Japanese Megabank Begins to Offer Loans for 1MW-2MW Solar Plants

2014/08/07 14:36
Shinichi Kato, Nikkei BP CleanTech Institute

Sumitomo Mitsui Banking Corp announced Aug 8, 2014, that it has started to offer the "SMBC Solar Loan," a loan product for solar power generation systems with an output capacity lower than 2MW.

As a capital for developing a solar power generation system, the company will lend ¥50 million to 500 million (approx US$489,332-4,893,326). The loan can also be used for land development. The period of the loan is up to 16 years. The handling charge is 2% of the amount of loan (including consumption tax).

Thus far, Sumitomo Mitsui Banking has been making project finance plans for customers who are willing to run solar power generation businesses. According to the company, when a power producer receives the certification of FIT (feel-in tariff) facilities, the construction site has already been decided on by acquiring or renting land. Also, the specifications of the facilities have also been decided on by, for example, ordering a solar power generation system.

On the premise that the possibility of the business to be run by the loan customer has been ensured at the time of receiving the certification, the company decided to offer a loan product even to solar power producers with facilities whose outputs are less than 2MW.

With regard to loans for the construction of 1MW-2MW solar power plants, local banks are increasingly lending money by using the ABL (asset based lending) method. Because of the entry of the megabank into the business, the competition to provide loans to solar power plants of that scale is expected to become fierce.