Aquila sells Japanese solar project to local pension

The German asset manager invested over €120m in the project last December, exiting to a Japanese institution in less than four months’ time.

Aquila Capital has sold a 38.4MW solar project in Japan, which it acquired last December for more than €120 million, to a local pension fund, after recently completing its development. 

The firm said the exit achieved a 1.3x money multiple and an 11.6 percent IRR, after costs for its investment vehicle. It will continue to manage the solar project for the duration of the term. 

This is the second project for the German alternative investments manager since it entered the Japanese solar sector in 2012. The utility-scale project is located in Hokkaido, Japan's northernmost island, and is equipped with co-located energy storage capabilities. It secured a feed-in tariff of 40 yen ($0.37; €0.34) per kWh for 20 years, which will remain unaffected by the new feed-in tariff scheme coming into effect this month. 

Aquila declined to name the Japanese buyer or disclose further transaction details. 

“The investment reflects the current outlook in the Japanese solar market. Market-ready projects are particularly interesting for local institutional investors, so developing projects that have already secured feed-in tariffs is an attractive strategy for our investors,” said Boris Beltermann, who leads the firm’s solar business in Japan. 

The asset manager remains committed to the Japanese solar market, with plans to grow its early-stage solar portfolio to over 150MW and develop it until assets are sufficiently mature for sale.   

Since 2012, Japan has adopted a remuneration system for renewables which is similar to the German Renewable Energy Sources Act. In Germany, the feed-in tariff is financed from electricity levies on electricity customers and Betlermann said that creates stable legal and economic conditions. 

He added Japan has a relatively high level of sunshine, which is comparable to southern Germany. 

“These conditions have led to Japan being among the largest and most lucrative solar markets in the world following the US, China and Germany,” commented Betlermann. “Furthermore, compared to the approval process in European solar markets, the development risk in Japan becomes comparatively low as soon as the land has been secured.”