Public-private partnerships an untapped goldmine in Japan

California and Japan share many things – nearly equal economic size, a passion for modernization through technology and a concern for sustainable development to meet climate goals, among other issues.

Public-private partnerships (P3) and private finance incentives (PFI) are playing a greater role in infrastructure projects in both Japan and California, as well. In 2022, the Japanese government set a goal of 30 trillion Yen’s worth of P3/PFI projects in the next 10 years.1

Enter Sunstone Cities and its affiliate, Public-Private Partners LLC. Those firms have the expertise to make P3 projects work, and the contacts to connect California financing and Japanese needs.

Making Connections

Sunstone Cities CEO and P3 Partners LLC partner John Keisler joined the California+Japan Trade Mission 2025 at the end of September and beginning of October. The CalAsian Foundation organized the trip, with support from the New California Coalition, the Los Angeles County Business Federation and World Trade Center Los Angeles.

To be sure, there were lots of different people talking about lots of different issues. But considering the emphasis Japanese leaders are putting on upgrading their country’s aging infrastructure, it’s a fair bet that financing – particularly financing that lessens government risk and cost – was a major topic in the meeting rooms.

Sunstone Cities and Sunstone Management are very involved in various clean energy expansions, too. Companies involved in everything from open ocean electricity generation to conversion of cargo trucks to electrical power trains get support from Sunstone. Japan established its Clean Energy and Energy Security Initiative in 2022 to provide high-level coordination of clean technologies including offshore wind, hydrogen, nuclear, and grid modernization.  Study of an 800-mile LNG pipeline project between Japan and Alaska began last month.2

Needs In Japan

Japan’s energy self-sufficiency rate was 15.2% in 2023, importing 90% of its total energy needs. Fossil fuels still account for 88% of Japan’s energy consumption, and almost all oil, LNG and coal is imported.3

Clearly, renewable energy development is a priority. In just one example, the government recently established the Floating Offshore Wind Realization Association specifically to create 45GW of offshore wind generation by 2040.4 Development of another 150 GW of solar generation also is a priority.

Energy is only one area of need. Municipal and national infrastructure – buildings, transportation and more – is aging. A 2022 amendment of Japan’s 1999 PFI Act expanded eligible projects to include sports facilities and assembly venues.

Smart city development is another priority, with the government allocating $225 million this fiscal year specifically for advanced smart city technologies. Earlier this year, Tokyo completed Phase 1 of the $10.1 billion Woven City project, demonstrating Japan’s aims in this area.5

Working Example

A relatively new concept in airport modernization has been privatization through a concession model. The Kansai and Osaka international airports were both privatized with a 44-year concession to the ORIX-VINCI consortium, establishing a template. Other government-owned airports are preparing similar arrangements.

In the United States, AlphaStruxure, a partnership of Schneider Electric and Carlyle, is constructing a 10.5 MW microgrid to power the New Terminal One at JFK International Airport. It will be the largest rooftop solar array in New York City and the largest clean energy microgrid at any U.S. airport. Construction is expected to be completed in early 2026.

Schneider Electric and Sunstone Cities are in talks to find ways to work together.

Opportunities Both Ways

As part of recent trade negotiations between the United States and Japan, an agreement was made for $550 billion in Japanese investment in the U.S. That type of investment represents an optimal environment for public-private partnerships.

Primary areas for Japanese investment are expected to include energy infrastructure, semiconductor manufacturing, critical minerals, and advanced fuels. By using a P3 approach, the Japanese investment can be multiplied to complete more needed energy generation projects along with other infrastructure.

As demonstrated by the trade mission mentioned above, the structure for potential partnerships between Japanese and American firms is largely already in place. The CalAsian Foundation is critical for cooperation, as is the New California Coalition.

Across the Pacific, Japan and the United States have a combined 25.5% voting share in the Asian Development Bank. The Japan International Cooperation Agency (JICA) has a Private Sector Investment Finance program that offers equity and debt financing for projects facing commercial viability challenges, and the Japan Bank for International Cooperation (JBIC) typically provides senior debt at favorable rates.6

Conclusion

High-tech solutions to systemic problems like clean energy are a priority in Japan and the United States. Providing financial high-tech like P3 partnerships would streamline the path to project completion.

Efforts including the latest California+Japan Trade Mission are the exact place these partnerships can begin to take place. Sunstone is honored and pleased to be a part of that partnership.

Footnotes

About Public-Private Partnerships LLC

Public Private Partners LLC (“P3 LLC”) was founded on the belief that public-private partnerships are the key to unlocking transformative projects. Government can jumpstart economic development, job creation, and community growth when paired with the innovation and capital of the private sector. Cofounders John Keisler and Jeff Fullerton – who has helped deliver more than $6 billion in successful P3 projects – work directly with economic development firm Sunstone Cities to turn big ideas into reality. https://sunstonecities.us12.list-manage.com/subscribe?u=2fd77d6c079360825b35bcbcd&id=e0227c3f06] | Contact john.keisler@sunstonecities.com.