APAC: Taiwan 128MW offshore wind farm nears financial close

06 June 2018 - 12:00 am UTC

The second phase of Taiwan’s first offshore wind farm Formosa I is set to achieve financial close this month, a source at local developer Swancor Renewable said.

The NTD 15bn (USD 500.7m) syndicated loan backing the project will be provided by a mix of local and foreign banks, including BNP Paribas, Société Générale, MUFG Bank, ANZ,  Crédit Agricole, Deutsche Bank, KGI Bank, DBS, Cathay United Bank, Fubon Bank, Deutsche Bank, and Entie Commercial Bank.

The loan will be used to finance the 120MW second phase of Formosa I, which is 50% owned byMacquarie Capital and 35% by Ørsted. The 8MW first phase of the demonstration project started operation in late 2016 following installation of two 4MW wind turbines 3km off the island’s northwest coast, in Miaoli county.

The project JV formed by Swancor, Macquarie and Ørsted – Formosa I (Haiyang) Offshore Wind Company – plans to start construction of phase two in 2019.

The Taiwanese developer also expects its wholly-owned 378MW Formosa II project, which will require an investment of over NTD 35bn, to achieve financial close as early as the end of 2018. It has liaised with over a dozen local and foreign lenders to prepare for a new syndicated loan.

A 20-year PPA with Taipower for the 378MW project is scheduled to be signed by the end of 2018, the source said, acknowledging that other offshore wind developers are likely to set the same timeline for their own power purchase deals. The project is scheduled to be connected to the grid by 2020. 

“We all want to make sure that the PPA is signed before the government adopts a new feed-in-tariff (FiT) for 2019,” she said. “Compared with peers, our advantage is that we are the only developer on the island with experience in signing a offshore wind PPA with Taipower.”

In December 2017, the second phase of Formosa I secured a 20-year PPA with a feed-in-tariff of TWD 5.8 per kWh with state utility Taipower. 

Taipower has a standard form PPA for offshore wind farm projects. The contract contains a 20-year FiT that will come into force on the signing date. This is reviewed and announced by the government every year. 

The source observed that this month’s project auction, in which developers will bid for additional capacity for their projects, is likely to lead to lower FiTs in 2019. That is because government officials are expected to use the auction bids, the lowest of which will win capacity, when setting the new FiT.

Meanwhile, the Taiwanese developer has also been in talks to introduce strategic investors for its Formosa II project, which secured all the 378MW capacity it applied for in the April selection. But any equity stake sales are likely to take place next year, once the PPA is signed and the FiT levels are set, the source noted.   

Formosa