Banks Accepting More Foreign Equipment for Japan Solar Projects

Banks are becoming more open to financing domestic solar projects that use foreign equipment as the country’s year-old incentive program for clean energy spurs investment in renewable sources.

Chinese panels with reinsurance and inverter makers such as ABB Ltd. (ABBN) of Switzerland and SMA Solar Technology AG (S92) of Germany are being accepted, Bloomberg New Energy Finance said in a June 28 report. Reinsurance helps ease lender concerns about using equipment from makers that could go bankrupt because the insurer agrees to honor the warranty, it said.

“Japanese banks have relaxed bankability requirements as they become more familiar with financing solar projects for the domestic market as well as reinsurance, especially for Chinese manufacturers,” Travis Woodward, a BNEF solar analyst said today by e-mail.

“The high tariff gave banks the financial flexibility initially to be low risk and use Japanese modules and inverters,” Woodward said. Solar tariffs in Japan are currently 37.8 yen (38 cents) per kilowatt hour for 20 years, after a 10 percent cut in April. Inverters convert power from solar panels for use on the grid.

Japan’s incentive program, which pays above-market rates for clean energy, has boosted solar capacity more than any other renewable source. Solar is faster to build than other types such as geothermal or wind, both of which must be assessed for their environmental impact.

Japan’s solar market will add 6.9 gigawatts to 9.4 gigawatts of capacity this year to the base of 7.4 gigawatts, BNEF forecasts. The country added about 1.6 gigawatts in solar capacity from April 2012 through the end of February, according to the Ministry of Economy, Trade and Industry.

To contact the reporter on this story: Chisaki Watanabe in Tokyo at cwatanabe5@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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