The Canadian-based Etrion Corporation, in association with Hitachi High-Technologies Corporation, has successfully completed the construction of a 24.7 MW power plant in the north of Japan. Located in the Iwate Prefecture, the Shizukuishi Solar Power Park has started generating electricity.
It has a 20-year fixed-price power purchase agreement with the Tohoku Electric Power Company, which will pay ¥40 (approximately US$0.39 at today’s rates) for every kilowatt-hour. Interestingly, the contract also features a take-or-pay clause, meaning Tohoku Electric Power will still pay even if it does not take the power. The plant is capable of generating 25.6 gigawatt-hours of electricity every year, which is enough to power 7,300 households.
The plant was completed on time and on budget, according to Marco Antonio Northland, CEO of Etrion. Hitachi High-Technologies Corporation, which supplied the tilt systems and inverters in return for equity, holds a 13% stake in the project, with the remaining 87% owned by Etrion. Financing for the power plant was advanced by Sumitomo Mitsui Trust Bank, the fifth-largest in Japan.
The region receives around 150-200 days of sunshine in a year. Assuming it generated electricity for just ten hours a day for 150 days, the plant would still earn $14.4 million in a year. Over a 20-year period, this adds up to $288 million, provided the yen holds steady against the dollar. Etrion’s share from the earnings works out to more than $250 million.
Etrion’s other solar power plants in Japan
This is Etrion’s second venture in Japan. The 9.3 MW Mito Solar Plant was its first foray into the Land of the Rising Sun, and it was connected to the grid in August 2015. This too had a similar shareholding pattern, and Sumitomo Mitsui Trust Bank was the financier as well. In fact, the Japanese financial major has extended an $88 million line of credit. Kengo Noguchi, the Global Head of Structured Finance at Sumitomo Mitsui Trust Bank, said that they were happy to support the country’s step toward clean, affordable energy. Japan is an earthquake-prone country, and after a massive quake measuring 9.0 on the Richter Scale caused a nuclear meltdown at its Fukushima power plant in 2011, the nation has started considering less-dangerous sources of power. It hopes to generate 20% of its energy from renewables by 2020, and has mandated that utilities purchase power from renewable energy sources at rates that are above the prevailing market prices.
Etrion’s third PV solar power plant, a 9.5 MW project at Aomori, is under construction. Northland hopes to ramp up their presence in the country to 250 MW. It also has a green footprint in Chile, where it operates a 70 MW plant, the largest merchant solar power plant in the world (meaning it has no fixed-price power purchase agreements and sells its power on the spot market); and Italy. The installed capacity of all their plants across the world is 156 MW, and they reported gross profits of $16.9 million in 2015. comment