Japanese trading house Itochu [9001:JP] and Mitsui Trust Bank [8309:JP] are set to establish a USD500m fund dedicated to investing in renewable energy projects in North America, as reported by Nikkei Asia on July 21. The fund will primarily focus on solar and wind power farms, as well as projects utilizing hydrogen and ammonia as fuels. A management firm under Itochu’s US subsidiary will set up the fund, with the aim to raise capital from other Japanese companies and regional banks, bring the fund’s investable capital to up to USD500m by June 2024. Itochu states that the fund will provide institutional investors, mainly in Japan, with opportunities to invest in renewable energy in the US and Canada.

The establishment of the fund reflects Itochu’s continued expansion in the US renewables market. The company has already invested in six wind power projects and over 30 power plants through its US arm, with plans to develop renewable power projects with a total capacity of 2 gigawatts (GW). This move also aligns with a broader trend among Japanese companies, driven by a lack of suitable sites for solar and onshore wind power domestically, to invest in overseas renewable projects. Moreover, they are also encouraged by the favorable policies under the Biden Administration’s Inflation Reduction Act (IRA), which has committed a total of USD160bn in tax credits to renewable energy firms. As a result of the IRA, the US Energy Information Administration anticipated that by 2024, solar and wind power will contribute 20% of the country’s overall power generation, up from around 14% last year.

Sources:

https://asia.nikkei.com/Business/Energy/Itochu-to-launch-500m-clean-energy-fund-in-North-America

https://www.reuters.com/business/energy/japans-itochu-partners-invest-2-bln-us-canada-renewables-via-fund-2023-07-24/

https://www.marketscreener.com/quote/stock/ITOCHU-CORPORATION-6491311/news/Japan-s-Itochu-Signs-Deals-to-Supply-Renewable-Energy-to-Amazon-Meta-42989326/