Japan Mega Solar Co., a company created by Japanese home renovator West Holdings Corp. (PINK: WSTHF), will invest around $1.3 billion in developing solar plants designed to take advantage of the country’s feed-in tariffs for renewable energy development.
The project calls for 250 plants with a combined capacity of around 500 megawatts. Japan Mega has already found interest from 12 investors, including Orix Corp. (NYSE: IX), JA Solar Holdings (NASDAQ: JASO), and LS Industrial Systems Co. (KRX: 010120) of South Korea, Bloomberg reports.
Under Japan’s new incentive program, utilities pay above-market rates to the developers of clean energy; this cost difference is passed on to the consumer in the form of surcharges. The feed-in tariff is set at a highly attractive rate of 42 yen per kilowatt-hour for 20 years, which is almost 3 times what industrial users pay for conventional electricity (as of the year ended this March).
“We will give priority to JA Solar and LS Industrial Systems” for solar panels to be used in the plants, [West Holdings Corp. Senior Managing Director Toshihisa] Nagashima said. The company may review the project depending on preferential rates set annually by the government for clean energy, he said.