Goldman Invests In Green Energy – Analyst Blog

June 15, 2013 by  
Filed under Green Energy News

Following its announcement to invest about ¥50.0 billion
($487.0 million) in solar power generation in Japan over the next
5 years,
The Goldman Sachs Group, Inc.

(
GS

) now plans to invest in offshore wind power. This move is part
of the NY-based bank’s target to invest about ¥300 billion ($3.19
billion) in renewable energy investments in Japan.

In keeping with its intention to effectively exploit the demand
for electricity generated from solar and wind power, Goldman
established The Japan Renewable Energy Co. unit in Aug 2012. The
latter was created to plan, design and operate power plants run
on energy from the sun, wind, fuel cells, geothermal energy and
biomass fuels.

Development of wind power is more challenging when compared to
solar as it requires prior investments and expertise, such as an
environmental impact study. Notably, it can take approximately
3-4 years to conduct such a study for offshore projects. Further,
offshore wind projects usually require approval from local
fishermen, which can be quite tedious. Moreover, expenses related
to the installation and maintenance of these projects is steep.

The investment in green energy evinces Goldman’s awareness of
environment sustainability and its aim to support the development
and promotion of renewable energy as well as clean technology. GS
Infrastructure Partners – a unit of Goldman – will provide
capital to Japan Renewable Energy Co. to initiate projects in
clean energy. The company also intends to take bank loans and
project financing worth ¥250 billion over a 5-year period.

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

Further, since Jul 2012, the Japanese government has been
striving to promote clean energy by offering incentives through
renewable tariffs. This has led to a spate of investments and
Japan is now poised to overtake Germany as the world’s principal
solar market in annual installations.

Other financial organizations keen to invest in renewable energy
in Japan include
SoftBank Corp.

(
SFTBY

),
ORIX Corporation

(
IX

) and
Mizuho Financial Group, Inc.

(
MFG

).

Through these initiatives, Goldman is likely to alter the
dynamics of distributed solar generation and wind power, in
addition to producing a significant source of clean energy.

Goldman currently carries a Zacks Rank #3 (Hold).

GOLDMAN SACHS (GS): Free Stock Analysis
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