Japan’s Green Finance Organisation (GFO) recently invested 70 Million Yen in equity to the construction of the Hokkaido Betsukai biogas Power Generation facility. The transaction is notable as it marks the first time pasture grass silage will be used for biogas power generation in Japan. The construction commenced in August, 2017.
The 1 Billion Yen project, to be developed jointly by Kadokawa Construction Co., Ltd and Corns AG Corporation, will install a 382 kW biogas power plant in Betsukai Town of Hokkaido Prefecture. The facility is expected to reduce 1,643 tons of CO2 every year. The feed that fuels the biogas facility – pasture grass silage – will be sourced from local dairy farms in the Hokkaido region.
The main revenue stream for this project will be the sale of electricity to Hokkaido Electric Power Co., Ltd., a regional electric utility via a 20-year offtake Power Purchase Agreement (PPA). Another revenue stream will be the sale of fertilizer, a useful byproduct of the digestor process, to agricultural companies such as KEH Bio Co., Ltd. That is, the project includes multiple revenue streams: both power and fertilizer. Sale of the fertilizer byproduct does not come with a long-term offtake agreement, and therefore this revenue streams comes with a different risk profile than a 20 year PPA.
The Green Bank Network’s “Transaction Takeaways” series highlights notable features of Green Bank deals