Exclusive: DBJ seeks investors for Japan's first wind fund

The Tokyo-based development bank plans to launch the vehicle in April with a target of $423m.

The Development Bank of Japan (DBJ) is seeking to enlist institutional investors to help launch a JPY50 billion (€391 million; $423 million) wind power fund with local utility Japan Wind Development Company (JWD).   

DBJ expects the fund's portfolio to comprise about 200 megawatts (MW) of operating wind assets, according to Yasuhiro Matsui, senior vice president of power and energy at the lender's corporate finance department. JWD will be in charge of the assets' operations and maintenance. 

The fund will likely be structured as a 50:50 joint venture between DBJ and JWD, the two companies said in a statement. However, Matsui told Infrastructure Investor that DBJ “plans to invite institutional investors, including pension funds and insurance companies in Japan to co-invest in the fund”. The bank may thus end up holding fewer shares when the fund is launched in April. 

He explained that the approach will allow capital to be “recycled and re-invested” in developing new capacity in the future. 

The closed-ended fund, which will have an investment period of 12 years, will not seek to invest in building new generating capacity at the early stage. It will aim to provide stable and attractive returns to investors, Matsui said. 

He believes the fund will draw strong investor interest in a context where the weak performance of domestic stock and bond markets is sharpening institutions' appetite for alternatives investments. 

According to Japan’s Ministry of Economy, Trade and Industry, the government has approved 85,550MW of clean energy projects since the introduction of a feed-in tariff (FiT) scheme in July 2012, 79,760MW of which are accounted for by solar capacity. Approved wind power capacity came third after biomass in the capacity ranking, representing about 2,330 megawatts. 

The government estimates that onshore wind will cost JPY13.9 to JPY21.9 per kilowatt-hour (kWh), with the FiT rate for land-based wind power maintained at JPY22 per kWh. 

Clean energy is expected to supply 24 percent of the country’s electricity by 2030 while wind will make up almost two percent of the total energy mix. 

Due to the longer lead time needed to build wind energy in comparison with solar, Matsui expects more wind capacity going online in the coming two to three years. “Wind energy will be the next big thing,” he commented.