Investing in Taiwan's energy transition

How financing enabled Taiwan's Yunlin and Formosa 2 and Changhua 1 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 20 gigawatts (GW) of offshore wind power by 2035.

 

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 Bank has financed a trio of projects including over 200 units of Siemens Gamesa Renewable Energy’s (SGRE’s) SG 8.0-167 DD offshore wind turbines to a trio of projects including the 640 megawatt (MW) Yunlin Offshore Wind Farm, the 376 MW Formosa 2 Offshore Wind Farm and, most recently, to the 605 MW Greater Changhua 1 Offshore Wind Farm.

Drawing on its deep know-how and decades of experience in Europe’s wind-energy industry, Siemens Financial Services provided and facilitated tailored financing that makes a difference.

 

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 all three transactions and committed €350 million of project finance commitments. 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.

Once completed, the Yunlin, Formosa 2, and Greater Changhua 1 wind farms will enable more than 1.6 GW of clean power, helping Taiwan reduce 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. Siemens Financial Services has financed three offshore wind projects in Taiwan, Yunlin, Formosa 2, and Changhua 1, which were amongst some of the most innovative multi-sourced project financings which have recently come to market in Asia. Although new risks and challenges have arisen from COVID-19, Siemens Financial Services continues to view offshore wind as an exciting component of the APAC region’s energy transition. We look forward to further supporting sustainable infrastructure projects in the region.
Siobhan Smyth, Head of Project and Structured Debt Europe/Asia, Siemens Financial Services
Siemens Bank has played a vital role in the financing of Taiwan’s energy transition, supporting the financing of three greenfield offshore wind projects representing over 1.6 gigawatts of clean, reliable power. Siemens Bank is a trusted financing partner to Siemens Gamesa’s key customers, both in established European markets and also newer markets such as Taiwan
Niels Steenberg, Executive General Manager, Offshore APAC, Siemens Gamesa Renewable Energy