Negative interest rates in Japan have pushed two of the country’s biggest banks, Mitsubishi UFJ Financial Group (MUFG) and Sumitomo Mitsui Financial Group, to adding more project finance loans for, primarily European, renewable energy as infrastructure such as offshore wind farms brings strong yields.
Spanish Banco Santander was the largest loan provider for renewable energy assets last year, Bloomberg writes, but has now been pushed down to the third position by MFUG, which provided USD 1.88 billion for renewables projects so far, and Sumitomo Mitsui, which lended USD 1.52 billion. Co-financing the Beatrice offshore wind project along with several other banks bumped up MFUG to the leading position.
The North Sea offshore wind projects have shown to be a viable solution for big Japanese banks as the European countries are actively pursuing the development of renewable energy projects, which are subsidized by the governments.
Renewable energy in Europe and North America, incentivised by feed-in tariffs or guaranteed power purchase agreements, provides a fruitful playing field with higher returns compared to those in Japan, according to Bloomberg New Energy Finance (BNEF) Tokyo-based analyst, Ali Izadi-Najafabadi.
Last year, The Bank of Tokyo-Mitsubishu UFJ co-financed the Nordsee One offshore wind farm . In September this year, Sumitomo Mitsui Banking Corporation, which established Sumitomo Mitsui Financial Group, emerged as one of the senior debt providers for the purchase, operation and maintenance of the Humber Gateway offshore transmission system.