Land Lease Contract Concluded for 230MW Solar Plant

2014/04/03 16:46
Kenji Kaneko, Nikkei BP CleanTech Institute

The construction project of the mega-solar (large-scale solar) power plant on the site of the former Kinkai salt field in Setouchi City, Okayama Prefecture, Japan, has been finally started.

The government of Setouchi City (land owner) concluded a land lease contract with Setouchi Kirei Future Creation LLC (limited liability company, Chiyoda Ward, Tokyo) March 31, 2014. The solar power plant with an output power of about 230MW is scheduled to be built on an area of about 260ha (the area of the former salt field is about 500ha). The construction will start in the upper half of fiscal 2014, and the plant will start operations in fiscal 2018.

The term of the land lease contract is 20 years (renewable). And the rent is ¥100 million (approx US$961,908) per year during the construction period, which is expected to be five years, and ¥400 million per year after the plant starts selling power. The LLC will invest about ¥3 billion in strengthening banks, heightening tide embankments and installing auxiliary drainage pumps in preparation for the Nankai Trough Quake.

Also, the LLC will pay a total of ¥1.6 billion within the contract period as a project cost for energizing local communities. According to the initial proposal, the project is focused not only on the mega-solar plant but also on the constructions of a data center, water park (Ecological Landscape), etc, regional vitalization, environmental protection and promotion of culture. The ¥1.6 billion seems to be used for those purposes.

The finance section of General Electric (GE) Co is considering investing in more than half of the LLC. GE has a good track record in large-scale PV inverters for mega-solar plants and has been in negotiations in the aim of selling its products, aside from the negotiations for the investment in the LLC.