Market RadarBESS & Batterijparken
Financing Closed for Nozomi Energy's Japanese BESS Project
Nozomi Energy, a subsidiary of Actis, has successfully closed financing for its 50MW/196MWh BESS project in Oita Prefecture, Japan. This project secured a contract in Japan's capacity market auction, marking a significant advancement in large-scale energy storage development in the country.
Nozomi Energy, the Japanese renewable energy platform subsidiary of sustainable infrastructure investor Actis, has successfully closed financing for its large-scale battery energy storage system (BESS) project in Oita Prefecture, southern Japan. The project, known as Nozu BESS, has a capacity of 50MW and 196MWh and is located in Usuki City, a rural area on Japan's main southern island, Kyushu.
The financing, for which specific terms were not disclosed, was secured through non-recourse funding from the Japanese commercial bank Aozora Bank. This required a demonstration of capabilities in key areas such as feasibility analysis, project development, and construction.
The Nozu BESS project was awarded a 20-year fixed revenue contract in Japan's inaugural Long-Term Decarbonisation Power Source Auction (LTDA), hosted by the national association of transmission system operators (OCCTO) in fiscal year 2023. This auction was designed to secure long-term investment in low-carbon resources, differing from the usual single-year capacity market auctions.
The LTDA marked the first mechanism to offer long-term contracted revenue to battery storage operators in Japan. While the payments are relatively low, equivalent to about a 3% internal rate of return according to one source, their contracted nature provides financial comfort to lenders. However, a condition stipulates that 90% of any additional merchant profits must be returned to the scheme administrator, OCCTO, which may limit commercial interest for some developers.
Nozomi Energy was among the successful bidders in this auction, securing contracts for two similarly sized projects, each for 37MW of capacity. In total, the first LTDA awarded 1.67GW of successful energy storage bids, including 32 BESS bids totaling 1.1GW and three pumped hydro energy storage projects totaling 577MW.
Actis, which established Nozomi Energy three years ago as a US$500 million renewable energy platform, aims to build a 1.1GW portfolio of onshore wind, solar PV, and battery storage in Japan by 2027. According to Jose Antonio Millan Ruano, president and CEO of Nozomi Energy, the financial close of the Nozu project demonstrates the company's ability "to originate, develop and finance complex renewable energy infrastructure in Japan."
The source for this article is Energy-Storage.News.
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