INTERVIEW

Project Financing for Oﬀshore
Wind Farm Project in Taiwan
Supporting One of Worldʼs Largest Oﬀshore
Wind Farm ProjectsInterview with Deputy Director ITO Yuki andTAMURA Masayuki,Division 3, New Energy and Power Finance
Department I, Infrastructure and Environment Finance GroupThe Japan Bank for International Cooperation (JBIC) signed in
September 2023 loan agreements for project ﬁnancing thatcollectively amounted to approximately JPY101.2 billion with Hai
Long 2 Oﬀshore Wind Power Co., Ltd. and Hai Long 3 Oﬀshore
Wind Power Co., Ltd. (collectively Hai Long) of Taiwan, whichhave received investments from multiple entities, including Mitsui& Co., Ltd. (Mitsui), for an oﬀshore wind farm project in Taiwan.
The loans are co-ﬁnanced with private ﬁnancial institutions andothers, bringing total co-ﬁnancing to approximately TWD117.1
billion. JBIC also provided a guarantee of approximately TWD4.7
billion for a Taiwan dollar denominated onshore loan by private
ﬁnancial institutions. In addition to JBICʼs guarantee, Nippon
Export and Investment Insurance (NEXI) and export credit
agencies from Europe and Australia provided insurance orguarantees. In October, JBIC also ﬁnanced through equity
participation the funds necessary for the development andoperation of the project.

Largest Oﬀshore Wind Farm in Asia
In this project, Hai Long will build, own, and operate a 1,022 MW
oﬀshore wind farm located 45 to 70 km oﬀ the coast of Changhua
County, Taiwan. The electricity generated by the project will besold to the state-owned Taiwan Power Company and private
consumers for 20 to 30 years. In addition to Mitsui, the Canadiancompany Northland Power Inc, which operates wind power
generation businesses in mainly Europe and the Americas, hasinvested in Hai Long.
Remarking on the signiﬁcance of the project, Deputy Director
ITO Yuki said: “Oﬀshore wind farms have been actively developedin Europe. JBIC has provided support for projects in Britain andFrance. However, in Asia, Hai Long is the ﬁrst large-scale oﬀshore
wind farm project for JBIC.
Taiwan relies on thermal power, which comprises about 80%
of its energy mix, while the ratio of renewable energy remains atabout 6%. In March 2022, Taiwan announced Taiwanʼs Pathway
to Net-Zero Emissions in 2050, aiming to increase the proportionof renewable energy in its power supply to 60–70% by 2050.
Through the reduction of greenhouse gas (GHG) emissions bycomplying with this policy, JBIC will contribute toward preserving
the global environment with the funding while supporting theoverseas business of a Japanese company.”

Structuring Project Filled with “Firsts”
Concrete discussions started from 2021, when the electricity sales
agreements were concluded in principle between Hai Long andbuyers (oﬀ-takers of electricity).
“We found it diﬃcult to conduct an oﬀshore wind farm projectin Taiwan. To set up 73 units of 14 MW turbines, for example, it isnecessary to properly control processes by specialized companies,including securing a ﬂeet of construction ships and constructing
and installing fundamental structures. However, Taiwan is not as
experienced as the leading European countries in this ﬁeld. In
addition, Hai Long is required to procure part of the necessary
materials from inside Taiwan (a local content requirement) to help
develop domestic industries. We had to contemplate theconstruction period and costs based on these factors.
When it comes to ﬁnancing, foreign export credit agencies,including JBIC, were required to provide guarantees for Taiwan
dollar denominated onshore loans by local private ﬁnancial
institutions. Since it was the ﬁrst time for us to provide aguarantee for an onshore loan in an infrastructure project, weneeded to consider numerous factors. We managed to meet theTAMURA Masayuki

ITO Yukiclientʼs demand by generating some ideas,” said ITO, explaining
how diﬃcult it was to structure the project.
TAMURA Masayuki remarked, “Obviously, Northland Power,
one of the sponsors of Hai Long, has a wealth of experience andknowledge, and the EPC contractors are highly skilled in eacharea. Also, the construction site is in a good location in terms ofwind conditions. However, construction may be hindered due tothe complicated seabed conditions and rough winter weather. So
after discussing the construction risks with experts, using theinvestigation results of previous projects in the same sea area, westarted the negotiations on the terms of loans.”

Accelerating Negotiations through Meetings
The contract negotiation took a long time as Hai Long was alarge-scale project with the co-ﬁnancing amount exceeding theequivalent of JPY500 billion, which was supported by seven export
credit agencies, including JBIC and NEXI, from six countries
around the world.
“In October 2022, a meeting was held in Singapore with theparticipation of related parties, including sponsors and lenders.
This was the ﬁrst opportunity for us to discuss concrete issues
face to face. Subsequently, we repeatedly held meetings in personor online and made progress in the negotiations. We visited
Taiwan many times to conﬁrm issues, such as Taiwanʼ s policy on
renewable energy expansion, the concept of local content
requirements, and the support system in the event of problems,”
TAMURA said.
Finally, the loan and guarantee agreements were concluded in
September 2023. In the project, construction components are
currently being manufactured at a rapid pace. The Hai Long 2
wind farm (518 MW) is planned to be completed by the end of2025 and the Hai Long 3 (504 MW) by the end of 2026.

Supporting New Projects in Asia
The Hai Long project draws attention at Taiwan and Asian
countries as a large-scale oﬀshore wind farm project in theregion. Going forward, there may be more projects that involve
Japanese companies.
“For me, it was my ﬁrst experience of structuring a project. I
am relieved to have successfully concluded the agreements forJBICʼ s ﬁrst oﬀshore wind farm project in Asia. In addition, a newproject has been planned in the area oﬀ the west coast ofTaiwan. South Vietnam is also promising, with many companies
showing their great interest in this business. I would like to makeuse of the experience I gained from this project,” said TAMURA,expressing his ambitions.
Deputy Director ITO also talked about future initiatives: “Inthe Infrastructure System Overseas Promotion Strategy 2025, theJapanese government, in support of the transition to carbon
neutrality and decarbonization, established a policy of providing
support for quality energy and electricity infrastructure thatharnesses sophisticated technologies to reduce the burden on theenvironment in a way that is compatible with the energy policies
of host countries. In Asia, many ASEAN countries, as well asTaiwan, have launched energy policies for decarbonization that
actively promote initiatives, ranging from the expansion ofrenewable energy to transitions to energy sources with less GHG
emissions. JBIC will support projects that contribute toward
maintaining and improving the international competitiveness ofJapanese industry with various ﬁnancial methodologies whileconsidering host countriesʼ energy policies and situations.”