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Goldman to Invest in Japan

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The Goldman Sachs Group, Inc. (GS) intends to invest about 50 billion yen ($487 million) in renewable energy in Japan in the next 5 years. The investment banking major plans to effectively exploit the demand for electricity generated from solar and wind power.

The endowment will be made by the Japan Renewable Energy Co. unit, established by Goldman in Aug, 2012. It was mainly created to plan, design and operate power plants run on energy from the sun, wind, fuel cells and biomass fuels.

The above-mentioned investment is consistent with Goldman’s target of spending $40 billion in renewable energy over the next 10 years. The initiative was taken to mark the company’s awareness of environment sustainability and to support the development and promotion of renewable energy as well as clean technology.

Goldman intends to take bank loans and project financing worth 250 billion yen over a 5-year period to initiate projects that will cost an aggregate of 300 billion yen.

Japan has the potential to become the second largest market for solar energy after China by the end of 2013. Commercial and utility-based projects are expected to enhance solar installations by almost 6.1 gigawatts (:GW) to 9.4 GW in 2013.

There is an extensive awareness of the benefits of green energy in Japan, as the rising number of solar energy projects in recent times evince. Consequently, financial markets have recognized renewable energy as an immensely valuable asset.

Japan has reduced its reliance on atomic power generation since the Fukushima nuclear-plant crisis due to the earthquake in Mar 2011. Since Jul 2012, the Japanese government has been striving to promote solar energy by offering incentives through renewable tariffs.

Other financial organizations keen to invest in renewable energy in Japan include SoftBank Corp. (SFTBY), ORIX Corporation (IX) and Mizuho Financial Group, Inc. (MFG).

Currently, Goldman carries a Zacks Rank #2 (Buy).

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