Danish renewable energy developer Ørsted achieved a significant milestone in December 2024 by reaching financial close on its 583MW Greater Changhua 4 Offshore Wind Farm in Taiwan.

The transaction - code-named Trinity - marks a first for Taiwan, as it features a substantial local investor, Cathay Life Insurance, raising hopes for increased domestic participation in the country’s growing offshore wind sector—the largest in Asia.

“The deal demonstrates that international developers, especially, Ørsted remain very much committed to Taiwan,” says Ji Yuan (featured right), head of infrastructure finance, North Asia for HSBC, the foreign financial adviser to the deal. CTBC Bank is the local adviser

Taiwan has over 30 offshore wind farms at various stages of operations/construction. From 2.25GW of capacity in 2023, the country hopes to touch 5.7GW of offshore capacity by this year (2025), despite ongoing geo-political challenges.

Trinity’s FC has emerged as a beacon of hope for the sector, especially as Ørsted faces significant impairments in its US business.

In December (2024), Ørsted announced Taiwan’s Financial Supervisory Commission (FSC) approval to the NT$27.32 billion ($855m) investment in the wind farm.

The approval supports the sale of 50% stake in the project to Cathay Life Insurance and its affiliate Cathay Wind Power Holdings, for around DKK11.6 billion ($1.64bn).

Cathay Wind Power is 99% owned by Cathay Life Insurance, with Cathay Power holding the remaining 1%.

Cathay Life is a subsidiary of Cathay Financial Holdings, who is no stranger to offshore wind sector, having previously invested in Ørsted’s Greater Changhua 1 Offshore Wind Farm, through its Cathay Private Equity affiliate. That investment was, however, small.

However, Greater Changhua 4 is the largest so far from a Taiwanese life insurer in the wind power sector.

“Trinity has kicked off a new phase, overcoming many of the hurdles for state-owned banks to start participating in Taiwan offshore wind farms,” said Hong Kong-based Yuan, emphasizing the cascading impact of a significant local investor involvement in the deal.

He reckons the transaction achieved several other key milestones, including being the first deal in Taiwan to obtain project financing solely off the back of a corporate power purchase agreement (CPPA).

EPC Wrap

Notwithstanding the unique aspects of Trinity, Ørsted’s projects are executed on the back of an unconventional structure that adds complexity for financiers.

For example, Greater Changhua 4 wind farm is owned through a joint holdco, which in return is equally split between Cathay Life and Ørsted.

Until Cathay Life came on board, the state-owned Danish developer used its own funds to start work at the farm.

With Cathay’s entry, it became the borrower of the latest financing, while Ørsted structured and led the “EPC Wrap” financing package and provided additional support.

“In this model, project finance loans are typically placed at the investor shareholder level, rather than at the asset-owning project company (SPV) level,” says William Wu (pictured left), a shareholder and Head of Taiwan practice at Greenberg Traurig (GT).

The international law firm represented Cathay Life in its investment in the Greater Changhua 4 project.

“This (holding structure) creates a level of separation between the financiers and the underlying asset, complicating risk management,” Wu explains.

Ørsted’s support for the financing process was instrumental, as lenders were able to rely on direct agreements allowing them to step in under specific conditions, such as a default.

Additionally, Ørsted mitigated some risks through project documentation by offering performance guarantees, creating a framework that facilitated the involvement of incoming investors.

Financing support

The financing package, signed on 11 December 2024 and followed by financial close the next day, involved 15 lenders in a multi-tranche structure.

The 19-year loan has a repayment period of 18 years, excluding around 20 months of construction.

IJGlobal understands the overall debt and equity financing for Cathay’s 50% share is just shy of $2 billion.

The following 13 lenders provided $1.2 billion -equivalent of local financing.

Citibank Taiwan and the Korea Development Bank also participated in the financing, which also has a small euro tranche.

About 80% of the financing package is backed by guarantees from 6 export credit agencies (ECAs):

• Credendo
• Export Finance Australia
• Export and Investment Fund of Denmark (EIFO)
• Korea Trade Insurance Corp (K-Sure)
• UK Export Finance
• Taiwanese National Credit Guarantee Administration (NCGA)

For the Danish ECA, exposure to Taiwan’s offshore wind market ranks among its top 3 globally while for NCGA this was the first-ever participation in a Taiwan offshore project.

According to Peter Boeskov (pictured right), Chief Commercial Officer at EIFO,  the Greater Changhua 4 project marks the sixth transaction the ECA has supported in Taiwan since 2018. 

