Green financing boosts Taiwan's bold renewable energy plans

23/07/2020

A series of offshore wind and floating solar projects that support policymakers’ energy transition goals are creating opportunity for local and global companies in Taiwan, supported by Societe Generale.

Taiwan is at the forefront of Asia’s transition towards renewable energy. It passed legislation in 2017 that requires electricity from renewable sources to increase from around 4 per cent of total generation capacity to 20 per cent by 2025 1. The government’s New Energy Policy envisages that Taiwan, which had installed electricity generation capacity of around 45 Gigawatts (GW) in 2018, will install 27 GW of renewable capacity, including 6.7 GW of offshore wind power capacity and 20 GW of solar photovoltaic (PV) capacity, by 20252

To deliver on these bold plans, Taiwan has already started work on four offshore wind projects to date. The 128 MW Formosa 1 windfarm was completed in December 2019 and the Formosa 2, Yunlin and Changfang & Xidao facilities are expected to deliver more than 1.7 GW of green power to the economy. Taiwan has also initiated the 181 MW Changhua floating solar project – one of the largest of its kind in the world and the first in Taiwan.

Supporting local and global clients

Delivering Taiwan’s pioneering offshore wind farms has also involved a broad range of local and international participants across all aspects of the projects. Formosa was developed by leading international sponsors Macquarie Capital, Orsted and Swancor Renewable Energy. Yunlin, the largest offshore wind project financing in Asia to date, was developed by Germany’s wpd and a Japanese consortium led by Sojitz, while the Changfang & Xidao wind farm is being developed by Copenhagen Infrastructure Partners, a Danish fund management company focused on energy infrastructure. Japan’s Marubeni Corporation is the sponsor of the Changhua floating solar project.  

« In Asia Pacific, Societe Generale has been involved with wind, geothermal, solar and hydropower projects in markets that also include Australia, Indonesia, Vietnam and Laos.  »

But the bank’s leadership with renewable energy in Taiwan has enabled it to connect clients with capital and opportunity in all the projects financed to date.  

Societe Generale was the Mandated Lead Arranger and Technical Bank for Formosa 1 back in 2018 and has been instrumental in the three other financed projects. The bank also acted as the financial advisor and mandated lead arranger to Formosa 2, reflecting the full spectrum of its capabilities for renewable energy projects. 

These achievements demonstrate the bank’s unique track record with offshore wind projects in Taiwan.

Furthermore, Formosa 2 was Societe Generale’s first completed offshore wind advisory mandate in Asia-Pacific. Building on the bank’s well-established advisory franchise in Europe and the Americas, the completion of Formosa 2 symbolises the bank’s advisory capability in global offshore wind sector. 

Building green capital markets

Societe Generale’s commitment to renewable energy in Taiwan extends to helping develop the local green bond market as a source of financing for projects. The bank issued its fourth bond in Taiwan this March, bringing the total proceeds it has raised through this groundbreaking funding programme to TWD 11.2 billion (EUR 335 million). 

The bank was the first foreign financial institution to be granted regulatory approval to issue green bonds in the local market back in 2018, reflecting its strong capability in debt markets and innovative approach for product offerings. This “first” also showcases its leadership in sustainability as a strategic priority for the group. 

Societe Generale’s first issuance was named Best Green Bond deal in Taiwan in The Asset’s Triple A Country Awards 20193  while the second, which raised TWD 3.6 billion, was the largest TWD-denominated green bond issued by a foreign bank in the market. Both deals were also recognised as “Positive Impact Bonds” because of their alignment with the Principles for Positive Impact Finance4 launched in Paris.

These transactions have also helped enhance the efficiency of the bank’s operations in Taiwan by matching the duration of its funding with the life of the projects it is financing. But, more importantly, they have allowed Societe Generale to channel capital from the local markets to the renewable energy projects that are powering Taiwan’s green ambitions. 

« Societe Generale, the leader in ESG, makes positive impacts to the environment and sustainable development. »

Kevin Tseng
Head of Fixed Income of Yuanta Securities
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