Orix Presses Ahead With Solar in Japan Despite Grid Constraints

Orix Corp., the finance and leasing company with renewable energy investments, plans to increase its backing of large-scale solar projects in Japan regardless of grid access constraints threatening to slow the industry.

The Tokyo-based company is targeting 800 megawatts of “megasolar” projects in operation by March 2018, said Yuichi Nishigori, head of Orix’s energy and eco services business. Orix currently has more than 430 megawatts of large-sized solar projects either operating or under development, he said.

Orix, which also sells solar panels, may buy projects from developers that are relinquishing approvals granted to them under Japan’s feed-in tariff program, Nishigori said. Some non-Japanese developers are asking Orix to jointly invest or buy their projects after having trouble pushing them through on their own, he said.

“We are also developing solar in areas where grid access is not becoming a problem,” he said, adding that Orix also targets to increase its rooftop solar capacity to more than 100 megawatts from the current capacity of 70 megawatts.

Japan has approved about 72,000 megawatts of clean energy projects since the introduction of a feed-in tariff program in July 2012. At least five of Japan’s 10 regional utilities are restricting grid access to new renewable projects while reviews are conducted to see how much more clean energy -- especially solar -- can be taken.

Solar Expansion

The utilities say two years of rapid expansion has begun to strain their capacity to absorb all the new electricity from sources that generate only when the sun shines.

The move is causing “troubles” to Orix’s business plans, especially for solar projects the company has yet to lock in, Nishigori said. Some of the developers that buy panels from Orix are also affected, he said.

Aside from the 800 megawatts of megasolar capacity Orix wants to build, the company is also considering a 430-megawatt solar plant on the island of Ukujima with partners such as Kyocera Corp. The plant has yet to secure grid access from Kyushu Electric Power Co., according to Nishigori.

Storage Technologies

Batteries should be used more to absorb intermittent solar power, Nishigori said.

“Fluctuating power will be absorbed more with batteries and also with better grid management,” he said.

Orix last year set up a venture with NEC Corp. and Epco Co. to provide battery rental services to reduce residential power costs. Battery prices must decline by about half from current levels, he said.

Orix plans to invest 300 billion yen ($2.8 billion) by March 2018 in clean-energy technologies such as solar, geothermal, biomass and wind, he said.

Before it's here, it's on the Bloomberg Terminal.