PETRONAS-owned Gentari International Renewables will join Yushan Energy and Mitsui & Co - who each own a 20% stake in the project - as partners. The shareholders have retained the services of Mitsubishi UFJ Financial Group and Cathay United Bank to secure non-recourse debt for the wind farm, with financial close expected in 2023. Northland and Gentari have also signed an exclusivity agreement to establish a broader strategic partnership for further offshore wind initiatives in Taiwan.
Located 40-50 kms off the Changhua coast, the 1,044 MW project is being built in three phases. The partners secured a feed-in-tariff (FiT) and grid connection with state-owned electric utility Taipower for the first phase Apr’18, under which the project will receive a tariff of $212/MWh for the first 10 years of supply, and $140/MW for the remaining 10 years. Meanwhile, the second and third phases of the project went on to secure tariffs of $75/MWh and $85/MWh for a period of 20 years, following which in Jul '22, the partners opted to replace the utility PPA with a corporate power purchase agreement (CPPA). The CPPA offered better prices compared to the agreement with Taipower, and Northland Power stated that the improved rate enhances the economics of the project and will be a key enabler for securing non-recourse project level debt financing and financial close later this year. Meanwhile, the Taipower PPAs are not affected by the CPPA and provide a backstop to the latter.
While the shareholders have executed the majority of the key contracts related to the project, delays in finalising PPAs, negotiations related to supply contracts and market conditions have pushed back the construction and slowed its initial progress. All the phases have obtained the requisite environmental approvals and construction is expected to commence in 2024, with commercial operations scheduled for late-2026.
The stake sale is part of Northland Power’s recently announced selective sell down strategy, which focuses on farming down interests in certain under-development projects on or before financial close. The strategy will help the company monetize its investment prior to construction, and will enhance its adjusted free cash flow and liquidity position. The strategy also helps the company manage its jurisdictional exposure, balancing the strong power prices across Europe with weaker awarded tariffs in Asia.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.
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