Swiss independent power producer Etrion announced on Tuesday that it has closed project financing on 34MW of solar PV projects that the company is building in partnership with Hitachi Hi-Tech in Japan.
The 34MW of generation capacity will be split across two plants, one in northern Japan with a capacity of 24.7MW, the other a 9.3MW power plant in the region of Mito, about 100km north-west of Tokyo. According to Etrion, these will be the first of several PV projects the two companies are looking to work together on.
PV Tech reported back in January that Etrion and the Hitachi subsidiary had signed a strategic partnership agreement to develop PV plants in Japan, followed shortly by the announcement of plans to build this initial 34MW, which the partnership has just achieved close on. Etrion and Hitachi Hi-Tech are looking to build 100MW of PV by 2015, to reach a total pipeline of 300MW by 2017, including these two projects.
The 24.7MW project, Shizukuishi Solar Project, will be built in Iwate Prefecture, toward the north-western tip of the main Japanese island of Honshu. Etrion says construction will begin in October this year, for completion and connection by the end of 2016. Regional utility Tohoku Electric Power will buy the electricity at a rate of Y40 per kWh (US$0.39 per kWh) under a power purchase agreement (PPA). The plant will produce around 25.6GWh of power annually from its 51-hectare site.
The smaller plant, Mito Solar Project, in Ibaraki Prefecture, will produce around 10.3GWh of electricity annually from its 9.3MW capacity. Also selling its power for Y40 per kWh, electricity from Mito Solar Project will be sold to beleaguered utility Tokyo Electric Power (TEPCO), the custodian of the Fukushima Daichi power plant and clean up. The 27-hectare project on leased land will begin construction in September this year, with completion scheduled for the end of 2015.
Both of the projects will use Hitachi PV systems, while financing was arranged by Japanese lender Sumitomo Mitsui Trust Bank. Sumitomo Trust executive officer Kengo Noguchi, who is also general manager of the company’s structured finance department, said the bank is “committed to supporting the country’s shift to clean energy”.
According to Etrion, the bank will finance around 80% of the total cost of both projects through the bank’s project debt, which can be paid back over 18 years. The remaining 20% of cost will be paid by Etrion and Hitachi, in proportions relating to their respective 87% and 13% ownership interests in the projects.
According to sources including Tokyo-based analyst Hiroshi Matuskawa of RTS PV, lending institutions in Japan are generally more disposed to providing funds to projects that utilise domestically branded, if not necessarily domestically produced, systems and solar modules. Additionally, it is thought that foreign companies such as Etrion looking to build or own solar projects in Japan are much more likely to find financial and other conditions favourable if they establish long-term partnerships with Japanese companies.
Etrion chief executive officer Marcus A Northland said: “Japan is one of the largest solar photovoltaic (PV) markets in the world and having strong local partners has been instrumental in enabling us to succeed in this exciting market.”
“Etrion is one of the first foreign Independent Power Producers (“IPPs”) to secure financing to build utility-scale solar plants in Japan and we are now well positioned to replicate this model with Hitachi High-Tech to accelerate our growth plans.”
Northland went on to say that the projects brought Etrion closer to being able to reach its objective of declaring dividends.