Japanese expand lending for solar projects

Now financing domestic solar projects using foreign equipment.

This reorientation was brought about by Japan’s generous year-old incentive program for clean energy that boosted investment in renewable sources.

Chinese solar panel makers with reinsurance and European inverter makers are finding it easier to source financing, said Bloomberg New Energy Finance. Reinsurance helps ease lender concerns about using equipment from makers that could go bankrupt because the insurer agrees to honor the warranty. Inverters convert power from solar panels for use on the grid.

Analysts 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.

The high feed-in tariff or FIT gave banks the financial flexibility initially to be low risk and use Japanese modules and inverters. Japan’s FIT is currently US$0.38 per kilowatt hour for 20 years, after a 10% cut in April.

Japan’s FIT that pays above-market rates for clean energy has boosted solar capacity more than any other renewable source. Japan’s solar market will add 6.9 GW to 9.4 GW of capacity this year to the base of 7.4 GW. The country added about 1.6 GW in solar capacity from April 2012 through the end of February, said the Ministry of Economy, Trade and Industry.