Scope completed the monitoring review for CPPIB Renewables Europe Sàrl on 3 February 2021:

Senior secured notes, current outstanding balance EUR 479.7m: BBB+

This monitoring note does not constitute a rating action nor does it indicate the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated rating history can be found on www.scoperatings.com.

Transaction overview

The project underlying the senior notes is currently the largest offshore wind farm project in Germany. The project comprises two adjacent offshore wind farms: Hohe See (497MW) and Albatros (112MW) in the German North Sea.

The project is sponsored by EnBW, which holds the majority stake (50.1%). Enbridge and Canada Pension Plan Investment Board (CPP Investments) own the remaining 49.9%. Enbridge joined the project as a strategic partner to EnBW in 2017. In 2018, Enbridge secured CPP Investments as a 49.0% co-investor in its renewable energy projects in Europe and North America.

The transaction represents the financing of CPP Investments’ interest in the project by issuing senior secured notes totalling EUR 510.6m. CPP Investments holds an indirect share of 24.45% in both offshore wind farms. CPP Investments will remain exposed to the project through its subordinated investment.

Key rating factors

The BBB+ rating reflects a total expected loss of 0.59% over the notes’ life until maturity (equivalent to a 5.82-year constant-exposure expected risk horizon). Key drivers are the absence of construction risks and low risks during the operating phase, especially with regard to the sponsors and revenue generation. The economic value of cash flows and the extensive experience and strong economic incentives of the sponsors and operators mitigate the risks contributed by the project structure and its financial strength.

The successfully completed construction is credit positive. This has no impact on the rating due to the marginal risk contributions from construction at the time of the initial rating.

The Covid-19 pandemic did not have a significant impact on the project. Both offshore windfarms have been feeding power into the grid and generating cash available for debt service since October 2019. Unscheduled grid outages and curtailments negatively affected power generation in the first six months of 2020, which is not unusual at the start of operations for an offshore wind park. The project was largely compensated for this underperformance through regulatory compensation payments. The technical availability of the wind turbines and the project’s cash flows for the full year 2020 were in line with our rating case assumptions.

The methodology applicable for the reviewed rating (General Project Finance Rating Methodology, 16 November 2020) is available on https://www.scoperatings.com/#!methodology/list.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst Torsten Schellscheidt, Executive Director

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