RWE and KKR just secured roughly £13bn to build the largest offshore wind project in British history, and the government is celebrating it as proof that clean energy investment is alive and well. It is a genuinely large deal. But buried inside the financing structure is a question that hasn't been answered cleanly: why did two of the world's most powerful energy investors need a £1bn loan from British taxpayers to get it done?

The Vanguard windfarms, two interconnected developments off the Norfolk coast, will generate about 2.8 gigawatts of electricity when they are fully operational, enough to supply roughly 3 million homes. Construction starts early next year, with power flowing by 2030. RWE, one of Europe's largest electricity generators, is the developer. KKR, the giant American private equity firm, has bought a 50% stake. Together, they assembled a lending group of 35 international banks. The UK's national wealth fund added £1bn on top.

Prime Minister Andy Burnham framed the announcement as a "vote of confidence for building in Britain" ahead of his speech at the Cop31 climate summit in Turkey this week. He described every new turbine as "power under British control, not at the mercy of events on the other side of the world." The government also highlighted an estimated 2,300 jobs a year during construction and 100 permanent roles once the farms are running.

The subsidy question

Here is what makes the financing unusual. The national wealth fund was set up with a specific mandate: direct public money only where private capital won't go on its own. Its own stated standard is to test whether "impact would not have materialised without us." The logic is sound in principle. Taxpayers shouldn't be subsidising returns for investors who would have written the cheque anyway.

The Vanguard project is a trickier fit. RWE and KKR are not distressed borrowers. The project already carries a government-guaranteed electricity price of £91.20 per megawatt hour (in 2024 money), locked in for 20 years, which is the main tool Britain uses to make offshore wind commercially attractive. That guaranteed price eliminates the biggest risk developers normally face. With 35 banks already in the syndicate, the question of whether the wealth fund's £1bn was truly what made the difference is hard to answer with a straight face.

The fund's defence is that the renewable energy sector will need enormous amounts of capital over the next few years, following a large auction round, and that having a state-backed lender in the mix helps keep borrowing conditions accessible across the whole market, not just this one project. That's a coherent argument. It is also an argument that is far more comfortable for investors than it is for the public, because it means developers can count on state financing support whenever borrowing costs climb, even on projects that have already been de-risked through guaranteed revenue contracts.

The harder backdrop

The announcement lands in a complicated week for the government's climate credibility. Ministers approved the Jackdaw gasfield in the North Sea, triggering a backlash from Labour MPs and environmental groups. They also rejected the Botley West solar project, an £800m development near Blenheim Palace that developers said would have powered 330,000 homes, on grounds that it would harm the green belt and the heritage site.

Approving a gas field while rejecting a solar farm while celebrating an offshore wind deal creates an awkward picture, even if each decision can be defended individually on its own terms.

The Vanguard investment is real, the jobs are real, and the electricity will be real. What is also real is a £1bn public loan to a project backed by some of the deepest private pockets in global finance, justified by a rationale that the fund itself seems to be stretching to fit. That is not a reason to oppose offshore wind. It is a reason to ask who, exactly, the wealth fund is working for.