Tue, Jul 17, 2018 - Page 12 News List

Taiwan’s transparency attracts energy finance: law firm

BANKABLE:Attractive feed-in tariffs and Taipower’s credit rating are among the possible reasons global investors are providing limited-recourse project finance, a report said

By Crystal Hsu  /  Staff reporter

Taiwan’s emergence as an energy investment destination could create new openings for Taiwanese companies far beyond the energy sector, as Asia’s thriving economies need energy, international law firm White & Case LLP said in a report yesterday.

The government aims to end nuclear power generation by 2025, by which time 20 percent of electricity should be generated from renewable sources and 50 percent from natural gas.

Offshore wind is a key component of the plan, with ambitions to install 5.5 gigawatts of offshore wind capacity by 2025.

With the growing cost efficiency of renewable energy and the emerging viability of battery storage technology, energy generation is nearing an inflection point, the consultancy said, adding that the shifting market dynamic in the oil-and-gas sector has seen liquid natural gas-to-power emerge as a viable alternative to coal-fired power generation in Asia.

Lower barriers to entry in renewables have given rise to a new breed of developers and investors who compete confidently against the traditional energy utilities and drive innovation in technology, development strategy and capital, it said.

Interest from international investors and financiers in the Taiwanese offshore wind sector has been intense, with market participants enthusiastically jockeying for position, it said.

Factors that help differentiate the local offshore wind sector from other Asian markets include strong government commitment, a transparent pipeline of opportunity, attractive feed-in tariffs and the potential for Taiwan to serve as a foothold for firms looking to build a presence in other emerging offshore wind markets in Asia, the consultancy said.

The investment-grade creditworthiness of Taiwan Power Co (Taipower, 台電) also lends significant support to the industry, it said.

In addition, there is no competition from firms from China, the largest offshore wind market in Asia and the third-largest in the world, White & Case said.

Still, a gap remains between ambition and practical delivery in the region, most noticeably because of slow and opaque approval processes, it said, adding that a lack of coordination among government authorities has also led to disappointments.

A key aspect of international involvement in the Taiwanese offshore wind sector is the pursuit of limited-recourse project finance, it said.

This means that financiers lend solely on the basis of the project and its cash flows, without additional financial guarantees from the project developer, it said.

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