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Offshore wind industry (finally) takes the plunge in Japan

Visit the hot springs of Jozankei-onsen and you’ll see many a tourist cautiously dip their toes in its steaming water.

There’s been a fair amount of offshore wind industry toe-dipping in the waters off the coast of Japan too. 45 MW of offshore wind has been installed, as of end-2013. Whilst not insubstantial, much of this is very close to shore, and it represents less than 2% of what has been achieved in the UK (3,653 MW), the world’s leading market.

Meanwhile, solar PV deployment in Japan is well over 14 GW and counting.

Government ambiguity
One reason cited for Japan’s comparatively steady offshore wind deployment has been the government’s unclear commitment to offshore wind.

This might seem like a strange statement: Japan has the most attractive financial support scheme in the world. The feed-in tariff (FiT) for offshore wind announced in March was enough to make Europeans salivate. At 36JPY/kWh [€0.27/kWh] for 20 years, it is over double that offered by China. There is also talk of FiTs for floating wind being introduced with a 1.5 multiplier.

As a further sweetener, capital grants are up for grabs too: the leading Kashima project will bag 500 million yen (€3.7 million).

But whilst the price paid for early projects is clear, the deployment volume targeted is not.

A government Wind Energy Roadmap in Japan is conspicuous by its absence, despite the Japan Wind Power Association lobbying for 75 GW by 2050. And the New Basic Energy Plan, launched in April, was noted not for a renewables vision, but rather for its confirmation of the roles nuclear and conventional generation will play.

Boundaries between departments do not help. Whereas the UK benefits from energy and climate change issues falling under the same departmental roof (the Department of Energy and Climate Change, DECC), in Japan they fall under two different bodies—the Ministry of Economy, Trade, and Industry (METI) and Ministry of Environment respectively.

And even the FiTs might not deliver the tasty rates of return they superficially promise.

Port facilities need upgrading, the supply chain is untested, and sites are generally far from transmission infrastructure. Discussions with local fishermen on seabed rights could prove an expensive negotiation exercise. Suitable installation vessels will be in short supply at first, and favoured homegrown turbines might not always be cost-optimal. This will put upward cost pressure on pioneering projects—placing levelised costs well above European averages.

Deliberately steady
But the real reason for steady deployment lies not in government. It lies in three deliberate industry choices.

Firstly, there is a pervasive preference to give homegrown Original Equipment Manufacturers (OEMs) time to develop their own turbines. Where the UK has historically prioritised deployment (to meet 2020 renewables targets), Japan has favoured high local content, in line with its approach to other sectors.

Secondly, Japan is not just looking at fixed foundation technology: it is also targeting leadership in floating wind. Floating wind is an earlier stage technology which is yet to be deployed in large arrays. The potential for deployment in Japan is great: most of Japan’s 600+ GW potential offshore resource is in water deeper than 100 m.

And thirdly, industry is paying extra attention to local technical risks. The Fukushima nuclear disaster has bred an era of technical caution in energy projects. Industry is also haunted by the hiccups of onshore wind in Japan: poor understanding of the impacts of complex and forested terrain led to over-optimistic energy assessments in the early years.

In particular, developers are keen to mitigate the risks posed by earthquakes and tsunamis, especially for fixed foundation projects. They want to avoid an unexpected wasabi-kick of technical catastrophe that leaves them spluttering.

Taking the plunge
Whilst offshore wind growth rates will not replicate the spectacular homegrown roll-out of solar PV, OEM activity is gaining momentum.

Mitsubishi Heavy Industries has embarked on a joint venture with Vestas to develop an 8 MW offshore turbine. Hitachi Zosen Corp. has buddied up with Statoil to pursue floating wind technology, whilst Hitachi Ltd continues to progress its 5 MW downwind offshore machine.

And it is the activities of industrial heavyweights which matter much more than government announcements. In the UK, offshore wind projections are best conducted by policy wonks who can decode the government’s Levy Control Framework modelling; but in the very different political culture of Japan, industry actions are a better guide to deployment.

The signs are that industry’s time for testing the waters is now up: it’s time to jump in. In April, the bullish telecoms giant SoftBank Corp. dived headfirst into Japan’s front-running 90 MW offshore project at Kashima, developed by Wind Power Ibaraki.

Others may soon decide to take the plunge too.

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