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Ørsted unveils USD 13bn Taiwan offshore wind finance plan

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Ørsted, formerly Dong Energy, confirmed it would borrow from Taiwanese financial institutions and use internal funds for its 2.4GW offshore wind project.

The Danish renewable titan will also seek to partner with institutional investors for potential equity investment and to issue corporate green bonds denominated in Taiwanese dollars, it said in a statement yesterday (7 March).

Internal funds will make up 50-70% of the financing, and the rest will be debt, including syndicated corporate loans and corporate green bonds from local financiers. The borrowings will be secured by Ørsted’s parent company guarantee.

The total cost of the four wind farms, collectively known as the Greater Changhua Offshore Wind Project, is estimated at about NTD 380bn (USD 12.99bn). This is six times the construction cost of the Taipei 101 building. Each project will require approximately NTD 90bn-NTD 110bn of investment. 

Ørsted has also been in discussions with the Taiwanese banks and financial watchdogs over the development of a corporate green bond market denominated in Taiwanese dollars.

The project, to be located off the coast of Taiwan’s northwest Changhua county, is by far the largest of its kind slated for Taiwan. A Bureau of Energy selection process scheduled for April will confirm the project's exact capacity, while Ørsted is also working to confirm grid connections with local authorities.

It is understood that Ørsted aims to secure about 40% of its planned 2.4GW capacity if the project is selected in April. It must then compete for a further subsidy in an auction, in which the firms that bid lowest will win. The four wind farms are expected to be completed from 2021 to 2025.

Ørsted is using project finance to invest in Taiwan's first offshore wind farm Formosa I, in which it controls a 35% stake. A few lenders including Cathay United Bank (CUB) are currently in negotiations with the Swancor, the local developer of the Formosa I, to act as lead arrangers for a syndicated project loan for the second phase of Formosa I.

Ørsted’s chief financial officer Marianne Wiinholt said the finance structure for the Greater Changhua project had been “well-received” by leading local and international banks in Taiwan.

“With 50.1% shares owned by the Kingdom of Denmark, Ørsted’s corporate balance sheet and Investment Grade credit rating of BBB+/Baa1 demonstrate that we have the financial capabilities necessary (for the development),” said Wiinholt.  

Taiwan has recently allowed  local branches of foreign banks to issue local currency-denominated bonds to finance offshore wind and other renewable projects. The new policy will likely see overseas groups issue NTD 500bn in local-currency bonds.