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Conrad Energy closes UK’s first standalone greenfield financing of two Pathfinder synchronous condenser projects

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Conrad Energy has announced the successful closure of the greenfield financing of two Pathfinder synchronous condenser projects located in the East of England. 

The company’s adviser, Nomura Greentech, launched the financing process in June and contacted over 50 lenders for this first-of-a-kind financing. The transaction received strong support and ultimately the £200 million package was supported by commitments from AIB, Siemens Financial Services acting through Siemens Bank, HSBC UK, Bank of China and CaixaBank. It comprises a fully amortising term loan of £170 million, and £30m of ancillary facilities maturing in March 2035. The financing package is underpinned by long-term cash flow visibility with no merchant exposure, supported by circa 10-years of 100% availability fee contracts with investment grade counterparty National Grid ESO.

Proceeds of the financing will be used to fund the remaining capex required to construct the synchronous condensers, as National Grid prepares to operate at zero-carbon by 2025 as part of the UK’s Net Zero target for 2050.

As a result of the increased penetration of renewable energy and the retirement of thermal generation, the transmission system inertia and Short Circuit Levels (“SCL”) are falling. Therefore, National Grid launched the Stability Pathfinder 3 procurements in November 2022 to secure SCL and provide stability to the network. The need for stability products varies across the country and so, National Grid have embarked on a series of regional procurement exercises to allow the market to provide solutions for this requirement.

The synchronous condensers, being provided by Siemens Energy, provide stability and voltage support to the electricity network, especially when system faults occur within the power grid. They do not generate power but produce or absorb reactive power to keep the current flowing consistently to the grid–helping to ensure reliable power is available for those who need it, when they need it.

Steven Hardman, Chief Executive Officer of Conrad Energy, said:

“We’re extremely happy with this successful transaction and would like to thank all the parties involved in getting this innovative financing completed. Special thanks go to our partners, Siemens Energy and National Grid, who worked closely with us to deliver a financeable project. Whilst the transaction was underpinned by the availability contract, we see these assets operating well into the future – providing stability to help facilitate the energy transition over the long-term.”

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