The Caisse de dépôt et placement du Québec (CDPQ) buys its first solar power plant in Japan. Quebecers’ nest egg is currently exploring other acquisitions of this type while the Empire of the Rising Sun is banking on solar energy to ensure its energy transition.
CDPQ will announce today the acquisition of 80% of a solar power plant located in Aichi Prefecture, Japan. In operation for a few days, the Inuyama project can produce up to 31 MW, enough to supply electricity to the equivalent of 7,850 households.
This is CDPQ’s first foray into the acquisition of electricity production assets from solar energy in the archipelago. And it won’t be his last. “We continue to explore other co-investment opportunities in the energy transition niche,” says Emmanuel Jaclot, senior vice-president and head of infrastructure at CDPQ.
The value of the investment is not disclosed. The acquisition results from a partnership between CDPQ and the Japanese multinational Shizen Energy. In October 2022, the institutional investor injected 20 billion yen – the equivalent of 135 million US dollars – into this company which works in solar as well as wind power, biomass and hydroelectric production.
Since then, CDPQ has held a seat on the board of directors of Shizen Energy, and it has established a common investment framework for future projects whose value must reach the equivalent of $460 million.
Both organizations are already exploring other opportunities to invest in renewable energy. Shizen Energy says it wants to carry out renewable energy projects equivalent to around 3 GW in Japan within five years.
CDPQ does not hide its interest in the Japanese market. Present on the archipelago since the 1980s – mainly in the banking sector – it has recently diversified its portfolio. In 2021, it began investing in the real estate market through its subsidiary Ivanhoé Cambridge. A year later, it announced two strategic transactions in the renewable energy sector.
In October 2022, CDPQ financed – without becoming the owner – a 35 MW solar park which supplies more than 7,000 Japanese households. Developed by a Singapore company, Vena Energy, the facilities are located in Fukushima prefecture.
It was a few days later that she invested 20 billion yen in Shizen Energy. Created in 2011, three months after the Fukushima nuclear accident, the company is now present in Asia and Oceania: South Korea, Vietnam, Thailand, Malaysia, Philippines, Australia.
In an analysis published at the start of the year on the CDPQ website, the senior director of infrastructure at the state-owned company’s office in Singapore, John Faye, argued that “the environmental consensus and the scale of efforts undertaken to achieve climate goals, combined with Japan’s stability, reinforce our convictions about it.”
He added that “clean energy and decarbonization are at the heart of our investment thesis in Shizen Energy, and we believe that partnering with a local developer is the best strategy to generate good returns in a market where the cost of capital is low and competition is increasingly fierce.
In Japan, solar energy is already on the rise, representing nearly 50% of production capacity from renewable energies, according to the International Energy Agency. Equivalent to around 22% of total electricity production today, renewable energy is expected to total between 36% and 38% of production by the end of the decade, according to Japanese government targets.
The Japanese government has set very ambitious objectives for solar energy by 2030. To stimulate the sector, it plans to install solar panels on government buildings and in certain public places. According to current estimates, Japan is on track to reach 88 GW of capacity by the end of the decade.