Orsted to sell half of Taiwanese wind farm to Cathay Life Insurance
Danish utility signs deal to farm down 583MW Greater Changhua 4 project to Cathay Life Insurance for about $1.64bn
Orsted has signed a deal to sell half of its 583MW Greater Changhua 4 offshore wind project in leading local insurance company Taiwan to Cathay Life Insurance and its affiliate Cathay Wind Power Holdings.
The sales price comprises the acquisition of a 50% ownership share and the commitment from the partners to fund half of the payments under the EPC contract for the wind farm. The total value of the transaction is about DKr11.6bn ($1.64bn), which is to be paid this year and next.
The wind farm is already under construction and expected to be completed by the end of next year. It forms part of the Greater Changhua 2a and 4 projects which have a combined capacity of 920MW.
“We’re pleased to apply our partnership model in Asia Pacific once again and advance the development of offshore wind in the region with Cathay, with whom we have great collaboration experience,” Orsted chief commercial officer Rasmus Errboe said.
“We’re satisfied with the transaction as it represents another important milestone in our partnership and divestment programme and ensures further progress towards our mid- and long-term targets.”
As part of the agreement, Orsted will build Greater Changhua 4 under a full-scope EPC contract. The utility will also provide long-term operations and maintenance services from its hub at Taichung Port.
Orsted keeps full ownership of the Greater Changhua 2b site. Greater The full 920MW capacity of Changhua 2b and 4 is covered by a 20-year corporate power purchase agreement (PPA) with semiconductor giant TSMC.
The entire Greater Changhua offshore wind cluster with its 1.8GW in capacity can produce enough power for nearly two million Taiwanese households.
Jacob Pedersen, chief analyst at Denmark's Sydbank, after the news maintained his buy recommendation for Orsted shares.
"Divestment/Farm-down is an integral part of financing Orsted's strategic plan towards 2030, and this marks another positive step," he said in a note to investors.
Divestments have become "absolutely necessary" for Orsted to realise its growth in its revised strategic plan without raising more capital after the large losses incurred in 2023, the analyst said.
Uncertainty after Trump victory
He added that uncertainty is very high about the development in the US market after Donald Trump won the presidential election.
"A total slowdown in the allocation of new projects during Trump's presidency certainly cannot be ruled out, but apart from a (not necessarily insignificant) negative effect on import prices for wind turbines, among other things, from new tariffs, the already approved Revolution Wind and Sunrise Wind should not be at risk," Pedersen said.
"On the other hand, a dormant US market could intensify competition for other offshore wind projects to be built after 2030."