Cathay Life Insurance, a life insurance subsidiary of Taiwan-based Cathay Financial Holdings Co., Ltd., announced, in collaboration with local solar cell and module manufacturer Neo Solar Power Corporation (NSP), their founding of a joint venture specialized to the development of solar power plants with an estimated capital of NT$3.5 billion. The new JV will be the first of its kind in Taiwan.
Cathay Financial’s subsidiary Cathay United Bank has been one of the major financing institutions for solar systems in Taiwan, with accumulated loans to more than 1,000 PV projects. Likewise, Cathay Life Insurance had previously taken part in the funding of a solar power facility, which was completed and in operation, providing a decent Return On Investment (ROI) for the company. Now with the Taiwanese Government listing green energy as one of the top five industries as prioritized focus to support, Cathay Life Insurance has decided to rev up its investment another notch, in seeking partnership with NSP.
The total finance, NT$3.5 billion, of the new JV is planned to be done via two phases. Cathay Life Insurance would have a shareholding ratio of no more than 45%, or NT$1.575 billion, with an estimated amount of NT$675 million in the first phase. On the other hand, NSP would have an estimated contribution of no less than NT$1.925 billion, with an estimated initial amount of NT$825 million, combining to a total of $1.5 billion by the two companies in their first phase of financing. The investment would proceed into second phase dependent on how the project is carried out.
Due to the project being an application of life insurance capital, the actual investing would only be conducted when being accepted by the Financial Supervisory Commission.
Cathay Life Insurance speculates that the building solar power plants with NSP and selling back the generated electricity to Taiwan Power Company, a state-owned electric utility, would have a greater ROI than acquiring other companies, at more than 5%. NSP have also stated that solar power plants can prove to be investments of high stability, profitability, generating a 20-year or more cash flow, and would be one of promised prospect.
It is said that the initial development of some solar power plants to-be-built by the new JV have gone underway, along with a certain amount of projects being secured, according to an interview with NSP, done by EnergyTrend over the phone.
NSP has also elaborated that the transfer of production capacity is expected to be completed in the fourth quarter of this year, when NSP will be able to elevate its edge among competitors as well as minimize the impact from Chinese PV suppliers. Furthermore, NSP takes a more active step in investing in R&D of new generation cell technologies such as PERC and N-type HJT, instead of expanding production capacity.
As for the power plant development business, on the other hand, NSP projects to break ground on 200MW of PV projects in Japan, USA and Taiwan in 2016, expecting to complete and sell 80MW of them. Moreover, NSP estimates to own a total of 800MW of solar portfolio, which would be of beneficiary to the company’s long-term revenue.
(Written by Rhea Tsao, chief editor of EnergyTrend; translated by a contracted translator at TrendForce Corp.)
