Korean insurers in $172m Japanese solar deal

The 41MW solar project is part of a 82GW pipeline approved by Tokyo under its feed-in tariff scheme.

Three of Korea's largest life insurance companies have acquired a 41.3-megawatt (MW) solar project in Kagoshima, Southern Japan. 

Kyobo Life, Hanwha Life and Heungkuk Life bought the asset from Japanese renewable energy developer Solariant Japan Company and junior partners in a transaction totalling JPY20.7 billion (€161 million; $175 million).

The Korean consortium closed both an equity and a mezzanine debt financing to complete the deal, with Shinhan Bank and Mitsubishi UFJ Leasing providing senior project debt. 

Solariant Portfolio Two, the solar farm's project company, is backed by the Kirishima Solar Fund Private Placement Special Asset Investment Trust. Set up solely for this project, the fund is being managed by KIAMCO, the asset management arm of Korea Development Bank

KIAMCO manages about KRW10 trillion (€7.66 billion; $8.32 billion) of infrastructure assets spanning power plants, public-private partnerships and transportation assets. 

The mezzanine debt fund will be managed by Darby Hana Infrastructure Fund Management Company, a joint venture between Hana Bank and Darby Overseas Investments. 

The solar plant, which is expected to comprise more than 132,000 photovoltaic panels, will be co-managed by Japanese asset manager Genkai Capital and local developer Tokyo Energy & Systems. 

The former has over JPY239 billion of assets under management, while the latter, partially owned by Tokyo Electric Power, is also responsible for civil works and the installation of the solar facility. 

Scheduled to be completed in the first quarter of 2017, the project is expected to power more than 16,000 homes annually under a 20-year contract with Kyushu Electric Power Company. 

The project is developed under the Japanese feed-in tariff (FIT) scheme at the rate of JPY40 per kilowatt-hour (kWh) plus value-added taxes. The scheme, started in July 2012, was enabled by the passage of a new renewable energy law following the 2011 Fukushima disaster. 

The FIT scheme rate has since decreased from JPY40 in 2012 to the current JPY27 per kWh. 

Solariant pointed out that by the third quarter of 2015, around 82 gigawatts (GW) of solar FIT applications were approved by Japan’s Ministry of Economy, Trade and Industry. Yet only 26 percent, or roughly 21GW of approved facilities, have been financed and constructed as of July 2015. 

Still, with total installed solar capacity tripled over the last three years, Japan has become the fourth-largest solar market in the world, behind Germany, Italy and China. 

While the renewable sector is making its progress, some of the country’s regional power utilities, including Kansai Electric Power and Kyushu Electric Power, have restarted their nuclear operations despite safety concerns from the Japanese public.