Bank liquidity on Taiwan offshore

Contributed article by Daniel Mallo, Head of Energy, Infrastructure and Metals & Mining for Asia Pacific, published in PFI Yearbook 2020. 

Taiwan is at the forefront of the offshore wind sector developing in the Asia Pacific region. A discussion about liquidity available for offshore wind in Taiwan should probably start with Taiwan’s success in having developed a leadership position in this sector over the past few years. 

The opportunity 

In less than 2 years, Taiwan has seen one project starting operations (the 128 MW Formosa 1 project, which started commercial operations in late 2019) and two more sizeable projects (the 640 MW Yunlin project and the 370 MW Formosa 2 project) starting construction in 2019, while a fourth project is slated to reach financial close and start construction within the next few weeks. 

The challenges

Offshore wind is a new asset class growing at a pace that will require multiple sources of liquidity to accommodate the future projects pipeline. Greater participation from the local banking market and possibly the emergence of a local project bond market would further bolster the availability of capital for those projects. 

Societe Generale’s involvement  

Societe Generale has been involved in all four offshore wind projects in Taiwan to date, in both a financial advisory capacity (Formosa 2) and a lead arranger capacity (Formosa 1 and Formosa 2, Yunlin and a fourth project to close in the coming weeks). The bank was also the first foreign bank to issue NTD-denominated green bonds (also recognized as “Positive Impact Bonds”) in 2018 and 2019 in order to establish a sustainable funding platform to further support this renewable energy project finance activity in Taiwan.  

Societe Generale is very confident in the growth prospects of this market and believes the pool of available liquidity will continue to grow for this asset class.

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