Japan’s ENEOS to buy renewables company for US$1.8bn

Out-Law News | 19 Oct 2021 | 2:29 am | 1 min. read

Japanese oil company ENEOS will acquire the renewable energy company Japan Renewable Energy (JRE) for 200 billion yen (US$1.8bn), it has announced.

ENEOS will buy all shares from JRE’s owners including Goldman Sachs and GIC, a Singapore sovereign wealth fund. The transaction is expected to complete in January 2022 at which point JRE will be wholly owned by ENEOS,  JRE said in a statement.

Renewables expert Karah Howard of Pinsent Masons, the law firm behind Out-Law, said: “The pressure on Japanese energy companies to decarbonise and move towards sustainable development goals is telling in ENEOS’s recent agreement to acquire JRE renewables startup for over 200bn yen. ENEOS will use this acquisition to expand its investment into renewables to achieve carbon neutrality by 2040, leveraging JRE’s expertise in solar, offshore wind and biomass power plants.”

“Nikkei Asia states that the acquisition follows Japanese Chubu Electric Power and Mitsubishi Corp’s purchase of Dutch Eneco in 2020 for 500bn yen. Against the backdrop of the Japanese government’s target of 45 gigawatts (GW) of installed offshore wind power by 2040, further such acquisitions are anticipated,” she said.

JRE was set up in 2012 and has wind, solar and biomass power plants in operation. According to a local report, ENEOS hopes to use this transaction to change its current business model, which is heavily reliant on fossil fuels.. According to the company’s announcement, it plans to achieve carbon neutrality of its own CO2 emissions by 2040.

Nikkei commented that ENEOS believes that acquiring JRE would help itself to enter the offshore market and “keep it from having to develop offshore wind power on its own”. 

Japan has set a target to install 45GW of offshore wind power by 2040 as part of plans to achieve carbon neutrality by 2050. In April Japan strengthened its 2030 emissions reduction target to cut emissions by 46% by 2030 from 2013.