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Highlight 2007: Solar Power Generation Project

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Solar Power Generation Project in Spain

Converting Spain's Sunlight

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Mikio Ishiguro
Global Structured Finance Division
Mizuho Corporate Bank

Supporting Spain's Greenhouse Gas Reduction Aims

Try to imagine a scene where solar panels covering an area three times the size of the Tokyo Dome are bathed in the brilliant sunlight of southern Europe.
Together with six colleagues at our London office, I was put in charge of a large–scale solar power generation construction project led by Sumitomo Corporation. It is due to come online in autumn 2008.
In March 2008, MHCB signed a contract to provide approximately JPY 7 billion in finance, around 80% of the total project cost. I believe we won the contract because of our world–class track record in financing projects for renewable energy such as wind power, our excellent reputation for ample know–how in handling the risks specific to this sector, and our global management structure.
David Short, who headed the London end of this deal, said "our seamless, round–the–clock framework for coordinating with Tokyo was essential for ensuring this project could move forward and greatly assisted in understanding the parties concerned in Europe and Japan within the limited time available."
The plant is being built in Tenerife, one of Europe's most famous resort islands. Tourism is the main industry on the Canary Islands which, like other EU countries, have adopted a highly proactive program to introduce wind and solar power generation as a means of reducing CO2 emissions.
The new power plant will provide some 3,500 households with electricity.This is the largest project to date for which a Japanese company has served as the primary developer. Over the 25– year life of the project, it is estimated that the solar power plant will reduce CO2 emissions by 180,000 tonnes compared with a coal–fired power plant.

Overcoming Risks Posed by Nature, and Other Problems

Credit screenings for solar power generation projects are more complicated than for conventional schemes because the amount of electricity generated is at the mercy of the weather, specifically the amount of sunlight. The screening process begins with accurate analysis of weather data, and expert judgement concerning the entire project plan is absolutely essential.
In this case, the credit screening took about three months, and the contract was ultimately signed when we concluded that the project was both creditworthy and viable, thanks to abundant sunlight, the generous long–term special preferential treatment available for the project from the government, the adoption of highly reliable solar panels manufactured by a Japanese manufacturer, and the excellent cooperation extended by the local community.
I've wanted to be involved in environment–related business ever since my student days, so I was very proud to be involved in this project, which brought together Mizuho, Japanese technology and business development capabilities in an European country that is putting a great deal of effort into promoting natural energy – an ideal combination.
I think my colleagues in London all thought the same. Looking ahead, I plan to provide proactive support for further projects that utilize solar power generation and other renewable energy sources.

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David Short
Europe Structured Finance Division
Mizuho Corporate Bank

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Bird's–Eye View of the Solar Power Generation Plant Tenerife (Under Construction)

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