Goldman Sachs backs solar PPA in Japan with $63 million bond

Goldman Sachs is arranging a JPY 8.7 billion (63.5 million) green bond to support the construction of around 700 solar plants on disused farmland across Japan by Clean Energy Connect (CEC), the renewable energy unit of Japanese trading company Itochu.

The solar facilities will sell power to NTT Anode Energy, a unit of Nippon Telegraph and Telephone Corp. (NTT), under a 30-year PPA.

“NTT’s strong credit ratings would imply that there is an extremely high chance the company continues as a going concern well into the future,” a Goldman Sachs  told pv magazine. “Indeed, the vast majority of the investors participating indicated that they had no concerns with NTT’s prospects even over a 30-year horizon.”

This is the first time that a green bond linked to a solar PPA has been issued in Japan.

“In September 2013, GS structured the first rated securitization of solar energy globally, through our JRE Mega Solar Project Bond Trust 1,” the spokesperson said. “This first-of-kind green project bond transaction led the way to the development of a pipeline of similar project bonds to more efficiently fund renewable energy throughout Japan. To date the firm has arranged more than JPY 100 billion in green project bond financing in Japan.”

Under current Japanese regulations, corporate PPAs must involve electric utilities, except for on-site PPAs. Both physical and virtual PPAs are allowed. Under physical PPAs, electricity buyers pay fixed fees to generators through retailers, including “sleeving” and management fees.