Mitsubishi UFJ to Keep Clean Energy Financing at 2013 Levels

Feb 23, 2014 4:01 pm ET

Feb. 24 (Bloomberg) -- Mitsubishi UFJ Financial Group Inc., the largest lender in Japan, expects to fund clean energy projects in 2014 at the same level as last year with solar the main destination for investment in Japan.

Mitsubishi UFJ was lead arranger of 37 deals totaling about $2.5 billion last year, according to the Tokyo-based bank. Twenty of the deals were for projects in North America, nine in Japan, five in Australia, and three in the U.K.

“Our projection is that it will be about the same as last year globally,” Tomonori Miyagawa, a senior manager at the project finance department of Bank of Tokyo-Mitsubishi UFJ, said in an interview.

The lending pipeline for renewables has boomed in Japan as the government stokes demand with incentive programs intended to diversify energy sources following the Fukushima nuclear disaster almost three years ago. Japan was the second-largest market for solar with 6.7 gigawatts of installations last year, according to Bloomberg New Energy Finance.

Mitsubishi UFJ was ranked first as lead arranger of asset finance for clean energy and energy smart technologies in 2013, followed by the European Investment Bank, according to data from BNEF based in London.

In terms of asset financing in Japan last year, Mitsubishi UFJ was lead arranger for $916 million of credit for eight solar projects and one wind farm, according to the bank.

Solar Market

Solar will probably be the focus of clean energy financing again this year, according to Yoko Yanagida, who oversees project financing in Japan for the bank.

Japan’s solar market is expanding after the July 2012 introduction of the clean energy incentive program, which also covers wind, geothermal, small hydro and biomass.

Wind projects tend to be delayed because environmental impact assessments are needed, Yanagida said. Assessments became a requirement for wind power developers in October 2012.

Mitsubishi UFJ plans to increase loans to energy and utility industries in the U.S. to capitalize on a recovery in the world’s largest economy, President Nobuyuki Hirano said in an interview last year.

Shale gas in the U.S. bears monitoring as it may affect clean energy developments, Miyagawa said.

“We are closely watching how much the U.S. plans to invest in renewables in the medium term as coal is being switched to shale gas, which can reduce CO2 emissions,” he said.

--Editors: Iain Wilson, Indranil Ghosh