Cases: Energy

Financial risk management is important for winning contracts in the offshore wind market

To win offshore wind contracts, Aibel relies on being able to provide substantial bank guarantees. For the third time since 2019, Aibel AS has won a contract in a competitive European offshore wind market. Eksfin is also providing risk mitigation this time as well.

Illustration: Aibel


Company: Aibel AS

Project: Hornsea 3 in the United Kingdom

Financing: Bank guarantees from DNB and a 50% counter-guarantee from Eksfin.

Aibel builds and maintains platforms and other critical infrastructure for the energy sector. The company holds a leading position within the European offshore wind industry, the electrification of offshore oil and gas installations and onshore facilities. Aibel is one of the major suppliers on the Norwegian Continental Shelf and a full-service supplier of innovative and sustainable solutions. More than 4,500 employees work at the company’s offices in Norway, Thailand and Singapore. In addition, Aibel owns two modern shipyards in Haugesund, Norway, and Laem Chabang in Thailand with substantial capacity for prefabrication and building. 

Aibel AS will be delivering two transformer platforms to Ørsted’s Hornsea 3 offshore wind farm project in the United Kingdom. In the long-term, the wind farm could supply two million households in the United Kingdom with electricity.

Guarantees from Eksfin extend the capacity of banks

Aibel’s offshore wind contracts require the provision of somewhat higher guarantees than the company’s traditional contracts for the oil and gas industry, in addition to longer maturity periods. Stricter requirements for guarantees and maturity periods put pressure on bank credit lines, therefore Eksfin’s contribution is important. In connection with this contract, Aibel provides bank guarantees as security for completion of that equivalent to ten per cent of the contract value and a substantial advance payment guarantee. DNB issues the bank guarantees and has applied for a 50 per cent counter-guarantee from Eksfin. The maturity periods of the completion guarantees are 64 and 70 months, respectively. 

See also: The guarantee was important for Aibel winning the offshore wind contract in the North Sea.

Completion guarantee 

The ‘completion guarantee’ product safeguards the co-contractor against losses if the Norwegian exporter fails to meet their obligations according to the signed contract or given offer. The exporter’s bank sends the risk mitigation application to Eksfin. In this case, Eksfin relieves DNB through a counter-guarantee.

Good financial risk management is crucial for this type of project. The fact that Eksfin is there to assist is extremely supportive for Norwegian industry in a tough European market.

Mads Andersen, Group Chief Executive at Aibel

Key role in offshore wind

The two platforms that Aibel will be delivering, named Hornsea 3 Link 1 and 2, are so-called HVDC platforms or transformer platforms. They will play a key role in the offshore wind farm, which will be developed with up to 231 wind turbines producing an alternating current directed to the transformer platforms. Here the power will be converted to a high voltage direct current (thus HVDC for High Voltage Direct Current). This gives significantly lower transmission losses in long undersea cables. Transformers are therefore a prerequisite for profitable production of offshore wind a long distance to shore. At the coastline, the direct current is converted back to an alternative current for the UK high voltage network.