Expanding its international and renewable energy footprints, GE Energy Financial Services has invested in a 32MW solar PV power project in Japan. This transaction, with project developer Pacifico Energy, contributes to GE Energy Financial Services' plan to invest over USD $1 billion annually in renewable energy projects worldwide. Financing for the “Kumenan” solar project was done on a non-recourse project finance basis and was supported by a JPY ¥11 billion loan from The Bank of Tokyo-Mitsubishi UFJ and The Chugoku Bank Ltd. Additional financial details were not disclosed.
Located in the prefecture of Okayama, Kumenan has started construction and is expected to reach commercial operations in the first quarter of 2016. With approval by Japan's Ministry of Economy, Trade and Industry, it will sell power to a regional utility through a 20-year power purchase agreement at a fixed tariff rate. Pacifico Energy -- a utility-scale solar project developer based in Tokyo, and a subsidiary of Virginia Solar Group -- is managing construction and operations. Toyo Engineering Corporation is the construction company on the project, and PV modules are supplied by Yingli Green Energy.
With Japan looking to diversify its power generation mix, it has set a goal of producing about 20 percent of its power from renewable sources by 2030 and implemented a feed-in tariff which attracts investments. David Nason, president and chief executive officer of GE Energy Financial Services, noted that Kumenan helps Japan meet its renewable energy targets and sets the stage for future investments by the GE unit.
"Our investment in Kumenan advances our global growth into new markets with a strong risk-return profile," said Nason.
GE Energy Financial Services has made project investment commitments of USD $1.8 billion in equity and debt in more than one GW of solar power projects worldwide. The business unit also intends to finance Japan's largest solar project, in Setouchi, expanding its foothold in the region.
The president of Pacifico Energy, Kazuomi Kaneto, noted that the company seeks financial partners to support its project operations and management capabilities. "To maximize our project development expertise and free up capital," he said, "we partner with experienced investors like GE Energy Financial Services, which can offer flexible financial structures, strong bank relationships and technical know-how to help enable certainty of execution."
Pacifico Energy intends to start construction on 200 MW of solar power projects this year across four advanced projects.