Canadian Solar Inc. announced today that it has commenced construction on four solar projects in Japan totaling 143 MWp. This portfolio includes Canadian Solar's flagship mega-project, the 100 MWp Azuma Kofuji project located in the Fukushima Prefecture, and other projects totaling 43 MWp in the Ibaraki and Hiroshima Prefectures.
The Azuma Kofuji project will be powered with Canadian Solar high efficiency HiKu modules and is expected to reach commercial operation in Q1 2023. The energy generated will be purchased by the Tohoku Electric Power Company at the rate of ¥36 ($0.34) per kWh.
The project is financed by Nomura Capital Investment Co., Ltd. ("NCI") with construction debt of JPY 24.5 billion (approximately US$230 million), and will draw on Juwi Shizen Energy's experience as a global EPC (Engineering, Procurement and Construction) company. Built on 460 acres, Azuma Kofuji is expected to produce enough clean energy to power approximately 31,000 households. The project is expected to participate in the Climate Bonds green certification process which is compatible with the new European Union Green Bond Standard (EU GBS).
"We are delighted to contribute our part to revitalize the Fukushima Prefecture. Up until recently, the Azuma Kofuji project site was an abandoned, non-productive farmland. Now, we are directly investing and creating local job opportunities during the construction of the project, reinvigorating the local economy in a region devastated by the 2011 Tohoku earthquake. We have worked closely with local communities to ensure that clean, renewable energy from our solar plant creates lasting societal benefits. We are proud to take part in rebuilding economic and energy resilience in the Fukushima hometowns while supporting Japan's 2050 carbon neutrality ambitions," commented Dr. Shawn Qu, Chairman and CEO of Canadian Solar.
He added, "These projects continue to expand Canadian Solar's strong track record in Japan. We now have over 450 MWp of utility-scale projects that are operational or under construction, and two partnership platforms in Canadian Solar Infrastructure Fund (TSE: 9284) and Japan Green Infrastructure Fund. We are also one of the strongest solar module brands in Japan driven by our differentiated technology and large manufacturing scale. Put together, we have further solidified Canadian Solar as the most integrated solar player in the Japanese market. We thank our financing partners who continue to support Canadian Solar with low-cost capital, which allow us to develop and expand our high-quality project portfolio in Japan."
"Nomura has extensive experience financing renewables in Japan and is excited to support Canadian Solar on this significant transaction," said Vinod Mukani, Head of Nomura's Infrastructure and Power Finance group. "Canadian Solar is attractively positioned as a tier-1 solar module manufacturer and as a leading global solar developer. Nomura is pleased to provide this financing and partner with strong sponsors contributing toward the transition to a low carbon economy."
These projects received JPY 8.1 billion (US$75 million) through the issuance of Green Project Bonds to Japanese bond investors. As a seasoned project bond issuer, Canadian Solar has partnered with Goldman Sachs Japan Co., Ltd ("GS") as the sole arranger for the sixth time. Once again, the domestic bond investors provided Canadian Solar with innovative debt capital that is commercially different to that of the traditional bank facility market. These project bonds combine the unique aspects of having dual-tenor maturity of 2 years and 18 years within each tranche of bond, and blend total funding requirements throughout the construction and operational phase of multiple projects. The Japan Credit Rating Agency, Ltd. ("JCR") has assigned these Multi-Asset Dual-Tenor Green Project Bonds with an investment grade rating of "BBB+" and certified the issuer with highest Green 1 rating under the Japanese Green Bond guidelines. Hitachi Capital Trust Corp. is appointed as the trustee.
"This will be yet another ground-breaking Green Project Bond transaction brought to the Japanese market by Canadian Solar," said Toru Inoue, Goldman Sachs' Head of Infrastructure & Structured Finance for Japan. "We are extremely honored to support Canadian Solar's deep-rooted growth in Japan. Ever since we took part in Canadian Solar's first green project bonds in 2016, we demonstrated our capability to provide differentiated and innovative transactions to achieve the sponsor's business objectives. The renewables industry is a dynamic sector where creativity and the ability to think outside of the box are extremely important. We look forward to continuing to partner with Canadian Solar in its quest to make solar a sustainable mainstream energy."