Japan’s solar growth depends on banks ending loan drought

• 12 years ago (2011-08-26)
• David Flin

Asia 850 Nuclear 640 Renewables 752

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Japan’s plans for a rapid expansion of solar power is facing difficulties, with a lack of bank financing proving to be a problem.

Sumitomo Mitsui Financial Group said that a commitment to offer loans to solar ventures depends on legislation to subsidise renewable energy, part of Prime Minister Naoto Kan’s initiative to reduce Japan’s reliance on nuclear power. Kenji Baba, Senior Vice President at Sumitomo Mitsui, said: “Feed-in tariffs will be a driving force to push solar power plant projects. Lending requirements will emerge as soon as they become economically viable and bring about a good return on investments.”

Japan plans to expand its renewable energy industry by investing $130 billion by 2020. Renewable energy, including solar, wind and geothermal sources, accounted for 2.9 percent of Japan’s power generation in 2010. Governor Yuji Kuroiwa of Kanagawa Prefecture said: “Kanagawa relied on Fukushima nuclear generation. Now we need to build our local power system, and in doing so, solar is a big option.” Sumitomo Mitsui and the Development Bank of Japan are in discussions with Kuroiwa.

Keisuke Takegahara, Head of the Development Bank of Japan’s Environment Division, said that the amount and duration of tariffs to be set by the government are crucial to determining the pace of growth in photovoltaic plant demand. He said: “Private money can only follow a project that brings good returns – it’s that simple. When it comes to solar power, the feed-in tariff is the one thing that will decide the fate of a project.”

The legislation approved by the upper house of the Diet doesn’t specify how much and for how long a feed-in tariff will be in effect. The new law comes into operation in July 2012.