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Japan alternative-energy investment stalls

By far the biggest problem in attracting investors is the uncertainty surrounding the details of the government's energy policy, set to be unveiled sometime this summer. Although the government will force electricity companies to buy power from alternative-energy providers, for how many years and at what price isn't yet known. That lack of detail has muted investor interest.

TOKYO - More than a year after the accident at a nuclear power plant in Fukushima prefecture caused Japan to rethink its dependence on nuclear energy, uncertainty around the country's energy policy continues to stymie investor interest in alternative energy.

Japan is expected to drastically reduce its dependence on a nuclear industry that had been slated to provide half the country's energy by 2030. Solar panels, wind turbines and geothermal energy have all been proposed as ways to replace a significant portion of the power produced at the country's nuclear power plants. But uncertainty over what government incentives may be available-and which regulatory hurdles may exist-have kept investors off balance.

At $66.5 million in assets, Daiwa Asset Management's Green Energy Fund, a joint venture with Black Rock Securities of the U.S., is one of the largest offered by a Japanese investment bank. But even there, about two-thirds of the investment was in the United States and Europe at the end of February, with no other region contributing more than 3%, according to the fund's monthly report.

Deutsche Bank... more [truncated due to possible copyright]  

TOKYO - More than a year after the accident at a nuclear power plant in Fukushima prefecture caused Japan to rethink its dependence on nuclear energy, uncertainty around the country's energy policy continues to stymie investor interest in alternative energy.

Japan is expected to drastically reduce its dependence on a nuclear industry that had been slated to provide half the country's energy by 2030. Solar panels, wind turbines and geothermal energy have all been proposed as ways to replace a significant portion of the power produced at the country's nuclear power plants. But uncertainty over what government incentives may be available-and which regulatory hurdles may exist-have kept investors off balance.

At $66.5 million in assets, Daiwa Asset Management's Green Energy Fund, a joint venture with Black Rock Securities of the U.S., is one of the largest offered by a Japanese investment bank. But even there, about two-thirds of the investment was in the United States and Europe at the end of February, with no other region contributing more than 3%, according to the fund's monthly report.

Deutsche Bank Japan operates two alternative energy funds in Japan for a combined $27.5 million. Both funds had more than 40% of their investments in U.S. alternative-energy assets and about 12% each in Japan, according to the most recent monthly fund reports.

By far the biggest problem in attracting investors is the uncertainty surrounding the details of the government's energy policy, set to be unveiled sometime this summer. Although the government will force electricity companies to buy power from alternative-energy providers, for how many years and at what price isn't yet known.

That lack of detail has muted investor interest in a sector that should be poised for growth, said Shuhei Abe, founder and chief executive of Sparx Group Co., Japan's largest hedge fund and one of the biggest proponents of alternative-energy investment in the country.

"It is not possible to calculate returns," Mr. Abe said.

Regulatory hurdles have been particularly onerous on wind power projects, sometimes delaying them for years, Mr. Abe said.

Sparx manages about $6.5 billion in assets but has been unable to attract interest in a domestic alternative-energy fund it has been trying to establish since 2009. Sparx plans to open a $10 million-$100 million fund this July and is prepared to front all of the money itself if outside interest doesn't emerge.

"If we cannot find investors, we'll do it ourselves," Mr. Abe said.

Another problem for investors is the lack of companies concentrating solely on alternative energy that are open for investment, said Credit Suisse energy analyst Yuji Nishiyama. Many of Japan's alternative energy projects are run as segments of such corporate monoliths as Tokyo Electric Power Co., Sumitomo Corp., Marubeni Corp. and Showa Shell Sekiyu.

"There's no pure-play alternative energy company in Japan," Mr. Nishiyama said.

Although financial investment options remain limited, foreign alternative energy companies have had more luck with direct investment in Japan via subsidiaries or joint ventures.

The Japanese government in 2009 started subsidizing by up to a third the cost to companies of building green energy production facilities in the country, according to the Japan External Trade Organization, a government agency in charge of promoting cross-border trade.

Since then, solar companies, lithium battery makers and even a U.S. company studying the feasibility of ocean-wave powered generators have all established operations in Japan, the organization's spokesman said.

Canadian Solar Japan, a subsidiary of the Ontario-based solar power parts manufacturer, on March 26 said it would partner with Japanese technology company Hakuto Co. Ltd. to open a four-hectare, 2-megawatt "mega solar" plant in Japan's Mie prefecture for operation in the fall of 2012.


Source: http://online.wsj.com/artic...

APR 3 2012
https://www.windaction.org/posts/33573-japan-alternative-energy-investment-stalls
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