significantly change Poland’s energy mix. Our robust financial footing and extensive international experience in managing large-scale projects equip us to handle this process effectively. Despite the highly dynamic environment, we are on track with the Baltic Power project’s preparation, with the goal of providing clean energy to more than 1.5 million households as early as 2026. Securing financing for the project demonstrates that the financial markets also have a positive view of ORLEN’s strategic investments through 2030,’ noted Daniel Obajtek, CEO and President of the ORLEN Management Board.
The overall project budget is estimated at about EUR 4.73bn and includes capital expenditures with insurance of approximately EUR 4.05bn, as well as financing costs and an additional reserve. The construction of the farm is slated to commence in 2023, with the offshore segment following in 2024, and the project is expected to become operational in 2026. During the initial five years of operation, the Baltic Power project could generate an additional average annual free cash flow of approximately EUR 140m.
The repayment of the credit facility will be funded through the future financial surpluses generated by the project. The project will be financed under the Project Finance framework, which is well-suited for projects with significant capital requirements and extended timelines to achieve full operational capacity. The syndicate supporting the project comprises 25 financial institutions, encompassing both Polish and international commercial banks, export credit agencies (ECAs), and multilateral institutions, including the European Investment Bank (EIB), European Bank for Reconstruction and Development (EBRD), Euler Hermes, Export and Investment Fund of Denmark, and Export Development Canada. The project financing accounts for 80% of the expected total capital costs, with the project partners contributing the remaining capital.
‘The Baltic Power project is progressing in accordance with the approved schedule, and securing the financing marks a significant milestone in its development phase. This accomplishment was made possible thanks to the unwavering support and dedication of the project’s shareholders, ORLEN and Northland Power, and their effective cooperation throughout the preparation process,’ said Jarosław Broda, President of the Baltic Power Management Board.
Baltic Power is the most advanced offshore wind project in Poland. The project has successfully secured contracts for all key components, including turbines, offshore and onshore substations, cables, and foundations, and their respective manufacturing, transport, and installation. It also holds construction permits for the onshore part of the project and a permit for the construction of an offshore power connection to facilitate the transmission of electricity from the offshore wind farm to the mainland.
The construction of the Baltic Power offshore wind farm stands as one of the ORLEN Group’s key projects in pursuit of its strategic objective to achieve 9 GW of installed renewable energy capacity by 2030. The farm will be located approximately 23 kilometres off the coastline near Łeba and Choczewo, and it is designed to comprise 76 state-of-the-art wind turbines, each with a unit capacity of 15 MW. Upon its completion in 2026, the Baltic Power wind farm will start producing electricity to power over 1.5 million households. ORLEN Group owns more than 51% shares in Baltic Power.