The Bank of Tokyo-Mitsubishi UFJ Ltd. said it will loan 8.6 billion yen ($108 million) to Eurus Energy Holdings Corp. for its first “mega-solar” plant.
The bank and the renewable energy operator signed a financing agreement on Oct. 31 for construction of the plant in Shiranuka, Hokkaido. It will be one of the largest loans extended for a solar power project in Japan.
Construction of the plant is expected to be completed in March 2014. It will have a capacity of 30 megawatts, enough to power 9,600 households. Eurus Energy plans to sell all the electricity generated at the plant to Hokkaido Electric Power Co.
Eurus Energy used to be a subsidiary of Tokyo Electric Power Co., but the embattled utility sold the company to Toyota Tsusho Corp. to raise funds to deal with the aftermath of the Fukushima nuclear accident.
Most of the estimated 10 billion yen in costs for the solar power plant in Hokkaido will be financed by Tokyo-Mitsubishi UFJ, Fukushima-based Toho Bank Ltd. and the Bank of Iwate Ltd., based in Morioka.
Tokyo-Mitsubishi UFJ has already worked with several foreign banks to provide funds for overseas solar power plants, including a 32-billion-yen ($400 million) project in Canada.
Under Japan’s feed-in tariff system, which went into effect on July 1, electric power companies must buy renewable energy sources at fixed prices.
The rate remains fixed for 20 years for solar projects that generate 10 kilowatts or more of electricity, reducing the risk of the loans going bad.
Other banks are aggressively investing in natural energy sources to take advantage of the feed-in tariff system.
Mizuho Corporate Bank Ltd. in August signed a contract to extend 6 billion yen for a mega-solar power project in Oita with other financial institutions.
The same month, Saitama-based Musashino Bank created a financial product that will provide loans with a 20-year repayment period to clients that participate in solar-power projects. The product is called Taiyo no Megumi (Gift from the sun).
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