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Taiwan / Loan Insurance for Changfang and Xidao Offshore Wind Farm Project
-First Project to Support MHI Vestas Offshore Wind A/S in Its Exports of Wind Turbine Generators-


February 25, 2020

Nippon Export and Investment Insurance

Nippon Export and Investment Insurance (“NEXI”; Chairman and CEO: Atsuo Kuroda) has decided to provide insurance for loans extended to the Changfang and Xidao offshore wind farm project (“Project”) in Taiwan.

The Project involves the construction, operation and maintenance of a new 589MW wind farm located 11 to 25 kilometers off the coast of Changhua County of central Taiwan by two project companies, Changfang Wind Power Co., Ltd and Xidao Wind Power Co., Ltd. These project companies were established by Copenhagen Infrastructure Partners (“CIP”, a Danish infrastructure fund management company) on behalf of its funds. The electricity generated at the wind farm will be sold to Taiwan Power Company over a 20-year period under a power purchase agreement. MHI Vestas Offshore Wind A/S (“MVOW”) from the Kingdom of Denmark, of which 50% is owned by Mitsubishi Heavy Industries, Ltd. (“MHI”), will participate in this Project as a turbine supplier and engage in the supply, installation and maintenance of 62 wind turbine generators. Based on its local buyer’s credit1 scheme, NEXI will provide loan insurance for the funds procured by the project companies to purchase the wind turbine generators from MVOW. This will be the first insurance provided by NEXI to support MVOW’s exports.

Of the total NTD90 billion (approximately JPY 324 billion) project finance procured by the project companies, NEXI loan insurance will cover a financing portion of NTD10.2 billion (approximately JPY37.0 billion) by 10 private financial institutions: MUFG Bank, Ltd., Sumitomo Mitsui Banking Corporation, Mizuho Bank, Ltd., Crédit Agricole Corporate and Investment Bank, Deutsche Bank, DBS Bank Limited, Société Générale, Oversea Chinese Banking Corporation, Standard Chartered Bank, and the Hongkong and Shanghai Banking Corporation Limited. Part of the project finance will also be supported by the following export credit agencies and development financial institutions from six countries: Atradius Dutch State Business NV, EKF Denmark’s Export Credit Agency, Korea Trade Insurance Corporation, UK Export Finance, Norwegian Guarantee Institute for Export Credits and Germany’s KfW IPEX-Bank.

Amid ever-increasing demand for energy, Taiwan is highly dependent on imports of needed energy resources, while its reserve margin is showing a declining trend due to factors such as a reduction in nuclear power generation. The Taiwanese government is therefore planning to have 5,700MW of total offshore wind capacity installed by 2025. This Project is in line with government’s target, and is expected to contribute to the overall energy mix and decarbonization that the country strives for.

This Project supports the offshore wind turbine manufacturing business of MVOW, and is expected to contribute towards the expansion of business opportunities in the offshore wind power installation market where significant growth is expected, and the increased international competitiveness of MHI Group, as well as of Japan.

It is the first time for NEXI to provide insurance for a project supported by an infrastructure fund as a main sponsor. CIP has extensive experience in developing renewable energy projects, and is financed by many institutional investors such as leading pension funds in Europe. With the continued diversification of funding sources globally, the involvement of infrastructure funds in various projects is likely to increase. In response to such changing times and environments, NEXI will strive to further strengthen its flexibility and abilities2.

This Project is also in line with the Japanese government’s policies. In its “Infrastructure Systems Export Strategy” revised in 2019, the Japanese government expressed its intention to actively promote investments in renewable energy projects and “low-carbon infrastructure exports” while responding to the need of host country, in order to lead global decarbonization efforts based on the Paris Agreement. As part of this policy, the government has called for the promotion of the use of local buyer’s credit and of policy-based finances to support renewable energy businesses.

As one of Japan’s policy-based financial institutions, NEXI will continue to actively support Japanese companies and their overseas affiliates in the expansion of their exports to overseas markets.


Reference:
Insured MUFG Bank, Ltd., Sumitomo Mitsui Banking Corporation, Mizuho Bank, Ltd.,
Crédit Agricole Corporate and Investment Bank, Deutsche Bank, DBS Bank Limited, Société Générale, Oversea Chinese Banking Corporation, Standard Chartered Bank, the Hongkong and Shanghai Banking Corporation Limited
Insured value NTD 10.2 billion (approx. JPY 37 billion)
Tenor 18 years
Covered risk Political risk: 100%, Commercial risk: 95%

Contract: Power Group, Structured and Trade Finance Insurance Department
Tel: +81-(0)3-3512-7340

1 Local buyer’s credit involves providing finance to an overseas buyer for the purchase of equipment or technologies from a Japanese company’s overseas subsidiaries.

2 Conclusion of MOUs on Business Cooperation with 13 Financial Institutions
https://www.nexi.go.jp/en/topics/newsrelease/2019060701.html

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