Taiwan’s efforts to boost domestic renewable energy production have taken another step forward, after Copenhagen Infrastructure Partners (CIP) closed a US$3bn project financing deal to construct another offshore wind farm.

Once operational, Changfang and Xidao wind farm is expected to supply Taiwan with 589 MW of energy – forming a crucial part of the country’s strategy to switch 20% of its energy production to renewable sources within the next five years.

The combination of equity and senior loans was announced by Danish fund manager CIP last month and is provided by a syndicate of 21 banks. Described as “highly complex” by the firm, the deal includes cover from export credit agencies and insurers in several countries.

London-based Evan Stergoulis, a partner at CIP, describes the development as a “ground-breaking transaction in one of the world’s most dynamic and developing offshore wind markets”, adding that Asia Pacific is a “flourishing region” for renewable energy.

Law firm Watson Farley & Williams (WFW), which advised the syndicate of banks on the transaction, adds it is “the largest debt package raised in the Taiwanese offshore wind market to date”.

MUFG acted as financial advisor to the deal, with CTBC as local financial advisor. According to information published by the law firm, the other banks – a mixture of international and local institutions – included: ABN AMRO, Crédit Agricole, Deutsche Bank, DBS, EnTie, E-SUN, HSBC, JPMorgan, KDB, KGI Bank, KFW, Mizuho Bank, Natixis, OCBC, Santander, Société Générale, Standard Chartered, SMBC and Taipei Fubon Commercial Bank.

WFW adds that financing cover is provided by Atradius in the Netherlands, EKF in Denmark, GIEK in Norway, KFW in Germany, K-SURE in South Korea, NEXI in Japan and UKEF in the United Kingdom. Taiwan Life Insurance and TransGlobe Life Insurance also provide insurance cover and take a minority stake in the project.

For Taiwan’s government, the deal follows a string of recent syndicated project finance arrangements in the offshore wind sector. Construction on Formosa 1 started in November 2016, and two other projects – known as Formosa 2 and Yunlin – agreed multi-billion-dollar deals last year.

However, Chen Chung-hsien, director of the electricity division of Taiwan’s Bureau of Energy, admits domestic institutions “lack the necessary technology, capital and licensed experts for maintenance” to go it alone.

“A 100-MW wind farm costs almost NT$18bn (US$593.46mn),” says Chen, according to recent Taiwan News coverage. “The threshold is too high for indigenous companies, and local banks have no experience in offering loans of this magnitude for energy investment.”

A Bureau of Energy statement adds that thanks to recent investments, Taiwan is “standing out from all the countries developing green energy [by] taking the lead on offshore wind in Asia”.

The wind farm itself will be constructed in multiple phases. Located between 13 and 15km off the coast of Changhua County in western Taiwan, its 62 turbines are planned to have a joint installed capacity of around 600 MW.

The first phase of construction is scheduled to be completed by the end of 2021, providing around a sixth of that energy output. The second, far larger, phase is scheduled for the start of 2024.

By that date, Denmark’s EKF – whose guarantee covers around 13% of the project’s total debt – says it should be delivering electricity to more than 600,000 households. The agency was allocated DKK14bn (US$2.1bn) to finance the export of Danish climate technology.