by Cedric Brehaut, Solichamba
In their upcoming report ‘Solar PV Asset Management 2017-2022: Markets, Investors, Asset Managers and Software’, GTM Research and SOLICHAMBA partnered with Solarplaza to analyze the Japanese investor landscape, and found that Japan has the most fragmented investor landscape of all the major markets analyzed in the report, including the U.S., Canada, Germany, Italy, the U.K., France, Spain, Chile, and India.
The Top 20 Investors Make Up Less Than 10% Market Share
The top 10 investors identified in the GTM report account for 1.8 GWDC of net installed capacity at the end of 2016, and the top 20 for 2.6 GWDC. Measured against the total installed base in Japan for plants above 10 kWAC, the top 10 investors make up 7% of the market, and the top 20 investors 10%. When measured against the installed base of plants above 1 MWAC, the shares naturally increase to 14% and 21% but remain low in comparison to other global markets. Several factors explain this phenomenon.
Below, as a preview, you’ll find an overview of the top 5 investors in the Japanese market, as found in the research (This ranking differs slightly from our recently published Top 30 Solar PV Portfolios in Japan, because Solarplaza’s rankings are listed in order of gross capacity and accounts for operational projects by the end of January 2017).
|#||Investor||Category||Portfolio on 12/31/16
|Portfolio on 12/31/16
|Assets added in 2016
|Assets added in 2016
|2||Eurus Energy (P)||IPP||296||296||5||5||Yes|
|3||NTT Facilities||Project development||200||200||53||53||No|
Source: SOLICHAMBA, Solarplaza. Information reported by the provider except: marked with (E) when estimated, marked with (P) when publicly available, market with (*) when gross capacity reported by the provider but net capacity was estimated.
Co-Investment Partnerships Are Frequent
When analyzing investor landscapes, GTM Research and SOLICHAMBA adopt the same metric used across traditional energy industries: net capacity. For any given asset, net capacity equals the total capacity of the plant multiplied by the share owned by a specific investor. If an investor owns 50% of a 10 MW plant, it counts for 5 MW in net capacity. Joint ownership scenarios are very common in Japan, especially for large-scale plants. For example, the Renatus Soma Solar Park (52.5 MW) is co-owned by Kyudenko (40%), ORIX (30%), Beltecno Energy (19.8%), Kyuden Mirai Energy (10%), and Hokuto Electrical (0.2%). On average, the top 20 investors in Japan analyzed by the GTM own 80% of their portfolios, a lower number than in Germany and Chile (97%) but comparable to Italy (82%).
Portfolio and Plant Sizes Remain Relatively Small
The top 20 investors in Japan own portfolios averaging 129 MW in net capacity. While the scale of Japanese solar portfolios lags far behind the U.S. (921 MW), it outranks most European countries (except the U.K. and Germany). Unlike the U.S., Japan does not have a booming market for very large-scale PV plants, simply because of space constraints. In Japan, the installed capacity coming from mega solar plants ranging between 1 MW and 5 MW is five times larger than the capacity coming from mega solar plants larger than 5 MW. In the U.S., the ratio is exactly the opposite. From this standpoint, Japan is more comparable to European markets like Italy, France, and Spain.
A Large and Heavily-Fragmented Commercial Segment
The commercial segment in Japan, defined by GTM as plants ranging between 10kWAC and 1MWAC, makes up more than 14 GWDC of installed capacity at the end of 2016, more than the mega solar plant segment. Only Germany and Italy are in the same situation, and both markets show high levels of fragmentation: in the commercial segment, most assets belong to individual businesses and small investors. The phenomenon is probably amplified in Japan by the number of corporations, large and small, with enough financial means to invest in solar systems.
A Combination of Factors
In the end, the PV investor landscape in Japan shares characteristics with many other markets around the world, and its high level of fragmentation does not stem from anything uniquely Japanese. Instead, a combination of factors contributes to a higher level of investor landscape fragmentation: co-investment structures, relatively small plant and portfolio sizes, and a very large installed base of commercial-scale systems owned by smaller investors.
With an impending slowdown in new construction and limited activity on the secondary market so far, Japan is likely to remain a highly-fragmented market in the foreseeable future.