Oita seaside industrial zone was once called a "model city of new industry," based primarily on the heavy chemical industry. The industrial zone is now being transformed into Japan's largest mega solar (large-scale photovoltaic power plant) park. The output from the industrial zone is expected to exceed 120MW by spring 2014, and Oita City is likely to become famous as a "model city of new energy."
The opening ceremony for the first mega solar project in the zone took place May 14, 2013. The project's name is "NISSAN Green Energy Farm in Oita." With roughly 110,000 photovoltaic panels installed across Nissan Motor Co Ltd's industrial site, which is about 35ha in size, a maximum power of 26.5MW will be generated (fig. 1). As of October 2013, this is the largest mega solar power plant operating in Japan. JGC Mirai Solar (Nishi Ward, Yokohama City), a special purpose company (SPC) fully financed and established by JGC Corporation, rents the site from Nissan and runs the power generation business.
Project Finance for Japan's 1st Mega Solar Project
After about a 30-minute drive from the city of Oita on the Rinkai Sangyo Road, no large buildings can be seen to the left after passing the chimneys of the thermal power plant. This area is reclaimed land, developed in the 1970s, but it has lain idle as some companies owning the land stopped construction projects due to changes in the economic environment. Nissan's property was one of such abandoned areas. Thus, it came to be used for a mega solar project by being leased to JGC. The solar panels inclined at a 10-degree angle are about 1m high and cannot be seen behind the vegetation alongside the road. However, once visitors go up to the observation deck inside the power plant, they can see the panels covering the land in front of them. The distant panels become like a blue horizon blending in with the blue sea.
JGC has abundant experience in engineering, procurement and construction (EPC); however, it was entering into the field of mega solar projects for the first time. So, the company tied up with experienced enterprises in each business process area such as fund-raising, EPC and maintenance concerning mega solar projects to get to the point of celebrating the opening ceremony.
Given the total project cost of about ¥8 billion, JGC decided to raise funds by the "project finance" method. Unlike corporate finance based on the enterprise's credit rating, project finance provides funds to the project itself. At that time, there was no other case where funds were raised by project finance in the Japanese mega solar market. Based on this, Mizuho Bank, which had already been engaged in project finance for mega solar projects overseas, organized a syndicate with Oita Bank, the Howa Bank and the Bank of Fukuoka and became the syndicate's managing bank. In regard to EPC, Yonden Engineering (Takamatsu City), one of the most experienced firms in photovoltaic power generation system design and installation in Japan, and JGC Plant Solutions (Konan Ward, Yokohama City) reached an agreement to form a consortium.
(Continue to the next page)