According to a Bloomberg report, following the footsteps of
the U.S. banking major
The Goldman Sachs Group, Inc.
), 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.
Mizuho Financial Group, Inc.
) and Sumitomo
Mitsui Financial Group Inc.
) are planning to invest in the solar business on the
anticipation of huge returns.
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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
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
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