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Environment

Japan offshore wind farms offer $18bn in lending opportunities

Sector holds promise as target for sustainable investing, Mizuho study finds

Japan enacted a law last year to promote the expansion of offshore wind farms.   © Reuters

TOKYO -- Offshore wind farms planned across Japan total 2 trillion yen ($18 billion) in project costs, Mizuho Bank estimates, offering lending opportunities for banks seeking to boost their environmental credentials.

The Mizuho Financial Group member and peers Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group are reportedly considering proposals for financing 10 such projects as lead underwriters. Offshore wind farms typically require financing from multiple lenders due to their high costs.

As coal-burning power plants face greater scrutiny from investors emphasizing so-called environmental, social and governance -- or ESG -- investing, wind power presents a way for banks to add more renewable energy to their lending portfolios. Japan's parliament passed legislation last year promoting offshore wind farms.

Mizuho's study covers 13 planned offshore wind farms that are undergoing environmental assessments. The projects have a total planned output of about 5.37 million kilowatts.

Mizuho calculates that each kilowatt of capacity costs about 560,000 yen to build, for a total of 2 trillion yen excluding the cost of environmental assessments.

By this estimate, offshore wind power accounts for about 40% of a projected 5 trillion yen in Japanese spending on renewable energy projects -- solar, wind and others -- including capacity already in operation.

Mizuho has advised on five of the projects.

Japan's government plans to have renewables contribute 22% to 24% of the nation's energy mix by fiscal 2030, up from 16% in fiscal 2017.

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