Japanese Banks Invest in Solar Biz - Analyst Blog
February 07 2013 - 12:45PM
Zacks
According to a Bloomberg report, following the footsteps of the
U.S. banking major The Goldman Sachs Group, Inc.
(GS), some of Japan’s key banks are coming up with investments in
the country’s domestic solar power industry. Among these banks,
Mitsubishi UFJ Financial Group, Inc. (MTU),
Mizuho Financial Group, Inc. (MFG) and Sumitomo
Mitsui Financial Group Inc. (SMFG) are planning to
invest in the solar business on the anticipation of huge
returns.
Notably, in 2012, the investment in Japanese solar installations
was 223 billion yen. Therefore, these Japanese banks anticipate
investments to reach 1.8 trillion yen ($19 billion) by 2016. The
expected hike is primarily attributable to the Japanese
government’s subsidy program, which was initiated in Jul 2012.
This program is anticipated to propel Japan as the world’s
third-largest market of solar power in 2013. The incentive related
to the subsidy program is almost three times the sum that countries
like Germany offers to its solar industries.
The subsidy program had an instantaneous impact on Japan’s solar
business. Notably, domestic shipment of solar cells and modules
jumped 80% to 627 megawatts (MW) in Jul to Sep 2012 compared with
the prior-year period. Further, this prompted international biggies
such as Goldman and IBM Japan Ltd. to enter the Japanese solar
industry.
However, the opportunities in the solar industry may not last for
long as the policies will likely be reversed or terminated. The
Japanese government anticipates that the subsidies, better known as
feed-in tariffs, will be the primary factors behind enhancement of
fresh investments. But the incentives for solar energy might be
brought down to the range of 35–39 yen a kilowatt-hour (kWh), from
the existing rate of 42 yen per kWh for 20 years.
For the domestic Japanese banks, investing in the flourishing solar
industry would partially mitigate the reduction in lending that
occurred in the last 3 years. Japanese banks were highly affected
by the sluggish macroeconomic environment, which resulted in lack
of enthusiasm from the borrowers.
We believe that the solar boom will result in the banks collecting
more revenues. However, there is also fierce competition among the
banks for gaining control of the market.
GOLDMAN SACHS (GS): Free Stock Analysis Report
MIZUHO FINL-ADR (MFG): Free Stock Analysis Report
MITSUBISHI-UFJ (MTU): Free Stock Analysis Report
SUMITOMO-MITSUI (SMFG): Free Stock Analysis Report
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