TOKYO REPORT: Financial Firms Promoting Solar Power Output

Tokyo, Feb. 12 (Jiji Press)--Financial institutions in Japan are turning to solar power generation as a new earnings source amid an economic slump that is putting off borrowers. A Tokio Marine Asset Management Co. official said, "We're now in a position to promote the (photovoltaic generation) projects aggressively," referring to an agreement it has had with major trading house Mitsui & Co. <8031> since autumn 2010. Power generation is one of Mitsui's key areas of interest. After establishing a fund of 9 billion yen in August 2012, Tokio Marine Asset invested in some 10 solar power generation projects capable of generating a total of 28,000 kilowatts. Mitsui has since been operating facilities on behalf of the firm. Tokio Marine Asset plans to set up another fund of around 10 billion yen by the end of fiscal 2012 in March for investment in 10 or so more projects. The aggressive investment push is a direct result of the launch last summer of a feed-in tariff system that has eliminated ups and downs in sales, the official said. The tariff system is a mechanism of purchasing electricity generated from renewable energy sources at fixed rates. The investment is expected to yield more than 3 pct per year at a time when long-term interest rates remain below one pct, according to informed sources. Big banks are also plunging into the market. Mizuho Corporate Bank will establish a 5-billion-yen fund by the end of fiscal 2012 to put up between 5 pct and 15 pct of operating capital for megasolar projects capable of generating at least 1,000 kilowatts of electricity each. Bank of Mitsubishi-Tokyo UFJ has created a system with Mitsubishi UFJ Lease & Finance Co. <8593> to provide solar power generators, with support ranging from construction of facilities to procurement of funds. But there are uncertainties about financing services for solar power generation. While investment funds seek quick returns, photovoltaic generation projects last 10 to 20 years. Long-term projects are often accompanied by large risks, although investment in them is expected to bring in stable dividends and other returns. It is also uncertain if investment funds, which eventually sell facilities to lock in profits, can easily find buyers. Furthermore, electricity purchase prices are expected to drop under the feed-in tariff system. For example, the price of buying electricity generated from solar energy has been fixed at 42 yen per kilowatt-hour for fiscal 2012, but this figure is likely to fall in fiscal 2013 and thereafter. END