Partnerships between established European developers and domestic companies will play a particularly important role in the development of the Japanese offshore wind market, analysis by BNEF suggests
As highlighted here, although Japan is only now about to embark on auctions for offshore wind energy, the market there has the potential to become Asia’s largest, such is the country’s huge sea area and the potential wind resource in the country. It could, analysts have suggested, one day become one of the largest offshore wind markets in the world.
BNEF analyst Imogen Brown told a Reuters webinar that partnerships would be vital to success in Japan’s first decade of offshore wind projects. This is for a number of reasons, but in large part because bids in upcoming auctions will not be assessed on price alone.
Ms Brown said that only 50% of the points allocated to proposals in the auction process would be for the price developers bid. “Feasibility and experience are also very important scoring criteria,” she said. Other criteria that will be assessed include stakeholder engagement, economic benefits and reliability.
“It is not just about price,” Ms Brown said. “Japanese companies need to team with experienced developers to maximise the points they will be awarded.”
Among the Japanese corporations she highlighted who are already involved in the offshore wind sector are Marubeni, Tepco, J Power and JERA. Other Japanese and international players are queuing up to get involved in the industry, including RWE Renewables Japan and Kyuden Mirai Energy Company, who are to undertake a feasibility study for a bottom-fixed offshore wind project in Japan.
Other companies with an interest in bidding in upcoming auctions include Sumitomo Corporation, INPEX Corporation, Japan Petroleum Exploration, JR-EAST Energy Development, Kato Construction, Narita Construction and Venti Japan, along with Chubu and Mitsubishi Corporation, which recently acquired Dutch utility Eneco. In recent weeks, Japanese telecoms giant NTT has indicated that it is planning a foray into offshore wind.
The combination of an existing Japanese player in the offshore wind market and an overseas developer, or new Japanese entrant and overseas developer, is likely to outscore bids from new foreign entrants alone, existing Japanese players or new Japanese ones, Ms Brown suggests.
Japan launched its first auction for offshore wind at the end of June. That auction is for a small-scale floating windfarm offshore Nagasaki at the southernmost tip of the country, but as highlighted by OWJ, most initial offshore wind projects in Japan are expected to be bottom-fixed projects.
The Japanese Government is expected to auction 1 GW of offshore wind capacity a year from 2020 onwards, which translates into an ambitious target of 10 GW of projects auctioned by 2030.
Japan’s offshore wind market is likely to grow to around 7.3 GW of capacity by 2030, according to analysis by BNEF, with most of that capacity taking the form of bottom-fixed projects, despite the country’s significant potential for floating offshore wind.
BNEF’s analysis suggests that Japan is capable of achieving 7.3 GW of offshore wind capacity by 2030 even in the event of a multi-wave Covid-19 pandemic. 7.3 GW could even be possible in the event of an enduring pandemic, BNEF believes, but large-scale build-out of offshore wind capacity would be pushed later into the decade.
Following on from the launch of the first auction on 3 July 2020, Japan’s Ministry of Economy, Trade and Industry (METI) and Ministry of Land, Infrastructure, Transport and Tourism (MLIT) issued an ordinance regarding ‘areas that have already reached a certain preparatory stage’ and ‘promising areas’ toward the designation of future promotion areas under the Renewable Energy Use Law.
As consultancy RCG noted, 10 areas were announced as already having reached the ‘preparatory stage.’ In addition, the agencies will initiate preparation of data on wind conditions and geological surveys for four of these areas designated as ‘promising areas.’
RCG said areas that have progressed to the ‘certain preparatory stage’ include: Ganwu and Minami Shiribeshi, Hokkaido; Hiyama, Hokkaido; offshore Aomori in Japan sea (North), Aomori prefecture; Offshore Aomori in Japan sea (South), Aomori prefecture; Mutsu bay, Aomori prefecture; Happou-town and Noshiro-city, Akita prefecture; Katagami-city and Akita-city, Akita prefecture; Yuza-town, Yamagata prefecture; Murakami-city and Tainai-city, Niigata prefecture; and Saikai-city, Nagasaki prefecture. Ganwu and Minami Shiribeshi, Hokkaido, Hiyama, Hokkaido and Yuza-town, Yamagata prefecture were newly added.
Among this group, four areas have been singled out where ‘councils’ will be formed in each area by METI/MLIT and the preparation of wind measurement and geological surveys will be conducted by the government. RCG considers that these four areas will be candidates for offshore wind Round 2.
RCG said the four promising areas are: offshore Aomori in Japan sea (North), Aomori prefecture; offshore Aomori in Japan sea (South). Aomori prefecture; Jappou-town and Noshiro-city, Akita prefecture; Saikai-city, Nagasaki prefecture.
Riviera held a series of webinars on offshore wind in June. These are available to view in our webinar library