Following the announcement of its plans to invest about ¥50
billion ($487 million) in the Japan Renewable Energy Co.
unit, a solar power generation company in Japan over the next 5
The Goldman Sachs Group, Inc.
) private equity arm also plans to invest another $135 million in
ReNew Wind Power, an Indian wind farm company. Goldman plans to
effectively exploit the demand for electricity generated from
solar and wind power.
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Due to curtailment of subsidies in some parts of Europe, global
overcapacity in wind turbine and solar panel production worsened.
Notably, about $153 million was invested in 2012 as compared with
the investment of more than $700 million each in 2010 and 2011.
However, private equity venture capital interest in renewable
energy is experiencing an uptrend, particularly in India and
Japan. Moreover, energy production scarcity and new tariffs are
expected to augment investment in these two countries.
Of the total $500 million to be invested in ReNew, Goldman has
invested $385 million including the current investment worth $135
million. Moreover, for both ReNew and JRE investments, borrowings
worth about three times the equity value to fund projects will be
Supply-demand imbalance in renewable energy in Japan and India
prompted Goldman to pursue investments. Notably, India is
considered to be a prominent market player for wind power
generation while Japan is reliable for solar energy.
There is extensive awareness regarding the benefits of green
energy in Japan, as evident from the rising number of projects in
recent times. Consequently, financial markets have recognized
renewable energy as an immensely valuable asset.
Japan has lessened its reliance on atomic power generation since
the Fukushima nuclear-plant crisis caused by the Mar 2011
earthquake. Since Jul 2012, the Japanese government has been
striving to promote solar energy by offering incentives through
Through these innovative transactions, Goldman will likely change
help alter the dynamics of distributed solar generation and wind
power, produce a significant source of clean energy and generate
ample jobs across the U.S.
Goldman currently carries a Zacks Rank #3 (Hold). Some major
banks that are worth considering include
The PNC Financial Services Group, Inc.
JPMorgan Chase & Co.
). All the 3 banks hold a Zacks Rank #2 (Buy).