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Example of Support for Megasolar Project through Project Finance

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Project Finance for the Largest Megasolar Power Plant in Japan

The Megasolar Project Proposal

Kyocera Corporation (hereinafter, "Kyocera"), IHI Corporation (hereinafter, "IHI"), and MHBK announced in April 2012 that the three companies had reached a basic agreement to explore the feasibility of constructing the largest megasolar power plant in Japan — Nanatsujima, Kagoshima City, Kagoshima Prefecture.

The project site of the megasolar power plant is approximately 1.27 million square meters (roughly the same area as 27 baseball stadiums) of land owned by IHI. The basic agreement calls for construction of a 70–megawatt solar power plant at a cost of about JPY 27.0 billion. Plans call for the generation of about 79,000MWh annually, which could provide power for about 22,000 average households*1 and offset about 25,000 tons of CO2 per year*2. The power generation capacity of the solar cell modules is expected to be roughly equal to just under 40%*3 of the total amount of industrial–use solar power equipment shipped in Japan in 2011.

Leveraging its acquired knowledge in renewable energy and project finance, MHBK focused on the megasolar power plant project prior to the start of feed–in tariffs for renewable energy, and offered Kyocera and IHI commercialization proposals and commercialization support in connection with the megasolar power plant project.

These efforts were consistent with the needs of IHI to effectively utilize substantial land holdings and actively promote renewable energy, and Kyocera, which has years of experience in the solar cell business. Kyocera, IHI, and MHBK then came together to solve project–related issues one by one in a continued push toward commercialization. After these three principal partners reached agreement, knowing that local cooperation would be essential to the implementation of the project, the partners also obtained the cooperation of Kagoshima Prefecture, Kagoshima City, and other concerned parties in the region.

Arranging Project Finance in Cooperation with Regional Financial Institutions

Kagoshima Mega Solar Power Corporation was established as a special–purpose company in the power generation business through funding by seven companies, including Kyocera and IHI, in July 2012. Construction of the power generation plant began in September 2012 and is expected to reach completion in the fall of 2013.

MHBK served as lead arranger for JPY 23.4 billion in syndicated loans in March 2013 as part of its project finance efforts, with participating investors, including the Kagoshima Bank, Bank of Kyoto, Century Tokyo Leasing, as well as regional financial institutions in the Kyushu area.

In addition to solar power generation contributing to the revitalization of the Kagoshima area as it advances the environmental business, based on both its scale and the heightened social awareness it has generated, the project shows the promise of contributing to the advancement of renewable energy. Starting with this project, MHBK in FY2012 arranged project financing for eight domestic megasolar projects. Total costs of these projects were just under JPY 100.0 billion, of which arranged funding was JPY 83.0 billion.

  • *1Based on an average use of 3,600kWh per household. Source: "Denki–no–Hiroba" (Electricity Forum) of the Federation of Electric Power Companies of Japan
  • *2Based on calculations derived from "Industry–level Self–regulations on Labeling" provided by JPEA (the Japan Photovoltaic Energy Association)
  • *3Based on "Quarterly solar cell shipment volume in Japan" as provided by the Japan Photovoltaic Energy Association

Image: Rendering

Rendering

Establishing the Mizuho Mega Solar Fund to Support Our Customers

With the aim of fostering domestic solar power businesses, MHBK decided in November 2012 to make an equity investment of JPY 5.0 billion through the Mizuho Mega Solar Fund, which was established to invest in megasolar projects.

In its capacity as a front–runner in the solar power business, MHBK leverages the knowledge acquired through involvement in a series of projects, and in an effort to meet the financial needs of customers as they advance their solar power businesses, actively supports commercialization through loans and the utilization of the Mizuho Mega Solar Fund. In particular, investment through the fund addresses financial–solution needs of customers, such as reducing the investment burden as entry to, and expansion in, the power generation business progresses.

The Mizuho Mega Solar Fund also decided to invest in a megasolar business with Mitsuuroko Green Energy, Recycle One, and others in March 2013.

Mizuho is committed to advancing the spread of the renewable energy business to meet the diverse needs and expectations of involved companies.

Structure of the Mizuho Mega Solar Fund
Image: Structure of the Mizuho Mega Solar Fund

Employee voices

Photo: Koji Shiroishi Deputy Manager, Project Finance Team, Structured Finance Division, Mizuho Bank

Koji Shiroishi
Deputy Manager, Project Finance Team,
Structured Finance Division, Mizuho Bank

Discussions surrounding a new energy policy following the Fukushima´╝ŹDaiichi Nuclear Plant accident have given rise to expectations for the emergence and expansion of new markets for renewable energy businesses. Accordingly, with the establishment of a cross–organizational "Renewable Energy Task Force" in August 2011, we have been involved in a wide range of activities beginning at the upstream level, proposing solutions to owners of idle land, supporting the commercialization of power generation businesses, and working to further match the needs of parties on both sides. Keenly aware of the importance of the renewable energy sector as part of Japan's energy policy, we are working to strengthen our capacity for aggressive risk taking in growth industries and enterprises while actively promoting environmental businesses.

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