On Monday, Danish wind energy developer Ørsted announced that it has signed an agreement with major global institutional investor Caisse de dépôt et placement du Québec (CDPQ) and local investor Cathay PE to co-invest in the 605MW Greater Changhua 1 Offshore Wind Farm (Greater Changhua 1) in Taiwan.
Proceeds from the investment, disclosed at TWD 75 billion (approximately DKK 16 billion, or C$3.4 billion) will be used to fund engineering, procurement and construction services for Greater Changhua 1, which is part of the 900MW Greater Changhua 1 and 2a Offshore Wind Farms. This project, located 35-60 kilometers off the coast of Changhua County, is currently under construction and set for completion in 2022.
Under terms of the deal, CDPQ and Cathay PE will jointly own 50 percent of Greater Changhua 1. Ørsted will hold the remaining 50 percent, financed through its own balance sheet, and will also provide long-term operations and maintenance (O&M) for the project.
CDPQ and Cathay funded the investment through a multi-tranche financing package from 15 international and local banks and two local life insurance companies: Cathay United Bank, CTBC Bank, E-SUN Bank, Taipei Fubon Bank, Cathay Life Insurance Co., Taiwan Life Insurance Co., BNP Paribas, Crédit Agricole, Deutsche Bank, DZ Bank, HSBC, Oversea-Chinese Banking Corporation, Korea Development Bank, Siemens Bank, Société Générale, Standard Chartered and Sumitomo Mitsui Banking Corporation.
The 50-50 partnership is the first of its kind in the APAC offshore wind sector and is expected to help stimulate further opportunities in the Taiwanese market for offshore wind. While the deal structure itself is historic, Ørsted is a familiar entity in the Taiwanese wind market, having the distinction of being biggest shareholder and co-owner of Taiwan’s first commercial-scale offshore wind project, Formosa 1, whose capacity was expanded dramatically from 8MW to 128MW in 2019. Globally, Ørsted has installed more than 1,500 offshore wind turbines, with an installed offshore wind capacity accounting for one third of the world’s total.
CDPQ’s first APAC wind play
This newly minted investment in Greater Changhua 1 is an important step for CDPQ’s CAD 28 billion infrastructure portfolio, marking CDPQ’s first-ever investment in an offshore wind farm in Asia Pacific. According to the firm, its decision to invest reflects CDPQ’s “confidence in Ørsted’s track record,” and adds to a long list of investments in solar and wind energy across the Americas, Europe and India.
In a statement, Emmanuel Jaclot, Executive Vice-President and Head of Infrastructure at CDPQ, said: “This investment in Taiwan, which represents an attractive market for CDPQ, allows us to further diversify our presence in Asia. As an investor with vast experience in renewable energy, we seek this kind of greenfield opportunity to contribute to the transition towards a low–carbon economy. Working alongside our long-term partner Ørsted, and experienced local investor Cathay PE, we are proud to support the Greater Changhua 1 Offshore Wind Farm, which will supply clean power to over 650,000 Taiwanese families.”
Matthias Bausenwein, President of Ørsted Asia-Pacific, echoed these sentiments: “It has been our commitment to share our vast offshore wind financing experience with Taiwan’s financial community since the early stages of developing the Greater Changhua projects. We are glad to successfully achieve this important milestone by bringing our reliable and experienced partner CDPQ to Taiwan for the first time. We are equally thrilled to collaborate with our local partner Cathay PE, so that the Greater Changhua 1 will also be locally owned.”
An array of executives at Ørsted, CDPQ, and Cathay PE also heralded the deal’s significance to the Taiwanese energy market and the outlook for co-investment in Asia-Pacicif renewable energy infrastructure more broadly.
Kunal Patel, Vice President and Ørsted Head of Partnerships & Structured Solutions, said: “This transaction marks the evolution of our partnership model into Taiwan, leveraging our extensive track record of development, construction and operation of large offshore wind farms. With a long–term agenda in Taiwan, we remain committed to the Greater Changhua 1 project and will also reutilize the capital into further developing new offshore wind projects to assist Taiwan in achieving its energy transition goals.”
Cyril Cabanes, Managing Director, Infrastructure, Asia Pacific, CDPQ, adds: “We are excited to take this first step in Taiwan’s renewable energy market, where we see many prospects and opportunities to collaborate with esteemed international and local partners who share our interest in developing high-quality infrastructure. We are also committed to further expand our renewables and energy footprint in Asia Pacific, building upon this investment and other successful platforms that we have developed in India and Australia over the past few years.”
Jeff Chang, Chairman, Cathay PE, said: “We are delighted to team up with CDPQ to invest alongside Ørsted in the Greater Changhua 1 Offshore Wind Farm project. This landmark transaction represents an important milestone in Taiwan’s energy transition towards a low-carbon future and fits perfectly with Cathay PE’s investment mandate to invest in high–quality energy infrastructure projects alongside world–class partners.”
The financing package, which was structured and led by Ørsted, will be partially supported by guarantees and/or loans from five international export credit agencies (ECAs); Eksport Kredit Fonden (EKF) of Denmark, UK Export Finance (UKEF), Atradius of the Netherlands, Korea Trade Insurance Corporation (KSURE), and Export Development Canada (EDC), marking its first-ever participation in an offshore wind farm deal in Taiwan.