Multinational electricity and gas utility company National Grid has secured a US$743mn export credit agency (ECA)-backed financing package, structured under its green financing framework.

The package is made up of a US$488mn export credit guarantee from Sace with Simest CIRR support and a US$255mn Euler Hermes guarantee, and marks the first time multiple ECAs have come together to finance a green project of this size.

The loan, which follows the guidelines set by the Loan Market Association’s Green Loan Principles, will help fund a €2bn subsea electricity interconnector between the UK and Denmark. Known as Viking Link, the 765km-long, 1,400 MW cable will supply renewable energy to 1.4 million households across the UK.

The deal was structured by BNP Paribas, which took on the role of structuring bank, bookrunner, mandated lead arranger (MLA) and lender of both facilities, as well as Euler Hermes agent. It was joined by HSBC as bookrunner, MLA, lender and Sace agent, and by NatWest as bookrunner, MLA, lender and facility agent of the Euler Hermes export credit. All three banks, together with Sace and Simest, were advised by Clifford Chance, and National Grid was advised by Linklaters.

“We are proud to have supported National Grid in structuring and arranging the ECA-backed financing of the Viking Link interconnector, a tailor-made, cost-efficient financing package and the first ever multi-tranche green export credit facility,” says Renaud-Franck Falce, head of capital markets for BNP Paribas in Emea.

He says that the transaction shows that ECA finance is “fully compatible with green lending practices” and that it offers a framework that may be replicated going forward for other projects with sustainable features.

Viking Link is a joint venture between London-headquartered National Grid and Danish system operator Energinet. The project has been included on the European Union list of Projects of Common Interest, and demonstrates a fundamental role in supporting the EU transition to green energy in accordance with the Paris Agreement.

Once completed in 2023, the interconnector will enable more effective use of renewable energy, access to sustainable electricity generation and improved security of electricity supply, resulting in material environmental and socioeconomic benefits for both Denmark and the UK as well as the rest of Europe.

According to National Grid, by 2030, 90% of electricity imported via its interconnectors will be from zero carbon sources.

“Britain’s energy system is in the midst of a rapid and complex transformation,” says Katerina Tsirimpa, National Grid’s head of corporate finance. “This green loan represents another important contribution towards our net zero commitment and it reinforces our strong leadership position in the path to a greener energy landscape.”