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20 banks face credit risk as Taiwan offshore wind farm project delayed

Yunneng Wind Power cites pandemic and weather as reasons for delay, seeks debt repayment negotiations with creditors

Wind turbine generators. (Yunneng Wind Power Co. Ltd. website photo)

Wind turbine generators. (Yunneng Wind Power Co. Ltd. website photo)

TAIPEI (Taiwan News) – Twenty local and foreign banks face credit risk after an offshore wind farm developer sought a financial lifeline to cut its debt by NT$10 billion (US$326 million) when the high-profile project was delayed for two years.

The developer, Yunneng Wind Power Co., cited the pandemic and weather issues as the main reasons for the delay. This excuse was reportedly not accepted by the Bureau of Energy or Ministry of Economic Affairs, to give a green light for another delay.

The company could face an administrative penalty, a huge fine, or development disqualification, if it fails to complete the required documentation for remedies in late January.

Yunneng oversees the development of an offshore wind farm in the Taiwan Strait off the west coast of Taiwan's Yunlin and has a head office in Taipei. The farm will comprise 80 wind turbine generators, with a capacity of 640 megawatts.

Only 16 of 80 wind turbine generators had been installed on the farm by December 2022. This is far behind the scheduled completion date.

People familiar with the matter told UDN the construction costs had added up since the onset of the COVID-19 pandemic. The developer is no longer able to increase capital for the offshore wind farm project and is left with no option but to seek debt repayment negotiations.

Meanwhile, doubts are cast on its principal shareholders, including Skybone Renewables Taiwan Co. Ltd., whose parent company is headquartered in Germany. It previously operated as "wpd offshore" but in September of 2022 was sold to infrastructure fund manager Global Infrastructure Partners (GIP) in a deal to acquire wpd's offshore wind business worldwide.

There are calls in the country to demand Skybone cover the ever-increasing costs rather than leaving creditors to cover the additional costs caused by the delay.

According to another UDN report, in addition to Skyborn, which holds 48% of the shares of Yunneng, the other principal shareholders are Germany-based Starwind (27%) and Thailand-based holding company EGCO (25%).

Yunneng's website shows the syndicated loan was led mainly by foreign banks, including CreditAgricole Corporate and Investment Bank, Deutsche Bank, Mizuho, Standard Chartered and SMBC. The other participating foreign banks include MUFG Bank Ltd. Taipei Branch, BNP Paribas, Societe Generale, DBS, ING, Natixis, OCBC.

The six Taiwan banks participating in the loan, according to UDN, are Fubon, Cathay United Bank, CTBC Bank, EnTie Bank, E. Sun Bank, and King's Town Bank.