Category A project supported: Changfang and Xidao Offshore Windfarm
Published 10 March 2020
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1. Project description
UK Export Finance (UKEF) has agreed to provide project finance for the design, construction and operation of the 600 megawatt (MW) Changfang and Xidao windfarm, located 11 to 25 kilometres (km) off the west coast of Taiwan, in the Taiwan Straits, west of Changhua County (the Project).
The Project is comprised of two adjacent offshore sites, Changfang and Xidao, but is being developed as a single wind farm that will be constructed in two phases. Phase 1 will consist of the partial development of Changfang, which will have a capacity of 100 MW. Phase 2 will see the completion of Changfang and development of Xidao, providing capacity of a further 452 MW and 48 MW respectively. The completed windfarm will consist of 62 wind turbine generators (WTGs), together with associated jacket and transition piece WTG foundations. Ten WTGs will be installed in phase one and the remaining 52 in phase two. The WTGs will be established in water depths ranging from 26 to 46 metres (m) and will be connected via 66 kilovolts (kV) submarine cables to a newly built onshore substation. The onshore substation will house three 66 kV/ 161 kV transformers (two for Changfang and one for Xidao). Two circuits of buried onshore cables (totalling 4.8km) will connect this to the national grid system via Taiwan Power Company’s Changone substation.
Onshore construction works started in the first quarter of 2020. Offshore works will start in June 2021 for phase 1 and March 2022 for phase 2. Operations for Changfang phase 1 are planned for 2022, and Changfang phase 2 in 2023. Xidao operations are planned to commence in 2023.
The Project does not include any associated facilities.
The Project will reduce Taiwan’s reliance on coal and nuclear power for the generation of electricity, and consequently help it to meet its climate change reduction goals.
Other ECAs involved in the provision of financing are Atradius (Netherlands), EKF (Denmark), Euler Hermes (Germany) and KSURE (South Korea).
2. Project sector
The Project is in the renewable energy sector.
3. Project sponsors
The Project is being developed by Changfang Wind Power Generation Company Ltd and Xidao Wind Power Generation Company Ltd (the Project Companies). They are special purpose vehicles that are wholly-owned by Copenhagen Infrastructure Partners (the Project Sponsor).
4. UK exporters
Several UK companies will provide goods and services to the engineering, procurement and construction contractors
5. Export credit agent bank
Mitsubishi UFJ Financial Group (MUFG) Bank, Ltd.
6. Amount of UK Export Finance support
The principal value of the support is approximately 77.3 million UK pounds.
7. OECD Common Approaches and Equator Principles
UKEF categorised the Project as a Category A (having potentially significant environmental, social and human rights (ESHR) impacts) in accordance with the definition in the 2012 (Revised 2016) OECD Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (the “OECD Common Approaches”) and Equator Principles.
As required by the OECD Common Approaches, UKEF disclosed its potential involvement in the Project at least 30 days prior to committing to providing support. A notification was posted on the UKEF website on 20 November 2019, which provided a description of the Project, a contact point to signpost interested parties to environmental and social information, and links to the environmental impact assessments. No enquiries were received by UKEF or the contact point as a result of this notification.
8. Environmental, Social and Human Rights (ESHR) standards
Project-related ESHR documentation was reviewed for alignment against the 2012 International Finance Corporation (IFC) Performance Standards (PS) on Environmental and Social Sustainability and the World Bank Group Environmental, Health and Safety (EHS) Guidelines. The applicable IFC PS were:
- PS1: Assessment and Management of Environmental and Social Risks and Impacts
- PS2: Labour and Working Conditions
- PS3: Resource Efficiency and Pollution Prevention
- PS4: Community Health, Safety and Security
- PS5: Land Acquisition and Involuntary Resettlement
- PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources
- PS8: Cultural Heritage
The applicable World Bank Group EHS Guidelines, of which the following are relevant, were:
- General EHS Guidelines (2007)
- EHS Guidelines for Wind Energy (2015)
- EHS Guidelines for Electric Power and Distribution (2007)
9. Nature of ESHR impacts
The review of potential ESHR risks and impacts took into account the following impacts, receptors and issues during the construction and operational phases of the Project:
- noise and vibrations
- hazardous material management
- waste
- air emissions
- water quality
- terrestrial, avifaunal and marine biodiversity, including species of conservation concern
- livelihood impacts, especially to fishermen
- management of third-party contractors and suppliers
- grievance mechanisms
- occupational and community health and safety
- emergency planning and response
- cumulative impacts
- worker conditions of contract and accommodation
- cultural heritage
- visual impacts
- community engagement
- electromagnetics
10. Assessment of ESHR impacts
A review was undertaken in line with the requirements of the OECD Common Approaches and Equator Principles to identify potential ESHR risks and impacts of the Project and how these would be effectively managed. The review was conducted with the support of an Independent Environmental and Social Consultant (IESC), who was commissioned to undertake an environmental and social due diligence assessment of the Project for the financing parties.
The review included:
- desk-based review of project-related documentation: Environmental Impact Assessment, Environmental and Social Management Plan, Stakeholder Engagement Plan, and Livelihood Restoration Plan
- IESC site visit to the Project area, interviews with relevant personnel, and meetings with the Changhua Fishery Association
- follow-up meetings and interviews with relevant Project representatives
11. Decision
Various actions have been agreed between the Project developers, operators, and parties involved in the financing, which are necessary to ensure the Project’s on-going alignment with international standards. Following agreement of these commitments, it was concluded that the Project should meet the relevant international standards over the project cycle and UKEF therefore decided to provide its support in respect of the supply of capital goods and services by UK exporters to the Project.
A condition of support is that the Project will be subject to assurance monitoring by an IESC, in order to provide satisfaction that the Project is aligned with the relevant international standards throughout the duration of support.