Japan's Mitsui & Co said on Friday it had finalized a plan with Canada's Northland Power Inc. to build a 1 gigawatt (GW) offshore wind farm in Taiwan at an estimated cost of 960 billion yen ($6.5 billion).
The deal comes as countries around the globe are seeking to attract investment in offshore wind power projects to help combat global warming by reducing their use of fossil fuels.
Mitsui and Northland, which won the stake in the Hai Long bottom-fixed offshore wind project in 2018, aims to complete construction by the end of 2026 to generate a total of 1.022 GW, equal to the annual power consumption of 1 million households.
The project, 60% owned by Northland and 40% by Mitsui, involves constructing 73 large wind turbines in the offshore area 45-70 kilometers (30-45 miles) off Changhua county and consists of three sections, HL2A, HL2B, and HL3.
The HL2A will sell electricity to Taiwan Power Company under a 20-year power purchase agreement (PPA) while HL2B and HL3 will sell electricity to a private power user in Taiwan under a 30-year PPA, Mitsui said in a statement.
Of the total project cost, Mitsui will provide 260 billion yen, including 170 billion yen in equity and loans and 90 billion yen in guarantees, while about 540 billion yen will be funded through project finance.
The deal is subject to project finance contracts coming into effect, which is expected this year, Mitsui said.
Siemens Gamesa Renewable Energy and DEME Offshore Holding are among the contractors for the project, Mitsui said.
"We want to accumulate knowledge and experience from this project and apply them to subsequent projects," Takehiko Ainoya, general manager of Mitsui's infrastructure projects business unit told reporters, citing Japan, Philippines, and Vietnam as potential sites.
For Mitsui, which aims to boost renewable energy to account for more than 30% of its power generation portfolio by 2030, the Hai Long project will widen the ratio to 26% from the current 23%, he said.
($1 = 148.3000 yen)
(Reuters - Reporting by Yuka Obayashi; editing by Philippa Fletcher and Miral Fahmy)
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