Analysis by Aegir Insights suggests the rate of construction of offshore windfarms in Japan could take off in the mid-2020s, but only if potential bottlenecks are addressed
The winner of the first Japanese auction for offshore wind, a floating wind project offshore Goto City, is due to be announced in mid-2021. At present, 15 sites have been selected by Japanese authorities in different regions and are in various stages of development. Subsequent projects are expected to be bottom-fixed windfarms relatively close to shore, with larger-scale floating wind projects anticipated in due course.
But Aegir Insights believes the magnitude of capacity build-out before 2030 will depend on developers’ ability to shorten the environmental impact assessment (EIA) process time and address other key issues.
“The Japanese offshore wind industry could take off in the mid-2020s if clear guidelines, shortened EIA processes and potential bottlenecks in the supply chain and in grid/transmission systems are addressed,” said Aegir Insights in a newly published analysis of the Japanese market, Japan Offshore wind market report. It also highlighted vessel availability combined with cabotage restrictions on the use of foreign vessels as a potential risk that could lead to supply chain bottlenecks.
Aegir Insights noted that the Global Wind Energy Council has predicted what it described as “an optimistic 10-GW of offshore wind capacity in Japan by 2030.” It said Wood Mackenzie, Fitch Solutions’ ‘high case’ and 4C Offshore’s analysis predicts 8 GW, 7 GW and 2.9 GW of offshore wind capacity in the country by then.
“If designated areas are offered at an even pace in tranches of four, and if EIAs can be shortened, Japan could have a high build-out from 2025,” said Aegir Insights.
The company also believes Japan could quickly reduce the levelised cost of energy for offshore wind in the early 2030s with an upscaling of projects and the development of the local supply chain.
As highlighted above, the first tender process under the new Offshore Wind Act is underway and will see a floating wind area of up to 21 MW auctioned. Aegir Insights believes this is likely to be won by Japanese company Toda Corporation, because the proposed floating lease area off Goto City overlaps with Toda’s planned Goto Sakiyama Oki pilot project.
“This, together with the fact preference is given to previous operational experience, make Toda the likely winner of the first tender under the new offshore wind law,” said Aegir Insights’ report.