Korean Life Insurance Companies Acquired a 41MW Solar Power Project From Solariant Japan
Kyobo Life, one of Korea’s top life insurance companies, along with Heungkuk Life and Hanwha Life, acquired a 41.3MW solar project in Kagoshima, Japan from Solariant Japan, a wholly owned subsidiary of Solariant Inc., and its partners including Yingli Green Energy Japan, a subsidiary of one of the largest PV module manufacturers.
In a deal transaction totaling 20.7 billion JPY (~$172 million USD), Kyobo Life, Hanwha Life and Heungkuk Life completed both an equity and a mezzanine debt financing with Shinhan Bank and Mitsubishi UFJ Leasing to provide senior project debt. The consortium of these Korean investors acquired full membership interest in Solariant Portfolio Two, LLC., which serves as the project company established for development of the 41.3MW utility scale solar project, through KIAMCO’s Kirishima Solar Fund Private Placement Special Asset Investment Trust (“Project Fund”). The Project Fund was set up in order to invest in this project and will be managed by KIAMCO, one of Korea’s top asset management companies and a subsidiary of Korea Development Bank. The mezzanine debt fund will be managed Darby Hana Infrastructure Fund Management Company, a joint venture between Hana Bank and Darby Overseas Investments, Ltd.
More than 132,000 PV modules will be installed on the 41.3MW solar plant and will be managed by Genkai Capital, a Japanese asset management company with 228 billion JPY under management, and Tokyo Energy & Systems Inc, which is partially owned by Tokyo Electric Power Company, the largest electric utility in Japan. The 41.3MWp solar plant is scheduled to be completed in the first quarter of 2017 and will feed over 50 million kilowatt-hours of solar electricity annually to power more than 16,000 Japanese homes annually for the next twenty years.
According to Daniel Kim and Ric Tan, both Managing Directors of Solariant, “Solariant delivered on triple bottom line goals – environmental, social and economic – throughout the planning of the facility, which fit Kyobo Life’s corporate sustainability management framework.” As a result, Kyobo Life became the first Korean institutional investor to join the UN Global Compact. The solar power plant will offset 740 million tons (37m x 20) of carbon – the equivalent of 266 acres of forests preserved each year for 20 years, and taking 82 million cars miles off the road each year. Tokyo Energy & Systems, the construction contractor will be utilizing local labor force for civil works and the installation of the solar facility.
The project is developed under the Japanese feed-in tariff (“FiT”) scheme with 40 yen (~$0.33 USD) per kWh plus value added taxes. Since the FiT program was launched in July of 2012, the FiT rate has decreased annually from 40 yen to the current 27 yen per kWh rate. The energy generated by the power plant will be purchased by Kyushu Electric Power Company (KEPCO) for 20 years. Japan enacted its current renewable energy law in 2012 after the Fukushima disaster and the shutdown of all nuclear reactors, some of which since then have come back online. Japan’s installed non-residential solar capacity was less than 1 GWp before the FiT scheme was enacted. By third quarter of 2015, approximately 82 GWp of solar feed-in tariff applications were approved by Japan’s Ministry of Economy, Trade and Industry (“METI”), which surpasses the 64 GWp assigned METI’s energy plan for 2030 released earlier this year.
Yet only 26%, or roughly 21 GWp of approved facilities have been financed and constructed as of July of 2015. Despite being only only a quarter approved, these developments have catapulted Japan into 4th place in 2015 among the largest solar markets in the world, only behind Germany, Italy, and China but ahead of the United States. Even so, the battle between the renewable energy supporters such as METI and Japan’s monopolistic utilities, continues to loom over the fate of Japan’s energy policy. As the Fukushima plant continues to spew radiation into the Sea of Japan, Japan’s regional utility monopolies, enjoying the support of Prime Minister Abe, have publicly stated their goals of restarting their nuclear facilities.