Orrick Advises GE Energy Financial in Japan's Largest Solar Power Project

10.10.14

Orrick has advised Setouchi Future Creations LLC, a special purpose company consisting of a GE unit (NYSE: GE), GE Energy Financial Services, Toyo Engineering Corp. and Kuni Umi Asset Management Co., in securing debt and equity financing for Japan's largest solar facility, being built in Setouchi, Okayama Prefecture. With construction set to begin in November of this year, the 231 MW photovoltaic plant will have twice the output of domestic solar projects currently underway.

To support the approximately US$1.1 billion project, a 90 billion yen (US$867 million) loan agreement has been closed with Japanese banks for this project, which is the largest amount of debt raised for a clean energy project to date in Japan. The Bank of Tokyo-Mitsubishi UFJ, Mizuho Bank, and Sumitomo Mitsui Banking Corp. are lead arrangers of the syndicated loan in addition to local financial institutions.

The solar plant is expected to begin running in 2019 and power will be sold to Chugoku Electric Power Company over a 20-year contract. It is to be constructed by Toyo Engineering and Shimizu Corporation, and Chudenko will operate and maintain it.

Due to Japan’s Feed-in Tariff legislation introduced in 2012, there has been a significant increase in the number of renewable energy project being developed in Japan. Japan currently ranks fifth among countries in terms of the amount of solar PV power installed and an increasing number of foreign companies are taking advantage of this opportunity to enter the Japanese market. Some have called such a surge the “green rush” in Japan.

The cross-practice advisory team is led by Yoichi Katayama who heads Orrick’s Tokyo Energy & Infrastructure Group and includes Minako Wakabayashi, Jae-Hyon Ahn, Reiko Saito, Yuko Suzaki, Yuko Inui, Kentaro Shoji, Toyohisa Kaminiwa, Kaori Kaneko and Noriko Takayanagi, also of the firm’s Tokyo Energy & Infrastructure Group, Toshihiko Tsuchiya, Yuko Ino and David Gotsill of the firm’s Tokyo Real Estate Group, Torsten Marshall and Michelle Conde of the firm’s New York Energy & Infrastructure Group, and Christopher Gladbach and Noreen Phelan of the firm’s Washington D.C. Energy & Infrastructure Group.