Japanese Offshore Wind To Hit 4 Gigawatts In 2028

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Japan’s nascent offshore wind industry is expected to increase dramatically over the next ten years, according to energy analysts Wood Mackenzie, who predict that by 2028 the island country will boast upwards of 4 gigawatts (GW) of offshore capacity, a 62-fold increase on 2018 figures.

Wood Mackenzie released a note to journalists last week (attached to its recently-published Japan offshore wind outlook report) in which it outlined a bare-bones case for how offshore wind could fill the gap left by Japan’s broken love-affair with nuclear energy in the wake of the disastrous nuclear meltdown of the Fukushima Daiichi Nuclear Power Plant in 2011. While cleanup at the Fukushima Daiichi site continues, Japan’s nuclear fleet has been all but mothballed, with only nine reactors of an available 40 have been brought online, bringing operational capacity up to 9 GW in 2018.

Wood Mackenzie, therefore, estimates that by 2030, Japan will be facing a power generation shortfall of more than 10 GW at the same time as the country’s policies call for nuclear to account for 20-22% of the national power mix.

“In light of the power shortfall, Japan will need to increase its coal imports, supported by renewable energy capacity,” said Robert Liew, senior analyst at Wood Mackenzie. “In terms of renewable energy, scale matters and offshore wind is at an advantage.”

The question remains, then, how will Japan proceed in a climate where nuclear energy is out of favor with the majority of policymakers and the population, and where fossil fuels must be phased out to meet national climate targets?

The answer, as seen by many analysts, is offshore wind — and experts outside of the system are not the only ones to come to this conclusion, as has been highlighted by several announcements made over the last year by two of Japan’s largest electric utilities. Prime among these is the direction being heralded by the owners of the Fukushima Daiichi Nuclear Power Plant, Tokyo Electric Power Company (TEPCO). In July 2018, TEPCO president Tomoaki Kobayakawa outlined his plans to not only develop 6 to 7 GW of renewable energy across Japan and overseas, but a promise to focus on offshore wind — particularly floating offshore wind. This was put into practice in January when the company signed a Memorandum of Understanding (MoU) with Danish power giant Ørsted which will see the two companies work together on developing offshore wind projects, starting with the Choshi offshore wind project near Tokyo, for which TEPCO has already been carrying out a seabed survey.

“We’re confident that the partnership combining TEPCO’s extensive expertise in the Japanese power business and Ørsted’s unparalleled track record in the offshore wind business will lead to success in the Choshi project,” said TEPCO Representative Executive Officer and President, Tomoaki Kobayakawa in January. “We hope that this first step paves the way for expansion beyond the coastlines of Japan for the development, construction, operation and ownership of offshore wind projects.”

“TEPCO is aiming to make renewable energy a core generating source by developing 6-7 GW of renewable energy projects in Japan and overseas. The partnership with Ørsted will provide us with a very strong platform to scale up our renewable energy business as one of our main pillars of business growth.”

“Rising costs and a lack of public confidence in TEPCO’s ability as a nuclear operator has led the company to reconsider its future strategy,” said Wood Mackenzie’s Robert Liew. “TEPCO’s involvement in offshore wind is a crucial development which signalled to the market that offshore wind is commercially viable. This will make it easier for the government and local companies to accept offshore wind.”

“The medium- to long-term outlook for offshore wind in Japan looks especially promising with TEPCO’s involvement in offshore wind, the growing offshore pipeline and new policy measures to support wind development. We expect Japan to emerge as a key offshore wind market in Asia.”

Joining TEPCO will likely be Japan’s Electric Power Development Co., better known as J-Power, which in September 2018 signed a Memorandum of Understanding (MoU) with French multinational electric utility ENGIE to collaborate on power projects, specifically offshore wind and floating offshore wind projects. J-Power has already got its feet wet, so to speak, in the offshore wind industry, after its involvement in a consortium of companies set to build and operate Japan’s first offshore wind farm off the Port of Hibikinada, a 220 megawatt (MW) demonstration project. J-Power has also looked further afield to develop its experience in offshore wind, having acquired a 25% stake in August 2018 in the 860 MW Triton Knoll Offshore Wind Farm off the coast of Lincolnshire in the UK.

Japan’s electric utilities won’t be going it alone, either, as Japan’s government recently approved an offshore promotion law which grants developers the right to occupy an area for up to 30 years (including construction and decommissioning) in general sea areas. Japan has also set up a working group to establish maintenance and management standards for offshore wind projects, and discussions are also underway to streamline the application process for port and harbor projects in the leadup to the first offshore wind tenders expected to be held in the first half of 2019 for sites in the Aomori and Nagasaki prefectures.

However, as was reported earlier this year that Japanese conglomerate Hitachi is pulling out of wind turbine production, Wood Mackenzie questioned whether a local offshore supply chain can be fully established by 2020. Hitachi’s absence may open the door for foreign turbine suppliers, but as has already been seen in Taiwan, this will only serve to increase costs.

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Joshua S Hill

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