Solar, Utility Scale

Utility Solar Still Attractive in Japan Despite FIT Cut

Covering an area about the size of Montana, but with a population of more than 127 million, land commands a high premium in Japan. That said, utility solar power project developers continue to see opportunity in the Land of the Rising Sun despite high land-acquisition costs and a recent scaling down of the government’s solar feed-in tariff (FIT).

Partnering on its third utility solar power project, renewable energy investment company Pacifico and GE Energy Financial Services (GE EFS) are building a 96.2-MW solar power facility on the southern island of Kyushu. Investing the yen-equivalent of around $292 million, the Hosoe solar power plant will rank among Japan’s largest when completed.

“Although Japan’s FIT on solar power has fallen to JPN 27 yen per kWh from July 1 2015, we believe market demand for solar power still remains in Japan,” GE Japan said in an emailed response to questions. “GE EFS has not changed our investment strategy, which is actively interested in utility-scale solar, acquiring projects from 20-50 MW. We’re also interested in partnering on larger transactions.”

Utility Solar On The Japanese Island Of Kyushu

A syndicate of 12 Japanese banks is providing debt financing for Hosoe via a 22-year loan facility. Kyushu Electric Power will purchase the solar plant’s electricity.

Virginia Solar will be conducting the project’s engineering, procurement and construction (EPC). Trina Solar is to supply some 300,000 solar modules while GE Power Conversion is responsible for delivering, installing, operating and maintaining 50 1.26-MW GE Brilliance solar inverters, part of a package of solar power station equipment and services that is part and parcel of GE Power Conversion’s utility-grade GE Brilliance inverter skid solution.

Hosoe is GE’s fourth utility solar project investment in Japan since May 2014. The industrial engineering multinational has invested in the Kumenan and Mimasaka Musashi solar plants. In addition, GE is an equity partner in Setouchi City solar park, which at 230-MW is Japan’s largest utility solar installation.

Developing Utility Solar In Japan

The ability to reliably and consistently meet Japan´s strict grid and utility industry standards and specifications is one key element that’s essential to success in Japan’s closely regulated solar market, Peter Oram, GE Power Conversion’s renewable sales director, said.

In addition to providing inverters, GE is providing transformers and medium-voltage switchgear as part of the GE Brilliance skid inverter unit. It also is providing a 20-year long-term service agreement that includes an equipment availability guaranty, another key aspect of solar project development investors are keen to see before committing capital.

The capital GE Energy Financial Services brings to the project proposal and negotiating table affords GE Power Conversion a leg up on the competition. That said, GE EFS isn’t an equity investor in the large majority of utility solar projects GE Power Conversion has been and is involved in — whether in Japan or around the world, Oram said.

GE Power Conversion’s roots go back to the parent company’s 2011 acquisition of Converteam. Since then, the solar business unit’s business has grown significantly, expanding to include more than 2GW of utility solar projects of order backlog that Oram said will be completed over the next three years.

A substantial driver of that growth is the result of expanding and consolidating its product line beyond inverters to include all the components required for utility solar installations and incorporating it all into one compact unit – as is the case with the GE Brilliance utility solar power station solution at Hosoe. Another underlying driver is GE’s SunIQ, the solar power plant control unit to be installed at Hosoe.

Initially introduced in Europe, GE Power Conversion will be introducing its GE Brilliance 1,500-volt inverters in Japan next year, Oram noted. The new GE Brilliance inverters will lower equipment and overall balance-of-systems costs over the operational life of utility solar power stations, according to Oram.

Hosoe is being built on a 140-acre site that was originally planned as a golf course. Re-purposing land for solar project development, as well as the use of high-efficiency PV modules, is common in Japan given the limited availability of land, Japan’s strength in PV and power equipment manufacturing, and changing lifestyles, Lux Research solar analyst Mark Barineau pointed out in an interview.

Image: Hosoe Solar Project in Japan. Credit: Pacifico, GEFS