Etrion and Hitachi close project financing to build 34 MW solar projects in Japan

Switzerland-based Etrion Corporation and Hitachi High-Technologies Corporation announced in early September the planned construction of 34 MW of solar projects in Japan with financing arranged by Sumitomo Mitsui Trust Bank, Limited.

The total project cost for both projects will be financed approximately 80% through project debt from SuMi Trust with an 18-year tenor. The remaining approximate 20% equity portion will be funded by Etrion and Hitachi High-Tech based on their respective ownership interests of approximately 87% and 13%.

These projects will be built by Hitachi High-Tech using the proven EPC capabilities of Hitachi. Operations and maintenance (O&M) services will be provided by Hitachi High-Tech through a long-term fixed-price agreement for each project.

Shizukuishi Solar Project (24.7 MW)Shizukuishi is a 24.7 MW utility-scale solar PV power plant to be built in the Iwate Prefecture of Japan. Construction-related works are expected to commence in October 2014 and the solar project is expected to be operational by the end of 2016. The solar power plant will be built on 51 hectares of leased land and the facility will connect through the Tohoku Electric Power Co., Inc. utility. The project will enter into a power purchase agreement (PPA) with the Tohoku Electric Power utility to receive ¥40 per kilowatt-hour (kWh) produced (approximately US$0.39 per kWh).Once operational, Shizukuishi is expected to produce approximately 25.6 gigawatt-hours (GWh) of solar electricity per year.Mito Solar Project (9.3 MW)Mito is a 9.3 MW utility-scale solar PV power plant to be built in the Ibaraki Prefecture of Japan. Construction is expected to commence in September 2014 and the solar project is expected to be operational by the end of 2015. The solar power plant will be built on 27 hectares of leased land and the facility will connect through the Tokyo Electric Power Company utility. The project will enter into a PPA with the Tokyo Electric Power Company utility to receive ¥40 per kWh produced (approximately US$0.39 per kWh).Once operational, Mito is expected to produce approximately 10.3 GWh of solar electricity per year.

In 2012, Etrion and Hitachi High-Tech signed a development agreement to develop a pipeline of solar assets in Japan. Under this agreement, both parties provide the key functions necessary to successfully develop, build and operate solar projects in Japan. Shizukuishi and Mito are the first solar projects to be built under this arrangement and the companies are targeting to reach 100 MW by 2015 either under construction or shovel-ready.

Marco A. Northland, Etrion's Chief Executive Officer, commented:

"I am honoured to be working alongside Hitachi High-Tech and SuMi Trust in Japan. Japan is one of the largest solar photovoltaic (PV) markets in the world and having strong local partners has been instrumental in enabling us to succeed in this exciting market. Etrion is one of the first foreign Independent Power Producers (IPPs) to secure financing to build utility-scale solar plants in Japan and we are now well positioned to replicate this model with Hitachi High-Tech to accelerate our growth plans. These projects expand Etrion's geographic footprint providing a clear diversified platform for growth bringing Etrion closer to its objective of being in a position to declare dividends in the future."

Hidenori Nagao, Hitachi High-Tech's Vice President and Executive Officer and General Manager of Global Trading Group, commented:

"It is our great honour to launch business in Japan's emerging solar market with Etrion, who has a proven track record in the solar industry. These projects will be built with our proven technical capabilities in engineering, procurement and construction (EPC) using Hitachi's highly efficient and reliable solar PV power generation systems. Hitachi High-Tech, together with Etrion, are targeting a total of 100 MW by 2015 and a total of 300 MW by 2017, including these first two projects."

Kengo Noguchi, SuMi Trust's Executive Officer and General Manager of the Structured Finance Department, commented:

"We are very proud to partner with Etrion and Hitachi High-Tech in developing their first two solar projects in Japan. SuMi Trust is committed to supporting the country's shift to clean energy and we look forward to assisting Etrion and Hitachi High-Tech as they execute their growth plans, bringing more solar projects into the energy mix in Japan."