No. 38/2023 | 10-08-2023 | 22:09
Conditional investment decision on launch of construction stage of Offshore Wind Farm
ORLEN S.A. (“ORLEN”, “Company”) informs that on 10 August 2023 the Company’s Supervisory Board adopted resolution on the conditional investment decision regarding the launch of a project for construction of an Offshore Wind Farm located in the Polish Exclusive Economic Zone on the Baltic Sea with a maximum capacity up to 1200 MW (“Project”). The Project will be carried out by Baltic Power sp. z o.o. (Baltic Power) based on a joint venture agreement implemented by ORLEN, Baltic Power and NP BALTIC WIND B.V., a company from the Northland Power Inc. capital group, based in Amsterdam, Netherlands. ORLEN holds over 51% of the shares in Baltic Power.
The total finance plan for the Project is estimated at ca. EUR 4.73 bn and covers capital expenditures and contingency (in the amount of EUR 4.05 bn), as well as financing costs and additional reserve. Start of construction of the offshore wind farm is planned for 2023 and commercial operations are planned for 2026.
Stakeholders of the Project assume that financing of the Project will be realized in the Project Finance formula, i.e. a model where the repayment of the loans and letters of credit granted to Baltic Power by banks and other Polish and foreign financial institutions will be based on future cash flows generated by the Project. Project Finance formula is particularly beneficial for investments that require significant CAPEX and time to reach its full capacity, like construction and operation of offshore wind farms.
Today decision will finally come into force after certain conditions are fulfilled, ie. among others the process of financing is finalized and required construction permits are completed.
See also regulatory announcements: no 37/2023 dated 10 August 2023 and no 2/2021 dated 29 January 2021.