Sumitomo Corp., Japan’s third-largest trading house, bought 25 percent of a power project First Solar Inc. is building in southern California to expand its renewable-energy portfolio.
Sumitomo acquired the stake from General Electric Co., which jointly owns the 550-megawatt Desert Sunlight solar farm with NextEra Energy Inc., the Tokyo-based company said today in a statement. Terms weren’t disclosed.
This is Sumitomo’s first investment in a U.S. solar farm. It already own stakes in four U.S. wind farms and is seeking to boost its support for renewable-energy projects in the region, according to Jewelle Yamada, a Sumitomo spokeswoman in New York.
“The company overall has been looking to expand in the renewable business here in the U.S.,” she said in an interview today. “Solar was one area they weren’t in.”
Desert Sunlight, about 70 miles (113 kilometers) east of Palm Springs, California, will generate enough energy for more than 165,000 homes, according to the statement. It will provide 250 megawatts of capacity to Edison International’s Southern California Edison and 300 megawatts to PG&E Corp.’s Pacific Gas & Electric under 20-year contracts.
Long-term power-purchase deals generate steady revenue streams that appeal to investors, said Anthony Kim, a New York-based solar analyst for Bloomberg New Energy Finance. “More and more corporations are finding large-scale solar assets as a safe, long-term investment.”
Mitsubishi Corp. and Mitsui & Co. are Japan’s largest trading houses by market value. First Solar declined to comment.