By Anna Hirtenstein and Ichiro Suzuki (Bloomberg) — Mitsui & Co. Ltd. is close to taking a stake in a major offshore wind farm in Taiwan, according to people familiar with the transaction.
The Japanese trading house is in advanced talks to acquire part of Yushan Energy’s Hai Long wind farm project, according to the people who asked not to be identified because the information isn’t yet public. The transaction may be announced as soon as Thursday, the people said.
Yushan has a 300-megawatt project that’s still in the planning stages and may require $1.8 billion to develop, according to Bloomberg New Energy Finance. Mitsui’s involvement would bring another major investor to Taiwan’s effort to secure additional energy supplies while phasing out nuclear power. The island’s spare generation capacity has narrowed so much in recent years that blackouts are an increasing risk.
Buffeted by strong breezes in the Taiwan Strait, the nation picked seven companies in April to lead work on 3.8 gigawatts of offshore wind farms by 2025. Those plants, according to the government in Taipai, may require NT$962.5 billion ($32.5 billion) investment.
“Taiwan wants offshore wind to be a key contributor as it embarks on a power market transformation to phase out nuclear by 2025,” said Tom Harries, a wind-industry analyst at Bloomberg New Energy Finance in London. “It is also ripe for offshore wind since it is blessed with an energetic offshore wind resource, while experienced European developers are hunting for new growth markets.”
Japanese trading houses have been making moves into offshore wind in overseas markets, gaining experience to participate in what may become a big industry at home. Marubeni Corp. owns stakes in projects in the U.K. Mitsui’s move would mark its first move into the industry in Taiwan.
Northland Power Inc., a Toronto-based energy firm, owns 60 percent of the Hai Long 2 project, with Yushan holding the remainder. It’s expected to have 300 megawatts of capacity, one of the smaller projects that won in the government auction last month.
The plant will sell electricity based on a 20-year feed-in tariff that Taiwan initially fixed at $199 a megawatt-hour, according to BNEF.
Yushan sees potential for more work alongside that Hai Long windfarm. It has done work to identify areas in Taiwan for offshore wind farms and with Northland is “proceeding with the development of sites in the Changhua Sea area,” it said on its website. “The projects will result in over 1,000 megawatts of offshore windpower being made available to the Taiwan electrical power grid.”
Officials at Mitsui and Yushan declined to comment.
Named after the highest mountain in Taiwan, Yushan is unit of Singapore-based Enterprize Energy Pte., a pioneer in the offshore wind industry. Founded by Ian Hatton, Enterprize helped get the Ormonde wind plant in the Irish Sea started in 2011, the biggest offshore wind farm of its kind at the time. It specializes in early-stage work on energy projects and also has operations in Vietnam and the U.K.
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