APAC: Ørsted to tap local banks for 2.4GW Taiwan wind project

07 February 2018 - 12:00 am UTC

Ørsted, formerly DONG Energy, will look to local lenders to finance its 2.4GW Taiwan offshore wind farms despite the island’s recently relaxed foreign banking rules.

The Danish renewable titan may also use internal funds to fund the Changhua project, and it is not in a rush to lay out a solid financing plan “for the time being”, a spokesperson told Inframation.

“Given that our projects have a much bigger scale, we are likely to have…a more flexible timeline in terms of project finance compared with other developers,” she said, referring to recent moves by peers such as WPD to appoint a financial advisor for their planned Taiwan offshore wind projects.

Ørsted is by far the biggest player in the island’s burgeoning offshore wind industry, with plans to develop 2.4GW of offshore wind capacity on four sites off the coast of western Taiwan’s Changhua. That is far bigger than any other offshore wind project proposed on the island.  

The company plans to submit project proposals for the government’s official selection process scheduled for April. These will confirm the project’s exact capacity. It is also working to confirm grid connections with local authorities, according to the spokesperson. 

Ørsted has yet to tell banks how much money it needs for the 2.4GW project as the developer may also consider funding it with a considerable amount of internal cash resources.

According to Ørsted’s schedule, the first of its Taiwan offshore wind projects will start operation from 2021. In comparison, Germany’s WPD, which kicked off project financing for its Taiwan wind farms last month, set the commission date of its projects for 2020. 

In the meantime, Ørsted will maintain liaisons with lenders and potential equity investors, and said it will arrange project financing from Taiwanese lenders banks.

The Taiwanese government has released a raft of new rules to boost foreign banks’ participation in the lending to offshore wind projects. In the latest policy change in January, local branches of foreign banks are allowed to issue local currency-denominated bonds to finance renewable projects.

“We are confident of foreign banks’ interest in our Taiwan projects,” the spokesperson said. “But we will likely first consider attracting local financiers and investors as the Taiwanese government wanted us to engage in more domestic financial institutions.”  

In October last year, Ørsted met with a number of Taiwanese banks to introduce its planned 2.4GW Changhua offshore wind farms. BNP Paribas, with which the Danish firm has built a relationship with, helped coordinate the meetings.