An I Squared Capital-owned 180MW floating solar farm in Taiwan’s northwestern Changhua has kicked off its project financing process.
The facility, poised to become the world’s largest floating solar project by completion, will cost nearly NTD 10bn (USD 320m) to develop. About 75% of the investment will be financed via a syndicated bank loan, a spokesperson with developer Chenya Energy, a wholly-owned subsidiary of I Squared, told Inframation. The financial close is scheduled by the end of the upcoming quarter, while the project has a target grid connection date set for 2020.
This will also lead to the first standard non-recourse loan to be secured for a large-scale floating solar power plant on the island, following the completion of a 12MW solar project on the water of Agongdian reservoir, close to Kaohsiung city of southern Taiwan.
The developer has approved a provisional list of lenders comprising a mix of Western and local financial institutions. No more than ten lenders will be in the bank club for the loan syndication, though “a lot more” have shown interest and there is a “good” level of over-subscription on the deal, he added.
“The solar project loan will have a much simpler structure than the offshore wind loan as local banks have more experience in dealing with such types of assets,” the spokesperson said.
The 180MW-floating solar project will be located in the Lunwei district of Changhua Coastal Industrial Park, a food-to-chemical industrial cluster built on reclaimed land in the coast of Changhua county of Taiwan. The developer has finalised most of the early preparation works including obtaining the grid connection permit from state utility Taipower. It plans to kick off construction soon after gaining the final permits. The industrial zone is also home to Google’s Taiwan data centre.
The developer will look to seal a fixed-rate power purchase agreement (PPA) with state utility Taipower, preferably with a term of at least 20 years, after the project reaches financial close. Chenya will look to secure a tenor for the syndicated loan that will last more than ten years.
In early 2018, Chenya Power, a subsidiary of Chenya Energy, partnered with Hougu Solar to win the land rights for large-scale solar development in Lunwei district. In August last year, Taiwanese solar firm TSEC agreed to sell 115 million shares in Hougu to Chenya for NTD 344m. The Taiwanese government is planning to develop an extensive distributed and ground-mounted solar portfolio across Lunwei district of the industrial park, attracting investors such as Chunghwa Telecom.
Taiwan Cube Energy, another Taiwan-based developer controlled by I Squared, is also planning on project financing of an NTD 4bn energy-from-waste facility in Taoyuan district of northwestern Taiwan.
In late 2017, I Squared announced its acquisition of Chenya, with a plan at the time to invest in at least 500MW of solar power plants through three years following the takeover.
The New York-based investor is also preparing a potential sale of Asia Cube Holdings (ACH), an Asian renewable portfolio. Financial advisor Credit Suisse set an indicative bid date of 18 April for the 1.4GW of power and water assets spread across China, South Korea, Taiwan and Vietnam, as reported.
Solar assets in Taiwan have been increasingly popular among Western investors. In January, a group of US and Taiwanese firms agreed to team up to build the first renewable project in Asia supplying power to Google. That followed Black Rock’s acquisition of a 70MW solar portfolio in August 2018 from local developer J&V.