|
|
|
|
|
TOKYO, May 23, 2022 - (JCN Newswire) - Hokkaido Electric Power Company (Hokuden) and Mitsubishi Corporation (MC) are pleased to announce that we will be establishing a new joint venture in November 2021 that will be dedicated to hydroelectric power generation. The company, Donan Hydroelectric LLC (Donan Hydro), will be headquartered in Hakodate City, Hokkaido Prefecture. In conjunction with the new joint venture's establishment, Hokuden and MC have also agreed to form a hydroelectric power alliance that will service Hokkaido's Donan region.Our alliance will begin by Hokuden replacing in stages five existing power plants in Southern Hokkaido Prefecture, with Donan Hydro managing their operations thereafter. The five plants that will be replaced are all located in the Donan region. They include four that are directly owned by Hokuden (Nanae Power Station, Isoyagawa Daiichi Power Plant, Isoyagawa Daini Power Plant, and Ainumanai Hydro Plant), and one owned by Hokuden's subsidiary Eco Energy Corporation, Ltd. (Ono Power Station). (Excerpt from joint press release of October 2021)
To help fund the alliance's operations, Hokuden and MC have entered into a project-finance (PF)* agreement with North Pacific Bank and Sumitomo Mitsui Trust Bank, Limited. The agreement was signed in March of this year.Hydropower requires a great deal of infrastructure, including dams, waterways, generators and substations. Obtaining the rights to both install and operate that infrastructure means getting the necessary permits and authorizations, red tape that tends to make it difficult for developers to convince banks that the businesses are viable. For that reason, PF schemes for hydro projects have been few and far between.
Hokuden and MC engaged in numerous discussions with financial institutions, during which we were able to leverage our respective hydropower businesses and PF know-how to demonstrate just how sound our alliance's objectives are. The banks were impressed by our business plan and agreed to provide additional funding through this PF agreement.The plan is for Donan Hydro to lease existing waterways and other facilities owned by Hokuden. Only aging facilities shall be replaced once they are decommissioned, and Donan Hydro's power-generation operations shall commence thereafter.Hokuden's role in our alliance shall be to apply to the replacement work all of its expertise in building, maintaining and operating hydropower facilities. It shall also be responsible for ensuring that we remain in close communication with the local communities, and in maintaining the new facilities once they have been constructed.MC's role shall be to apply its extensive know-how in PF-driven power-generation businesses, which covers projects both here in Japan and around the world. This know-how shall be used both to ensure that Donan Hydro and its businesses are managed efficiently, and to oversee its contracts, PF funding operations, and so on.
MC and Hokuden are committed to leveraging Japan's domestically produced energy resources. Recognizing its worth in the context of renewable energy, we shall endeavor to optimize hydropower generated by the Donan region's valuable water resources and do our part to help Japan achieve carbon neutrality.
*Method of projected-cash-flow-based project financing that is secured by all of the project's assets. PF differs from other financing mechanisms in that it typically involves the setup of a special-purpose entity for each project in order to protect the project investors from any risks other than the loss of their investments. Because the lenders (banks) incur additional risks in PF schemes, they tend to have very strict criteria for approving businesses that apply for this type of financing.
Inquiry Recipient:
Mitsubishi Corporation
Telephone:+81-3-3210-2171
Facsimile:+81-3-5252-7705
Topic: Press release summary
Source: Mitsubishi Corporation
Sectors: Energy, Alternatives
http://www.acnnewswire.com
From the Asia Corporate News Network
Copyright © 2024 ACN Newswire. All rights reserved. A division of Asia Corporate News Network.
|
|
|
|
