Shinsei Bank makes up project financing agreement for mega solar project

JAPAN: Shinsei Bank Ltd announced that it has made up a project financing agreement for the construction of large-scale solar power plants.

In terms of the project financing agreement, these mega solar power plants, with a total output of approximately 40 megawatts, will be operated on approximately 50 hectares of land in Mito city and Shirosato town in Ibaraki prefecture, by Japan Renewable Energy Co. Ltd, the developer and operator of a solar power generation business. A loan agreement for project financing was signed on May 15, 2013.

The project financing agreement was arranged through a loan arrangement by Shinsei Bank in order to raise approximately 10 billion yen out of the total construction costs.

The sponsor, JRE, will start construction of the mega solar power plants in Mito city and Shirosato town in June 2013, and begin commercial operation of the plants from January 2015. After the full launch, the entire power generated by the plants will be sold to the Tokyo Electric Power Co., Incorporated at a fixed price for 20 years, based on the electricity supply contract in accordance with the “Act on Special Measures concerning the Procurement of Renewable Electric Energy by Operators of Electric Utilities” enforced in July 2012.

JRE was established by the Goldman Sachs Group in August 2012 in order to develop, construct and operate renewable energy businesses in Japan. This is JRE’s first project and is expected that it will be one of the largest scale mega solar business in Japan once the plant construction is completed. The source of repayment for this project financing agreement is limited to the cash flow from the project, and the Bank expects that this transaction will pave the way for new types of financing for mega solar development in Japan.