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The Global Wind Energy Council has released a detailed study on how Southeast Asia can accelerate the development of offshore wind energy by using innovative financial structures. The study is titled “Innovative Finance Mechanisms for Southeast Asia’s Offshore Wind Take-off: A Study on Unlocking Blended Finance.” It aims to explain how different types of finance can help the region move faster toward building large-scale offshore wind projects. GWEC is a global trade association with more than 1,500 members, including energy companies, turbine manufacturers, technology providers, and project developers. The organisation works closely with development banks, international agencies such as the IEA and IRENA, and national industry associations. Its larger mission is to ensure that wind energy becomes a core solution to the world’s energy and climate challenges and supports countries in attracting major investments while offering economic and social benefits.
The study highlights that its content includes forward-looking statements and that the authors do not guarantee the accuracy of the information, as conclusions are based on current assumptions and expectations. The main part of the research is built around a detailed financial model used to understand what tariff levels would make offshore wind projects financially viable in the region. Instead of calculating tariffs directly, the team used a goal-seeking or back-solving method. This means tariff levels were worked backward from a fixed minimum equity internal rate of return. The IRR was set to match the target cost of equity for projects either in the Philippines or Vietnam. By fixing the required return for investors, the model shows the tariff needed to ensure that projects remain attractive and meet investor expectations.
The financial model also included updated assumptions for capital expenditure and operating expenditure. These were benchmarked using industry data, including information provided by GWEC and specific references from Vietnam’s Interim Competitive Investor Selection Process. One of the most important findings is the impact of risk reduction tools. The inclusion of Export Credit Guarantees, especially when paired with concessional finance, lowers the overall cost of debt significantly. The model shows a 120-basis point reduction in all-in interest rates when both tools are applied. This reflects how commercial lenders view the projects as less risky when these guarantees are available.
To maintain consistency, all financial values in the study were presented in US dollars, even though region-specific data were used. The team chose not to model currency indexation separately because this would add more complexity and does not align with current market practices in Southeast Asia. After the US dollar tariff is determined, it is converted back into the local currency for each country. The study also applied a uniform assumption regarding upfront reserve requirements. A fixed equity reserve of 20 million dollars was set aside for the early development years of every scenario. This amount is meant to cover initial expenses linked to securing Export Credit Guarantee facilities, showing that de-risking a project carries substantial administrative costs.
Overall, the study provides a clear and structured explanation of how blended finance and risk mitigation tools can help offshore wind take off in Southeast Asia. It offers realistic financial benchmarks and gives policymakers insight into the tariff levels needed to attract investment.
