SCOTTISH Hydroelectric owner SSE has passed a key milestone on a massive windfarm development project in a success which emphasised the appeal of the sector to investors.

The Perth-based energy giant said it has secured the funding required to support work on the first phases of the Dogger Bank windfarm in the North Sea.

Set to be the world’s biggest offshore windfarm, Dogger Bank is expected to be capable of producing enough renewable electricity to supply five per cent of UK demand and power six million homes each year.

READ MORE: SSE boss defends energy giant's treatment of Scottish supply chain amid windfarm row

The first two phases will require a total £6 billion capital investment. SSE will split the costs with Norwegian oil giant Equinor. Both have 50% stakes in Dogger Bank. The partners have secured £5.5bn debt funding for the project.

SSE noted: “Due to the strong appetite from lenders, Dogger Bank Wind Farm was able to secure competitive terms, despite raising the debt during unprecedented economic circumstances arising from the global coronavirus pandemic.”

It added: “The level of interest achieved reflects the high quality of the project and enables strong returns on shareholder capital to be delivered.”

Following the apparent vote of confidence in Dogger Bank, SSE expects to be able to realise some of its investment in the project in coming weeks.

The company said a process to sell an equity stake in the first two phases of Dogger Bank is currently under way.

READ MORE: Renewable energy heavyweight underlines appeal of Scotland for investors

The interest shown in Dogger Bank by lenders provides vindication for SSE’s decision to invest significant effort in a project that has been under development for years.

SSE’s chief executive, Alistair Phillips-Davies, said yesterday: “We are proud to be leading on the construction and development of Dogger Bank Wind Farm, which has been 10 years in the making.

“We are putting our money where our mouth is on delivering net zero and reinforcing the UK’s position as a world leader. This investment will help drive a green recovery ... over the next five years, creating jobs and boosting the local economy.”

SSE has shifted its focus onto renewable energy generation and related networks under Mr Phillips-Davies.

The company believes that by investing in windfarms it can help in the drive for net zero while providing a boost for the economy and delivering returns for investors.

In recent months it has sanctioned investment in the giant Seagreen windfarm off Angus and the Viking development in Shetland.

Equinor said the first phases of Dogger Bank would form the backbone of a growing wind hub in the North Sea. The company, which was formerly known as Statoil, will operate Dogger Bank. It said: “Through the sheer scale of the project we have delivered record-low contract prices for the UK market, and as operator of the windfarm we will continue to deliver value to the UK for years to come.”

However, the interest shown in Dogger Bank by debt funders could raise questions about how the risks and rewards involved in windfarm developments should be shared between stakeholders.

READ MORE: Why should consumers have to help energy giants generate huge returns on their investments?

Last year, SSE secured 15-year contracts to sell output from Dogger Bank under the official Contracts for Difference Programme.

This provides support for firms to develop new windfarms by guaranteeing the price they will get for output from them. The costs are passed on to consumers through their electricity bills.

Investment in windfarms has yet to provide the boost to the Scottish supply chain that some hoped for.

Dogger Bank will include three phases spanning waters off Eastern England, Germany, Denmark and Holland. It is expected to be fully completed in 2026.