Japan’s JERA acquires 49% stake in Formosa II

The transaction marks the Japanese energy company’s second investment in a Macquarie Capital-backed offshore wind project in Taiwan.

Macquarie Capital has sold a 49 percent stake in a 376MW Taiwanese offshore wind project to Japan’s JERA, a joint venture between Tokyo Electric Power Group and Chubu Electric Power Group, both firms said in separate statements.

The transaction will result in Macquarie Capital’s stake in Formosa II dropping to 26 percent. Swancor Renewables, the third shareholder in the project and backed by New York-based infrastructure investment firm Stonepeak , will retain its 25 percent stake.

The project, which is expected to become operational by the end of 2021, has secured a 20-year power purchase agreement with Taiwan Power Company, based on a feed-in-tariff scheme. Once operational, Formosa II will be Taiwan’s largest offshore wind project, powering 380,000 households with green energy, Macquarie said.

According to a spokesman for JERA, the Development Bank of Japan will support the investment through a newly launched vehicle, JERA Formosa 2 BV.

“JERA has launched a new vehicle specifically to acquire the shares of Formosa II and DBJ will acquire the preferred shares of [the vehicle],” Atsuo Sawaki, JERA’s spokesman, told Infrastructure Investor. The proceeds of the stock issuance will be used to invest in the wind farm, Sawaki said, adding that JERA is aiming to redeem the shares from DBJ and eventually become the single shareholder of the 49 percent stake.

Sawaki declined to comment on the price of the transaction or the value of the preferred shares acquired by DBJ. Macquarie Capital also declined to comment.

JERA has recently established an operation base in Taiwan to expand its business activity and will dispatch engineers “to gain knowledge and experience in the construction and operation of offshore wind power generation”, the Japanese company said in its statement. It aims to become a “global leader in LNG and renewables, sparking the transition to [a] clean energy economy” by investing in large-scale offshore wind projects at home and abroad, it added.

In December 2018, JERA acquired a 32.5 percent stake in Formosa I, Taiwan’s first commercial-scale offshore wind farm with a generating capacity of 128MW. The project’s other shareholders are Orsted (35 percent), Macquarie Capital (25 percent) and Swancor (7.5 percent). That project is expected to become operational by year end, with the exception of two units that began operating in April 2017, generating an output of 8MW.

“Along with Formosa I, Formosa II places Taiwan at the forefront of the Asia offshore wind market and contributes to the Taiwanese government’s target of adding 5.7GW of wind power to its energy mix by 2025,” Macquarie Capital said in its statement.

Japan meanwhile aims to develop at least 10GW of wind capacity by 2030, mostly through offshore wind. The market is expected to take off next year following the government’s listing this past August of 11 regions that will be considered for capacity auctions.