US$625 million financial close for offshore wind farm in Taiwan

Macquarie Group, Ørsted and Swancor have secured TWD18.7 billion (US$626.1 million) project financing for the second phase of the Formosa 1 offshore wind project, Taiwan’s first commercial scale offshore wind farm, located off the coast of the Miaoli district of the country.

The 120 MW wind farm will add to an 8 MW pilot project that was commissioned in April 2017. The 20 turbines are being supplied by Siemens Gamesa, with installation expected to begin in the second quarter of 2019.

A consortium of eleven international and local Taiwanese banks is providing the financing, which has a 16-year term. The lenders include: Cathay United Bank, Taipei Fubon Commercial Bank, EnTie Commercial Bank, KGI Bank, ANZ Banking Group, BNP Paribas, Credit Agricole Corporate and Investment Bank, DBS Bank, ING Bank, MUFG Bank and Société Générale.

In addition, Denmark’s export credit agency (ECA) EKF is providing a guarantee. This transaction represents the first offshore wind project financing in Asia and the first extended tenor ECA-backed multi-sourced project financing in Taiwan. 

The lenders and EKF were advised by Linklaters.

The project was approved by the Taiwan Ministry of Economic Affairs Bureau of Energy as part of its target to build 1,000 wind turbines by 2030 to support the Taiwanese government’s plans to phase out nuclear power by 2025. 

Efforts to reach this target have increased in recent months. In March, Swancor signed a memorandum of understanding (MoU) with Siemens Gamesa to develop a second Formosa offshore wind project, which will have a generation capacity between 300 and 500 MW.

Furthermore, last month the Ministry awarded over 3 GW offshore wind capacity to developers including Ørsted, wpd, Northland Power Inc. and Copenhagen Infrastructure Partners. Projects with a combined capacity of over 10 GW were submitted to the auction, indicating that the government's targets are well-matched by developers' demand for Taiwanese waters.