About 300 MW of Japanese solar power projects may be supported by the British banking and investment group Barclays, in the form of solar bonds. $418 million or JPY 50 billion is the monetary value associated with the projects, should Barclays go ahead. The reason it may want to proceed is to offer an alternative investment option for its clients.
Renewable energy in Japan may double by 2030, so it seems as though solar bonds might be a reliable and attractive investment opportunity. In fact, Goldman Sachs started offering them in Japan two years ago, so Barclay’s might benefit from knowing it is already been done. (Goldman Sachs is already working on financing another solar power development – this one through a Canadian company.)
“Others may follow Goldman in the future. It’s uncertain how long the expansion will continue though,” explained Takashi Morioka, chief analyst for Rating and Investment Information. These bonds have very low interest rates, but are also generally considered to be very stable.
Grid congestion and an increase in interconnection applications might slow some of this expansion. Utilities can put the brakes on growth if they say it is not meshing well with their systems.
Barclays and Goldman Sachs are not in the business of being “green” – they are in the business of making money. When investment bankers put their money into these kinds of projects their motivation is very clear — to make money. It isn’t only Barclays and Goldman that have expressed interest in Japan’s solar power development, Deutsche Bank AG has as well.
This kind of endeavor is not primarily environmental, it is economic.
As we all know, the Fukushima incident was quite a shock to the Japanese people and one that traveled across international borders. It also spurred a new openness and urgency in relation to renewable energy, because it is much safer than aging nuclear power plants. Also, the cost of solar power has dropped so much recently, that it has become much more accepted.
Image Credit: Tawashi2006, Wiki Commons