Japanese trading giant Sumitomo Corporation has created a joint venture company in the US for development of renewables projects, joining a herd of foreign investors rushing here to benefit from lavish long-term federal subsidies for clean energy.

The company’s Americas subsidiary has formed Perennial Renewables with Advantage Capital with an initial focus on completing development of its partner’s current portfolio of more than 2GW of solar PV projects across six states.

The projects are located mainly in the Midwest and Northeast with a concentration in Arkansas, Illinois, Indiana, and New York. Plans call for completion and commercial operation of the most advanced projects in the second half of 2024 while adding others to the development pipeline.

Perennial will leverage Sumitomo’s global strength in project finance arrangement with Advantage Capital’s development team expertise on site control and interconnection, according to Sumitomo.

If they meet certain eligibility criteria, the solar projects could be eligible for a tax credit worth as much as 50% of capital investment, or $27.50/MWh for power sent to the electric grid over the first decade of operation.

Inflation Reduction Act, the landmark climate law signed by President Joe Biden in August 2022, does not cap subsidy amounts for clean energy production. The aim is to turbocharge supply of solar and wind sufficiently to help meet forecast demand through 2035, the goal set by Biden for a carbon-free grid.

As US investment in new clean energy generation capacity is far below what is necessary to meet that target, the administration is courting foreign capital with subsidies and prospect of S growth over the long-term in the world’s second largest clean energy market.

Sumitomo, unlike some new entrants, is familiar with the US market where it maintains five projects, mainly onshore wind with 313MW net-owned generation capacity, through subsidiary Perennial Power Holdings formed in 2002.

Globally, Sumitomo is developing geothermal, hydro, solar, and wind projects with 2.1GW of net-owned generation capacity as of 30 June.