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Zhongneng Raises NT$40 Billion for Project Finance of Offshore Wind Farm with Largest Industrial Localization

published: 2021-12-01 15:49

The Zhongneng Offshore Wind Farm—a joint venture backed by China Steel and Copenhagen Infrastructure Partners (CIP)—announced an agreement of project finance on November 24. President of Zhongneng Shyi-Chin Wang confirmed that the company has raised more than NT$45 billion for financing and signed a syndicated loan agreement with 20 Taiwanese and foreign banks and an excess loan rate up to 230%. Expecting the entire financing project to complete in December, Zhongneng will then launch the construction of the Zhongneng wind farm by informing its suppliers of construction commencement. The wind farm is scheduled to be built by Q2 of 2024 and commercially operate in the end of the year.  

After receiving the syndicated loan, Zhongneng will begin constructing an offshore wind farm. CEO Joris Hol suggested that construction of onshore substations will start in early 2022, while pin piles, foundations, turbine components, turbine towers, and blades will be established throughout next year. In 2023, the company will kick off offshore construction comprising the establishment of pin piles, foundations, and some submarine cables. Next year, the wind farm is set to be connected to the gird; after the remaining cables and turbine equipment are established, the construction can be finished by 2Q24 and start operating commercially in late 2024.

Marina Hsu, chief development officer of Zhongneng and managing director of CIP Taiwan, is optimistic that the wind farm construction can be accomplished in time. Affected by the COVID-19 pandemic, the maritime construction schedule has been intense; such schedule constraints will continue to exist next year. Nevertheless, Zhongneng aims to launch construction next year and build the wind farm in 2023, where pandemic is expected to slow down.

The Zhongneng Wind Farm, located 10km off the coast of Changhua, has been granted with a capacity of 300MW for grid connection. The wind farm comprises the largest-ever 27 industrial localization projects, in which 40 primary and secondary suppliers (totaling more than 200 firms) are involved. Specifically, pin piles and foundations are respectively manufactured by CTCI Machinery Corporation and Sing Da Marine Structure Corporation. Nearly 10 Taiwanese turbine suppliers have started to build new plants or expand the existing ones; at the Port of Taichung, for example, such plants occupy an area of 80 hectare. Additionally, CDWE is in charge of turbine and foundation transport and installation. Whether cooperation between businesses and manufacturing can be smoothly managed depends on the competences and experience of local firms.

 (Source: Zhongneng)

Zhongneng has spent 14 months on planning and preparing for project finance. CTBC Bank and MUFG Bank respectively serve as the domestic and international financial advisors. A total of six banks, namely Bank of Taiwan, Mega Bank, Taiwan Cooperative Bank, CTBC Bank, First Bank and Land Bank of Taiwan, are the lead banks, with Hua Nan Bank, Changhua Bank and Taishin Bank being the co-lead arrangers.

Additionally, the loan involves the participation of seven major public and private Taiwanese banks (i.e., Taipei Fubon Commercial Bank, E.SUN Bank, Taiwan Business Bank, The Shanghai Commercial & Savings Bank, KGI Bank, Bank of Kaohsiung and Eximbank) as well as four international banks (i.e., Mizuho Bank, Sumitomo Mitsui Banking Corporation, Crédit Agricole and MUFG Bank). Notably, the syndicated loan hit a record high regarding subscription amount in offshore wind projects; the amount of retention rate exceeded 50%, the highest number among insurance policies for offshore wind farms in Taiwan.

Wang mentioned two highlights about the offshore wind project. With increasing stress on energy saving and carbon reduction, green electricity has become the gold mine of clean energy. The responsibility is not only placed on the government in question but investors, customers, non-profit organizations and foreign governments. Further, the project has local advantages thanks to China Steel’s long-term partnerships with the financial sector, which also facilitates the formation of a solid alliance with CIP.

 (Source of first image: Unsplash)

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