JAPAN Law and Practice Contributed by: Yusuke Murakami, Nobuhiko Suzuki, Yuma Ito and Masataka Hayano, Mori Hamada & Matsumoto
ernment has never changed its policy goals toward decarbonisation by 2050, and investor engagement with energy and infrastructure projects has remained steady and firm. If US risk/return worsens due to its policy uncertainties (such as Inflation Reduction Act (IRA) funding pauses or cancellations), some part of the global pool of capital may rotate toward Japan where its GX policy is crystallising and supporting steady deal volumes. 1.3 Access to the Energy and Infrastructure M&A Market Different types of investors are taking different approaches to access the energy and infrastructure M&A market in Japan. Independent Energy Developers Since the introduction of the Feed-in-Tariff subsidy programme back in 2012, a large number of independ- ent energy developers have emerged. Typically, these have developed and constructed renewable energy assets on a greenfield basis with project finance from commercial banks. Japanese Strategic Investors Typically, strategic investors (such as general trading houses ( sogo shosha ), power and gas utility groups, oil refiners and real estate developers) have invested in renewable and battery storage assets on a greenfield and/or brownfield basis. They often acquire a portfolio of operational and/or pipeline assets from develop- ers or sometimes even acquire the whole business of such developers to “buy time with money” for the purpose of their strategic goals to change their exist- ing business models in a more sustainable direction. Global Infra/PE Platforms Major global infra/PE platforms (including those based in US, Australia and Singapore) are raising Asia-focused infra funds with Japan as a priority – particularly for renewables, data centres and transi- tion adjacencies. They typically acquire a portfolio of operational and/or pipeline assets from developers. Banks and Institutional Investors Commercial banks, including Japanese megabanks such as MUFG, Mizuho and SMBC, are dominant in lead arranger position for project financing in energy
and infrastructure projects in Japan. Also, life insurers and pension funds are deepening transition finance and project-loan exposure. The use of project bonds (including the repackaging of project loans to trust beneficial interests) is not particularly common or popular in Japan. Listed Infrastructure Funds (Tokyo Stock Exchange Infra Fund Market) A small but active market of listed funds (historically solar-heavy) provides a take-out or recycling route for operating assets (now testing storage add-ons, FIP transitions and wind farms). 1.4 Energy and Infrastructure Projects In its Seventh Strategic Energy Plan (published in 2025), Japan targets a 2040 power generation mix of 40–50% renewables, 30–40% thermal (fossil and low- carbon variants), and about 20% nuclear. In practice, renewables account for about 25%–30% of Japan’s generation mix, with thermal (LNG, coal) still domi- nant. For 2030, the policy targets renewables making up about 36–38% of power supply. By 2040, renewa- bles are expected to be the main power source for Japan. The main types and sizes of currently planned (major) energy or infrastructure projects are as follows. Renewables (Other Than Offshore Wind) Many developers and investors are developing renew- able energy projects based on the fixed-price offtake guarantee under the FIT scheme or corporate PPAs with or without the FIP subsidy. The size of solar, bio- mass and onshore wind projects could significantly vary from several MW up to several hundred MW, but suitable onshore sites for large-scale development on a greenfield basis have been rapidly decreasing in Japan. Offshore Wind Offshore wind has been considered by investors to be the last frontier of large-scale development of renew- able energy in Japan. Also, the Japanese government is expecting that offshore wind will play a vital role in the process of making renewable energy the main power source in Japan toward 2030 and 2040. The size of an offshore wind project could range from sev-
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