Etrion confident about planned 138 MW pipeline in Japan

Swiss independent power producer Etrion on Wednesday said it was confident that it would meet its targets in Japan of 100 MW of shovel-ready or under-construction PV projects in the country this year and 300 MW by 2017.

Offering on update on its Japanese operations, Etrion CEO Marco A. Northland said he was pleased with the significant progress the group’s Japanese team had achieved to date in construction and development. “Etrion is one of the first foreign companies to gain traction in utility-scale solar power generation in Japan. Today, we have 34 MW under construction and more than 138 MW under development in Japan. I am confident we will meet our target with Hitachi High-Tech of delivering shovel-ready or under-construction projects in Japan totaling 100 MW by 2015 and 300 MW by 2017."

Northland pointed out that Japan was a large net importer of fossil fuels but had low financing costs and attractive government incentives to reduce the country’s dependence on nuclear power. “This combination of factors makes Japan one of the largest fast-growing solar markets in the world."

34 MW of Japanese projects under construction

As previously announced, Etrion started construction of 34 MW in Japan in the fourth quarter of last year, with the company owning 87% and Hitachi High-Tech 13%. The Hitachi subsidiary is building the 9.3 MW Mito and the 24.7 MW Shizukuishi power plants, which are expected to begin operation in 2015 and 2016, respectively.

The utility-scale Mito project includes five sites under construction in the Ibaraki Prefecture of Japan. With construction proceeding on schedule, Etrion expects to connect each of the sites between May and August, more than five months earlier than previously announced.

The 24.7 MW Shizukuishi facility is under construction on a single site in the Iwate Prefecture of Japan. The project is expected to connect to the grid in July 2016, five months ahead of schedule.

138 MW advanced project development pipeline

In 2012, Etrion and Hitachi High-Tech signed an agreement to develop a pipeline of solar assets in Japan. In addition to the 34 MW already under construction, the joint development team is reviewing a large pipeline of opportunities in different stages of development and in different stages of negotiation with third parties. The four most advanced projects total 138 MW. Etrion expects to own 70 to 85% percent in the Japanese projects, with Hitachi High-Tech and/or local development partners owning the remainder. The projects include:

Japan Greenfield Project 1, a 24 MW solar project in southern Japan with feed-in tariff (FiT) and land contract secured. The project is expected to be shovel-ready by the first quarter of 2016.

Japan Brownfield Project 1, a 50 MW solar project in southern Japan with FiT and land contract secured and grid impact studies completed. Etrion has secured exclusivity with the developer and the project is expected to be shovel-ready by the fourth quarter of 2015.

Japan Brownfield Project 2, a 50 MW solar project in southern Japan with FiT and land contract secured and grid impact studies completed. Etrion has secured exclusivity with the developer, and the project is expected to be shovel-ready by the fourth quarter of 2015.

Japan Brownfield Project 3, a 14 MW solar project in southern Japan with FiT and land contract secured and grid impact studies completed. The project is expected to be shovel-ready by the fourth quarter of 2015.

Etrion said these projects may be replaced by other projects within the next 12 months in order to accelerate construction or improve project economics. The company added that it planned to finance its projects under development through the most efficient combination of cash on hand, non-recourse project loans, corporate debt and/or equity financing.

In October, the Ministry of Economy, Trade and Industry (METI) in Japan set up a working group to address concerns issued by certain utilities regarding grid congestion as a result of the large number of applications submitted from solar developers.

According to Etrion, the subcommittee reviewed the current METI approval process and provided recommendations for the FiT scheme for future projects as well as measures to deal with grid capacity issues and curtailment. Etrion said it believed the planned development projects would not be affected by the recent proposals, which it said should provide greater clarity on the grid connection process for these and future projects.