Northland and Mitsui secure finance for $9bn Taiwan offshore wind giant

Northland Power has signed a second major offshore wind financing package within the space of a week after securing a 20-year credit agreement for 118 billion New Taiwan Dollars ($3.7bn) to give its 1GW Hai Long array in Taiwan fully-funded status.

Japan’s Mitsui group owns a 40% stake in the project.

The non-recourse project financing is expected to carry a weighted average interest cost for the term of the financing of around 5%, according to the Toronto-listed company.

In its statement, released late Thursday, Northland said the multi-phase Hai Long project financing, which is expected to reach financial close shortly, was backed by more than 15 lenders with support from export credit agencies (ECAs) from six countries.

In the case of Hai Long, Northland said financial close is expected to cover all debt and equity required for the project, taking account of future cash flows expected from sell-down proceeds and pre-completion revenues.

“Today’s announcement is a major achievement for Northland, our partners, and the offshore wind industry, globally and in Taiwan,” said CEO Mike Crawley

“We are progressing yet another world-class offshore wind project despite a challenging market environment. The project will produce high quality and stable cashflow over a 30-year period with further optimisation opportunities.”

He described Northland as “one of the few companies able to originate, develop, finance, construct, and operate such facilities.”

Hai Long’s total cost is projected to be approximately $9bn, with other funding including approximately $1bn of pre-completion revenues and equity investment contributed by the project’s partners, according to Northland.

Sell-down

Northland helped fund its own equity investment by selling a 29.4% stake in the Hai Long project to Gentari International Renewables, a deal which is expected to close during the fourth quarter of 2023. This sell-down will leave Northland with a 30.6% stake but retaining its lead role in construction and operation.

Hai Long’s two phases are located approximately 45-70km off the Changhua coast in the Taiwan Strait.

Hai Long 2A was awarded up to 300MW of grid capacity under a feed-in tariff, while Hai Long 2B and 3 were awarded up to 744MW of grid capacity in Taiwan’s first competitive price-based auction in 2018, leading to signing of a power purchase agreement in 2022, Northland stated.

The project has already commenced in-water construction and fabrication of components and is expected to complete the construction activities and enter full commercial operations in the 2026 to 2027 period, the company said.

In its own statement, Japan's Mitsui group said the partners have now reached a final investment decision for Hai Long, subject to the project finance contracts coming into effect.

The government of Taiwan has set a renewable energy target of 15GW of offshore wind to be constructed between 2026 and 2035. Once operational, Hai Long will provide enough clean energy to power more than one million Taiwanese households, Northland stated.

Upon completion of Hai Long and the Baltic Power project, Northland said its gross installed offshore wind capacity will nearly triple from 1.2GW to 3.3GW.