Sonnedix Japan: Expanding the use of solar through sustainable growth and commitment to build a bright future
Published 8th July 2021
By Shoichiro Takamura, Head of Business Planning & Solutions, Sonnedix Japan
Sonnedix is a global solar independent power producer (IPP) with a proven track record in delivering high-performance cost-competitive solar photovoltaic plants across OECD countries.
With a total controlled capacity of over 4GW, and more than 350 solar plants across eight countries, Sonnedix has built a strong culture around creating a positive impact in the environment and communities within which it operates, in line with its purpose of harnessing the power of the sun to build a bright future.
Sonnedix started its journey in Japan in 2013 in line with its sustainable growth strategy and its aim to expand the use of solar worldwide. Sonnedix Japan, operating on behalf of the Sonnedix Group, was created with a clear vision of becoming a long-term player in the country with an initial target of reaching a total controlled capacity of 300MW.
Today Sonnedix Japan has far exceeded that first MW target with a current controlled capacity if 592MW, including 288MW of operational capacity, 170MW in projects under construction, and a development pipeline of 134MW.
The first operations of Sonnedix Japan were acquisitions of early to mid-stage development projects, taking over the pending development activities which included completing land acquisitions, securing the relevant interconnection routes, achieving project financing, and completing the construction of each project.
Japan is a very unique market in which “localizing” your business is a key success factor. Sonnedix Japan has experienced different challenges and opportunities with each of their solar projects during the past eight years. There are specific particularities that the solar IPP highlights as common to most projects in the Japanese market:
- Civil works – Japan is a mountainous country, which means many large-scale developments (such as mega-solar) require notable amount of civil works to be conducted. This requires considering, right from the design phases, the appropriate natural disaster prevention measures and facilities that will need to be built in (retention ponds, drainage systems, sedimentation basins, etc.). A proper design is key for the permitting process and to meet the construction schedule and planning. For example, the construction of the 32.9MW project Sonnedix Yamadamachi required two retention ponds of a total capacity of 36,750m3, and approximately 30% of the construction works involved the referred civil works. Even in a case like Sonnedix Kurayoshi, a 36.4MW solar plant currently operating in an ex-golf course, the company has required around 26% of civil works.
- Weather conditions – Japan’s meteorological circumstances entail a rainy season, a typhoon season, and for a major part of the country, a snowy season. These seasons, combined with the topography-related requirements such as the abovementioned civil works, demand developers to pay special attention in certain periods of the year to try to avoid problems during the construction period but also being ready to react rapidly to any unforeseen circumstance.
As the Japanese market has been evolving, Sonnedix Japan has kept growing through acquisitions of projects, both in development stage (at different stages, including those requiring construction works) and operational, as well as exploring further opportunities beyond the FiT scheme.
With the FiT regulation changing considerably in the past years, the agility of the business and its capacity to anticipate, take mitigation measures, and identify opportunities to ensure the optimization of its solar assets have been important factors to becoming a trusted and reliable player in Japan. Despite the restrictive – and sometimes retroactive – effects of these regulatory changes (including restrictions in changing modules, deadlines for securing interconnection, curtailment…), Sonnedix Japan has taken the opportunity to understand the regulatory landscape and equip the business with a good mitigation plan to minimize the impact on the investments made and develop a smart strategy for project financing.
Sonnedix Japan started executing large-scale project finance since 2015, initially in collaboration with foreign lenders. As the company developed and grew its portfolio of solar assets in the country, new opportunities appeared to build and establish long term relationships with major Japanese banks. In 2016, the IPP secured financing for its 32.9MW project Sonnedix Yamadamachi with Shinsei Bank, 41.6MW project Sonnedix Sano with SMBC, and 46.6MW project Sonnedix Tono with MUFG Bank.
Today, Sonnedix Japan has developed strategic partnerships with different local financial institutions managing the synergies between the appetite from Japanese local banks and the company’s needs to secure financing for different types of projects in terms of size, location, curtailment rule, etc. To date, Sonnedix Japan has executed financing of projects totaling 450MW, thanks to the trusted partnerships established with more than 20 banks. Nurturing these relationships, as well as building new ones, is a key factor for the IPP’s growth in the Japanese market, and an important part of the company’s culture of Sustainable Growth.
It is this culture driven by sustainability standards and practices that makes Sonnedix a successful business in continuous expansion around the world. The IPP’s commitment to operational excellence goes hand-in-hand with a deep commitment towards protecting and enhancing the environment and communities within which it operates.
Given the reserved aspect of the Japanese culture, the need to adjust stakeholder engagement activities to the local market is crucial to successfully becoming a trusted neighbor in these communities. Most of the large-scale solar PV plants that Sonnedix Japan develops and operates, are located in rural areas where local authorities and members of the communities can be reluctant or suspicious about the impact of these projects. By spending adequate time to properly informing these stakeholders about the benefits of solar energy, but also listening to their concerns, needs, and wishes for the improvement of their community, Sonnedix Japan can find the path towards a win-win relationship throughout the entire life of the project, ensuring the solar plant has an active role to play in the social and economic development of the area.
For instance, during the development of the 46.8MW project Sonnedix Suwa, the IPP’s conversations with the local communities led to improvements such as the installation of streetlights or financing a project to rejuvenate one of the local natural parks. In addition to that, the project organized a guided site visit to the solar plant, for children and their families in the area, promoting the education in solar energy and sustainability.
Sonnedix Japan continues expanding its business across the country. Despite the challenges of the COVID-19 global pandemic, in 2020 Sonnedix Japan completed the construction of four solar PV plants totaling 154.6MW, and acquired another four operational assets, including 55MW solar PV plant Sonnedix Hitachi Juo which recently achieved a financing of EUR172M with MUFG Bank, Joyo Bank, and seven co-financing regional banks.
And this is just the beginning. The solar IPP continues actively seeking new opportunities to develop, build, and operate solar photovoltaic assets in the Japanese market, and across other OECD countries, faithful to its goal of building a bright future through the expansion of solar energy and socially-responsible behavior towards the environment and the communities in which it operates.