The trajectory is clear: after adding 3 Gigawatts of capacity to its global renewable energy portfolio over the past five years, ORIX Group is planning to add another 6GW in the next six years– taking the total to 10GW by 2030.
Most of that accelerating growth will come from markets outside of Japan, where this business has its original roots for ORIX, says Hidetake Takahashi, Senior Managing Executive Officer, Head of Energy and Eco Services Headquarters, and the executive responsible for ORIX Group’s Global Investment Strategy.
Over the past few years, Mr. Takahashi and his team have built up a wide-ranging portfolio of solar, onshore wind and hydropower assets spread across some of the world’s fastest-growing energy markets: India, China, the US and Europe. The cornerstone is Elawan, a European wind and solar developer and operator that is based in Spain but is investing across the globe, in which ORIX increased its stake to 100% in 2023.
Likewise, ORIX also has a substantial stake in Greenko, one of India’s largest renewables companies; as well as smaller holdings in Ormat Technologies, which focuses on geothermal energy worldwide and battery energy storage systems in the US and China’s Beijing Energy, which develops solar and hydro facilities.
International plans
All of these developers have ambitious expansion plans. Elawan, for example, has almost 9GW of projects under development compared to the less than 2GW it is currently operating. And after initially concentrating mostly on Europe, it is now moving rapidly into the United States, with two new solar farms just starting up in Texas. “The American market is definitely a focus for us and one where our presence is lower compared to Europe”, says Mr. Takahashi.
Another area of focus is battery energy storage systems, in order to manage intermittent power generation and to avoid curtailment.
There is an opportunity in developing a value chain in green hydrogen (and green ammonia), ranging from production and transport to use as a zero-carbon fuel or as a medium for energy storage. Elawan is currently working on its first green hydrogen generation facility in Spain, while Greenko is taking advantage of India’s abundant natural resources to also develop ‘green molecules’, potentially for export as well as domestic consumption.
Domestic potential
ORIX started its environmental business almost 30 years ago in Japan, initially to recycle leasing equipment, like computers and office equipment that had reached the end of their useful life. From there it expanded into prividing energy efficiency services, then into selling solar panels and eventually into operating waste management facilities and renewable power plants.
Today it is one of the country’s largest operators of solar farms with a capacity of 920 Megawatts, as well as running another 30MW of onshore wind, geothermal and biomass. While most of these power generation facilities are owned and operated by ORIX itself, ORIX is currently aiming at adding new projects to secure revenues through corporate power purchase agreements (PPAs). ORIX signed its first PPA with a third party, the Kaihara denim factory, in 2021, followed by dozens of newly built projects, and then last year, ORIX signed up to a long-term PPA with Kansai International Airport and Osaka International Airport, both of which are run by the Group, for 23MW of energy from a solar farm to come online in 2025.
ORIX is also moving into the energy storage business in Japan in a big way, with the announcement that it will construct one of Japan’s largest energy storage plants housing 40 containers of lithium-ion storage batteries. With a rated output of 134 MW and rated capacity of 548 MWh, Maibara-Koto Energy Storage Plant will be constructed on a 26,000 square meter lot owned by Maibara City in Shiga Prefecture and leased by ORIX. Construction will begin in November 2024, with the commencement of operations scheduled for 2027.
In total, Mr. Takahashi’s goal is to see the Environment and Energy business increase its contribution to ORIX Group’s profits and assets to at least 10% from around 6% as of now, respectively, over the next three to six6 years. Given the segment’s recent strong performance that looks eminently achievable.
