Taiwan’s 120 Megawatt Formosa 1 Offshore Wind Farm Reaches Financial Close

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The 120 megawatt (MW) expansion to Taiwan’s first-ever offshore wind farm, Formosa 1, has reached financial close this week thanks to the completion of a NT$18.7 billion ($626 million) project financing deal by a consortium of eleven international and local Taiwanese banks.

As has already been made abundantly clear over the last 18 months, Taiwan is emerging as the next major hub for offshore wind energy development. In May, the Taiwan Ministry of Economic Affairs awarded a total of 3.8 gigawatts (GW) worth of offshore capacity to seven companies across 10 offshore wind farms which will be completed and operational by 2025.

Big-name offshore wind developers and manufacturers are all turning their eyes to Taiwan as both a location for government-supported development as well as a supply and manufacturing hub for the region.

And while the truly large-scale projects are mostly on the horizon, Taiwan’s first offshore wind project, the Formosa 1 offshore wind farm, continues to grow. Phase 1 of the Formosa 1 offshore wind farm was an 8 MW demonstration phase which was completed back in October of 2016 and consisted of only two offshore wind turbines. The second phase, however, a 120 MW addition, has been slowly making its way through the development phase, and this week received the final go-ahead, reaching financial close thanks to a consortium of eleven international and local Taiwanese banks, as well as the EKF, Denmark’s Export Credit Agency.

The project is jointly owned between Taiwanese developer Swancor Renewable Energy (15%), Australian bank Macquarie Capital (50%), and Danish offshore wind developer Ørsted (35%) which, back in January of 2017 (then known as DONG Energy), acquired its stake in the project from Swancor. A year later, in April, wind turbine manufacturer Siemens Gamesa Renewable Energy was awarded the contract to supply the wind turbines for the 120 MW expansion, and later the same month Ørsted confirmed its final investment decision for the project.

“We’re committed to the Taiwanese market and to the government’s offshore wind plans,” said Matthias Bausenwein, Ørsted’s General Manager for Asia Pacific, at the time. “Ørsted has shared its vast professional experience and expertise in offshore wind and thereby contributed significantly to bringing this project to the next stage and ensuring that it can be built in 2019.”

This week, Ørsted confirmed that the project had reached financial close with the finalizing of long-term project financing to be used to fund the development, construction, commissioning, testing, and operation of phase II, as well as the refinancing of phase I facilities of the Formosa 1 project.

Located 2 to 6 kilometers off the Miaoli coast in North-Western Taiwan, the Formosa 1 offshore wind farm will consist of 20 of Siemens Gamesa’s SWT-6.0-154 wind turbines which will be delivered and constructed in 2019. Worth noting is the specific needs of wind turbines set to be delivered to Taiwan, considering its location on the Pacific Ring of Fire and in the way of numerous typhoon paths that regularly sweep the region. Siemens Gamesa’s Bernd Eilitz confirmed to me via email that the SG 8.0-167 DD wind turbines to be used at the 640 MW Yunlin offshore wind farm being developed by German wind energy developer wpd will be typhoon-ready by construction — for which Siemens Gamesa was named preferred supplier earlier this week. One assumes that the same preconditions were applied to the delivery of turbines for the Formosa 1 project — a fact Bernd Eilitz confirmed with me via email after the article was published.

“We are proud to be involved with the Formosa 1 development team in this pioneering project, which we started a few years ago with Phase 1, and are now able to continue with an even more advanced technology,” said Andreas Nauen, Offshore CEO for Siemens Gamesa, in April. “This contract is an important milestone for the development of offshore wind in the region. Also, it is an important step for Siemens Gamesa in our ambition to support Taiwan in implementing a reliable and efficient energy system to meet the government’s targets for decarbonization.”

The financial consortium behind the project financing is made up of four local Taiwanese banks — Cathay United Bank, Taipei Fubon Commercial Bank, EnTie Commercial Bank, and KGI Bank. Furthermore — as well as seven international banks — ANZ Banking Group, BNP Paribas, Crédit Agricole Corporate and Investment Bank, DBS Bank, ING Bank, MUFJ Bank, and Société Générale. It is also the first participation of EKF in a project financing in Taiwan.

“We are glad to see that this important project milestone has been achieved now,” said Matthias Bausenwein this week. Ørsted’s strong track record and professional experience have contributed to the project financing success and we will continue with solid support throughout the construction of Formosa 1’s second phase.”

“We are pleased to take another concrete step with our customers towards helping the Taiwanese government meet the goal of 520 megawatts installed offshore by 2020, and the grid capacity goal of 5.5GW to be commissioned between 2020 and 2025,” added Siemens Gamesa Renewable Energy’s Andreas Nauen. “These ambitious targets demonstrate the proactive commitment of the government to supporting the offshore wind industry in Taiwan.”

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Joshua S Hill

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