Investing in Taiwan's energy transition

How financing enabled Taiwan's Yunlin and Formosa 2 offshore wind projects

Blessed with strong winds and a relatively shallow coastline, Taiwan is on track to transform its power sector with its focus on increasing wind power capacity. The target? Installing at least 5.7 gigawatts of offshore wind power by 2025 .

 

With a population of more than 23 million , Taiwan has named energy supply stabilization and decarbonization as two key energy transition principles. Green energy, such as wind power, is expected to play an essential role in helping Taiwan diversify away from coal and become nuclear-free .

 

Yet, owing to its limited history of large-scale project finance transactions, offshore wind projects in Taiwan could face constraints on local currency project financing. Offshore energy projects with extensive development phases spanning from construction to operation often require large amounts of financing, resulting in complex financing structures.

 

 

Off the western coast of Taiwan, Siemens Gamesa Renewable Energy (SGRE) is supplying 80 SG 8.0-167 DD offshore wind turbines to the 640 megawatt (MW) Yunlin offshore wind power plant, and 47 turbines of the same type to the 376 MW Formosa 2 offshore wind farm. 

 

The projects mark Asia Pacific’s first large-scale offshore wind transactions, which involve over a dozen of international and local banks, as well as multiple export credit agencies. As the mandated lead arranger, Siemens Financial Services through Siemens Bank arranged the Euro-denominated loan facility for both transactions and committed nearly €300 million of project finance debt. The project financing provided by Siemens Bank was key in signaling confidence to other lenders for SGRE’s market-leading technology, which in turn facilitated timely completion of the financing and issuance of notice-to-proceed for construction.

The financing provided by Siemens Bank was an important part of the overall financing package, supporting SGRE and facilitating the notice-to-proceed for Formosa 2.
Martinus Hartman, Head of Structured Finance, Siemens Gamesa Renewable Energy

Once completed, the Yunlin and Formosa 2 wind farms will enable more than 1000 MW of clean power, helping Taiwan offset carbon emissions while powering local households from a sustainable source. The projects also underline the value of tailored financing in enabling significant energy projects – and in Taiwan’s case, supporting its energy transition goal of generating 20% of power from renewable sources by 2025 .

Financing is vital in enabling capital-intensive infrastructure. We’re proud to support the state-of-the-art technology from Siemens Gamesa Renewable Energy, which will help Taiwan address the impact of climate change. In 2019, the Yunlin and Formosa 2 offshore wind projects were amongst some of the most innovative multi-sourced project financings which had come to market in Asia that year. We look forward to further supporting sustainable infrastructure projects in the region.
Siobhan Smyth, CEO of Project and Structured Debt Europe/Asia, Siemens Financial Services