BayernLB and Danish export credit agency EKF have extended a €1bn facility to finance renewable energy supplier RWE’s investment in two offshore wind farms which will power the equivalent of 1.6 million homes in Germany and the UK.

Munich-headquartered BayernLB acts as the arranger, agent and lender on the loan, with EKF also acting as a direct lender, although a spokesperson for BayernLB declined to say how much each institution is providing.

The earmarked facility, signed and closed on December 13, is structured as an initial €500mn loan with options for a floating and fixed interest rate basis.

The funds will be used in RWE’s development of the Sofia wind farm at Dogger Bank in the North Sea, which will supply power to the UK, and Kaskasi near the German island of Heligoland, off Germany’s northwest coast. They will have a combined production capacity of 1.7 gigawatts (GW).

EKF is participating because Siemens Gamesa, the Spanish-German renewable energy firm, will produce equipment for the projects in Denmark.

Michael Müller, RWE’s chief financial officer, says the financing “diversifies our funding sources by adding a commercially attractive, replicable financing instrument to support our significant growth ambitions”.

EKF managing director Werner Grub says: “We are very pleased to have closed this agreement, where EKF is once again financing renewable energy projects with a total production capacity of more than 1.7GW.

“The loan gives RWE the flexibility required to implement wind energy on a large scale, and we are happy to play a role in this. We are also looking forward to the new collaboration with RWE.”

Law firm Dentons advised both lenders and Gorrissen Federspiel provided local advice to EKF. Freshfields acted as counsel to RWE.

In lending to the Sofia project, EKF joins a throng of European ECAs who have covered financing for wind power at Dogger Bank, a large sandbank around halfway between Denmark and the UK where a sprawling wind power project is being developed in phases.

ECAs from France, Norway and Sweden have backed facilities totalling around £8.5bn for other stages of the development, provided by commercial lenders including BNP Paribas, Société Générale, Barclays and Santander.