“Taiwan is a very important market in terms of offshore wind resources and the export opportunities it offers for Danish companies,” Boeskov said.

The agency’s involvement has been critical in shaping Taiwan’s offshore wind market, which is fraught with logistical challenges.

“Taiwan has very short weather windows, and you’ve got to make sure that everything happens on time to avoid any costly delays,” Copenhagen-based Boeskov said, adding that their board approval for participation in the project came as far back as February 2024.

The short campaign period that also affected Yunlin and strict local sourcing requirements – which are being eased –  have impacted the sector. Ørsted skipped the latest 3.2 auction round.

Over the years, EIFO and other ECAs have played a key role in catalyzing Taiwan’s offshore wind sector, particularly as commercial banks and other institutional investors remain cautious.

EIFO was among the first ECAs to back projects in Taiwan, and its involvement in Greater Changhua 4 followed prolonged discussions.

EIFO’s earlier Taiwan OSFs investments include:

• Formosa 1
• Formosa 2
• Yunlin
• Greater Changhua 1
• Changfang
• Xidao

While the agency continues to participate in offshore wind transactions, it is shifting its focus toward smaller investments.

“We helped get the market going, and we would still like to be involved, but we are probably, for the medium term, looking at participating with smaller tickets than we did in the past,” Boeskov said.

EIFO has provided about DKK1 billion ($141.6m) in the financing for Trinity.

The Greater Changhua 4 project also marks a significant milestone for EIFO. “In contrast to other transactions, this is the first time we’re involved with a corporate PPA in Taiwan,” Boeskov highlighted.

The offtake structure has evolved in the Taiwan offshore market. In 2024,Northland-led Hai Long project became the first farm to achieve FC backed by a CPPA with Taiwan Semiconductor Manufacturing Company (TSMC), though a PPA from state-owned Taipower also backstops the transaction.

In Greater Changhua 4, TSMC is the sole offtaker.

Investor shift

As Taiwan's offshore wind market matures, other key trends are reshaping its dynamics. A notable shift is in sponsorship, with domestic players becoming more active, Greenberg Traurig’s Wu said.

"The most likely buyers for assets are increasingly local players, signalling a significant shuffle in ownership over the coming years," Singapore-based Wu said. 

EIFO’s Boeskov also foresees an increasing role for local stakeholders in Taiwan’s offshore wind projects.

Local insurers and corporates are starting to play a more prominent role in Taiwan’s offshore wind market.

The investor shift comes with operational assets coming back to the market. For instance, in the operational Formosa 2 refinancing, the deal mitigates construction risks. Taiwan’s J&V Energy Technology has also taken over Macquarie’s stake in Formosa 2, along with other Taiwanese investors.

Also, Ørsted’s 2 upcoming wind farms code named Lotus,– Greater Changhua 2a 288MW and Greater Changhua 2b 336MW – will be substantially ready when they will hit the market.

“This simplifies the process of ownership transfer compared to earlier projects like Trinity or Mercury (Greater Changhua 1), which were far more complex due to their stage of development and structure,” Wu added.

“This evolution is expected to streamline transactions and reshape the landscape of asset ownership.”

By making substantial investment in the Greater Changhua 4 project, Cathay Life has taken some development risk—a first for a local insurer at this scale.

“This opens the possibility for other international consortiums to partner with local insurers in the future,” said Wu.

When asked if the Taiwan offshore market can attract overseas insurer, Wu said insurers, particularly outside Taiwan, remain cautious due to regulatory restrictions and their inherently conservative approach. 

“Their risk profiles are designed to limit potential exposures, which poses challenges for entering markets like Taiwan, more specifically for highly complex deals such as an offshore wind project,” he said. 

For instance, Japanese insurers may still find it difficult to commit to Taiwan's market with large-scale investments. 

That said, the presence of insurers already operating in Taiwan is a positive sign. “This can serve as a reference point and help insurers justify their decisions internally, as it’s easier to align with a precedent set by peers in the field”.

Wu also highlighted the interconnected nature of Taiwan’s financial holding structures.

“When an insurer invests in a sector, it can create a ripple effect, making it easier for affiliated institutions within the same group to follow suit”.

Greater Changhua 4 construction is likely to get completed in 2025.

Advisers:

• HSBC – FA (international)
• CTBC – FA (local)
• Greenberg Traurig – legal to Cathay Life stake purchase
• White & Case – legal to lenders
• Linklaters – legal to Ørsted on equity divestment
• Gibson Dunn – PF documentation for Cathay Life