In Japan, Prominet Power Co., Ltd (Prominet Power) a wholly-owned subsidiary of Tokyo Gas Co., Ltd (Tokyo Gas) has announced its intention to acquire two biomass power plants currently under development from an Equis Group investment fund. The acquisition is expected to be concluded in mid-September, 2020.
According to a statement, Prominet Power will acquire the 51 MWe Fushiki Manyofuto Biomass Power Plant in Takaoka city, Toyama Prefecture, which is currently under construction and expects to start commercial operations in October 2021. The project secured JPY 24.6 billion (≈ US$232 million) of non-recourse project financing committed from nine syndication banks led by Sumitomo Mitsui Trust Bank and Shinsei Bank.
Prominet Power will also acquire the 75 MWe Ichihara Yawatafuto Biomass Power Plant in Ichihara city, Chiba Prefecture, which construction start is in October 2020 with commercial operations estimated to begin in January 2024.
The Ichihara Project is expected to issue a notice to proceed (NTP) immanently and project secured JPY 43.5 billion (≈ US$410 million) of non-recourse project financing committed from twenty (20) syndication banks led by Chiba Bank.
Furthermore, Tokyo Gas Engineering Solutions Corporation, a wholly-owned subsidiary of Tokyo Gas will be awarded as the owner’s engineering consultant and to be undertaking the operation and maintenance (O&M) for the Ichihara Yawatafuto Biomass Power Plant.
Expansive renewable power strategy
Once operational, both biomass power plants will use wood pellets as the primary fuel and are eligible for the Japanese Feed-in Tariff (FIT) general wood category (JPY 24 per kWh) under a 20-year term.
Power Purchase Agreements (PPA) for 100 percent of the power output have been reached with Hokuriku Electric Power Company and TEPCO Power Grid Inc, a wholly-owned subsidiary of Tokyo Electric Power Company,
These transactions are expected to increase Tokyo Gas Group’s renewable power capacity by approximately 126 MW and the total transaction volume of Tokyo Gas Group will be over 1.3 GW of which around 256 MW are domestic power projects.
Tokyo Gas Group will continue expanding its renewable power business, both domestically and overseas, to achieve renewable power transaction volume to 5 GW by 2030, aiming for the “net-zero CO2 emissions” as set forth in Group Management Vision, “Compass 2030” launched last November.
New strategy with Equis Development
For Equis, the Equis Funds Group divestment is in line with the business’ focus as Asia Pacific’s leading infrastructure asset developer. Equis has established Equis Development Pte Ltd (Equis Development), a Singapore headquartered company, through which all future equity investments will be made by Equis.
Equis is no longer raising new private equity funds and is now focused on greenfield development of high-quality renewable energy, waste processing, and recycling infrastructure assets in developed markets across the region, including Japan, via Equis Development.
Employing a regional team of professionals specialized in developing and operating such projects, Equis Development plans to commit over US$2 billion into the renewable energy and waste-related infrastructure sectors across Australia, Japan, South Korea, and Taiwan over the next two years.
We are excited to be a part of Tokyo Gas’ mission to achieve “net-zero CO2 emissions” by 2050. The Equis Development team has a proven track record of developing sustainable biomass projects in Japan, which provide stable renewable baseload power, minimize emissions, and generate significant opportunities for local communities, said Lance Comes Managing Director for Equis Development in Japan.
As part of its ongoing commitment to Japan, Equis Development owns (separate from its fund business) and is developing the 50 MW Niigata East Port Biomass Power Plant in Niigata, and the 50 MW Tomatoh Biomass Power Plant in Hokkaido (Equis Projects).
With construction scheduled to commence construction in 2021, these Equis biomass power projects are at an early stage of development and will require US$536 million of capital.