Deal focus: BlackRock finds an entry into Taiwan solar

About a year ago, BlackRock Real Assets' renewables team was initiating its first communiques in a country it had never penetrated with an unfamiliar operator of a fledgling project unlike any asset it had backed before. Now the US-based firm is ready to expand its footprint in its newest base exponentially across the next two years and use the country as a beachhead for a high-level pivot toward Asia.

The deal in question entails the 100% acquisition of a 28-projet solar portfolio in Taiwan from J&V Energy Technology for an undisclosed sum. BlackRock invested via its second global renewables vehicle, which closed last year at $1.6 billion. 

It represents not only BlackRock's first foray into Taiwan, but also its first investment in a floating solar project. Floating solar installations are typically constructed on manmade bodies of water, such as dam reservoirs, to optimize the use of space. The extra due diligence needed to get comfortable with the technology was a small price for access to market with a rare government offtake regime featuring 20-year fixed-rate contracts.

"We spend a lot of time reviewing and comparing different markets, but Taiwan became a strategic priority over the past year," says Charlie Reid, a portfolio manager in BlackRock's renewables team. "We were looking for a potential seed investment in the Taiwanese market, and this transaction afforded us the opportunity to enter and expand our presence there. When we enter into a market, we tend to commit pretty deeply."

The portfolio consists of seven construction projects and 21 operating assets, the oldest of which has only been up and running for about a year. When all 28 installations are online next year, total capacity will come to about 70 megawatts, or enough to power 16,000 homes.

The existing offtake contracts are with Taipower, a state-owned AA-rated utility. New Green Power, the portfolio's existing engineering, procurement and construction contractor, will continue to lead development as well as providing operational and maintenance support. BlackRock will offer support via its global in-house engineering team.

One of the main incentives for renewables investment in Taiwan of late has been the government's target to increase renewable power generation from less than 1 gigawatt currently to 25 GW by 2025, a plan that is estimated to require some $50 billion of investment. About 20 GW of this build-out is expected to come from solar.

"We've seen this play out in different markets where once renewables take hold, generally those targets are delivered or even exceeded because renewables globally is now the cheapest form of new power generation," Reid says. "We don't see that energy transition away from nuclear to renewables slowing down."

Reid hopes to scale his firm's 70 MW toehold to "several hundred megawatts" in the near term, conscious that Taiwan's renewables policy push is likely to bring in new competitors and eager to jumpstart a broader embrace of the region. "This is the next wave for us," he adds. "Asia Pacific is going to have a much more significant role than it has in our portfolio."

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• Topics
• Greater China
• Infrastructure
• Cleantech
• Buyouts
• Taiwan (China)
• BlackRock
• energy