Japan mulls offshore wind policy shifts

Japan is mulling a series of sweeping new offshore wind initiatives that promise to speed up project timelines, facilitate local coordination and guarantee grid access.

On 17 February, the Ministry of Economy, Trade, and Industry (METI) and the Ministry of Land, Infrastructure, Transport, and Tourism (MLIT) held a joint conference discussing potential measures to accelerate the formation of projects and improve the business environment for offshore wind farms under the Offshore Renewable Energy Development Act.

“By accelerating the development of projects, the government aims to achieve the targets set out in the first phase of its vision for the offshore wind industry in December of last year,” explains Akio Hasegawa, a Director in RCG’s Tokyo office. “Several measures were outlined that will help facilitate local coordination and secure grid capacity.”

Last December, Japan unveiled the first phase of its vision for offshore wind, declaring a target of 10 GW by 2030 and 30 – 45 GW by 2040.
Based on the requests of the private sector, the government is considering the option of extending and renewing the period of occupation, for up to a maximum of 30 years, while keeping an eye on trends in technological development.

Hasegawa says there have been voices of concern originating from the private sector regarding the occupation permit, saying that a project can only be operated for approximately 20 years in reality, taking into account the period of development and demolition, and that if the period can be extended by 10-15 years, it will lead to reductions in costs.

The wind measurement will take about six months to prepare and about a year to carry out. Presently, after the promising areas for offshore wind power are selected, the preliminary preparations for the survey, which include wind measurement and site inspection, can begin.

In the future, however, preliminary preparations will likely start before the selection of the promising area, taking into account local conditions, so that the wind measurement can be carried out immediately after the selection of the promising area.

The country is also seeking to adopt a Japanese-style offshore wind allocation model to minimize the duplication of early development costs. In Japan, business associations have requested this reform in an effort to reduce the risk of business operators.

“The proposals here represent a policy shift for Japan,” Hasegawa explains, “which should ease the current challenges in the market.”

Tokyo, Japan  – The Renewables Consulting Group (RCG), a sector specialist advisory firm, continues its expansion into Japan ahead of the country’s expected offshore wind growth.

Last year, the Japanese government announced plans to install as much as 45GW of offshore wind capacity by 2040 with an interim target of 10 GW by 2030. Japan also set new feed-in tariff rates for offshore wind that will result in large-scale offshore wind development at multiple sites during the next decade [↑]. To accommodate the coming demand, RCG has responded with plans for new recruitment while bolstering its market intelligence, due diligence and technical advisory service offerings.

Located in Tokyo’s financial center, RCG’s office in the Marunouchi district affords our Asia Pacific team a local base of operations. Over the coming months, RCG plans to significantly expand the Asia Pacific region team to as many as 15 staff, through a combination of local experts, and experienced European offshore wind expatriates, who have either already relocated to Japan, or will do so when travel restrictions are eased. RCG’s continued in-country growth means the firm is able to put an experienced team – including senior personnel – on any renewable energy engagement in Japan and the broader Asia Pacific region.

This week, Hideto Seto joined RCG as Associate Director. He has more than 15 years’ experience in the wind energy industry working across a broad range of operational, commercial and account management roles. Seto is an expert in wind turbine operation and maintenance (O&M) management, project management and account relationship building. He provides clients with solutions for wind farm planning, lifetime operation cost optimization and project management.

With experience spanning both project management and O&M execution for international clients, Seto has held multiple industry leadership roles. He has extensive experience in service management from planning to execution. This includes providing clients optimisation plans for existing wind farm assets to drive reliability improvements, the use of state-of-the-art digital technologies to yield performance improvements, and lifetime operation budget planning for new wind farm developments. He has also led the launch of new O&M organizations in multiple countries, including relationship building with local contractors.

Commenting on the news, Gareth Lewis, RCG’s Managing Director for the APAC Region said:

“With an aggressive near-term target, we continue to see Japan as a major offshore wind growth market. As a result, RCG has responded with the hiring of Hideto Seto, who brings with him a wealth of experience in service operations, account management and project management. With Seto on board – and the fact that we are already providing advisory services for Japanese offshore wind projects – will accelerate further business expansion in Japan’s renewables market.” – Gareth Lewis, Managing Director, APAC

The Tokyo office – along with RCG’s office in Taiwan – is leading the acceleration of the firm’s Asia Pacific platform to realise its goal of providing a top-tier market intelligence, management consulting, and technical advisory service to the renewable sector and delivering long-term value for clients.

Japan plans to install as much as 45 GW of offshore wind by 2040 as the government aims to reduce carbon emissions and achieve carbon neutrality by 2050. The announcement, which followed a discussion by the Public-Private Council held on 15 December, follows recent decarbonization announcements in the UK and the Baltic countries and represents the country’s strongest indication yet regarding its offshore wind targets.

Raizo Kobayashi, an RCG Associate based in Tokyo, notes that Japan’s plan calls for the establishment of near-term targets, including 10 GW by 2030 and up to 45 GW by 2040.

Japan, which has lagged behind offshore wind market leaders like China, South Korea and Taiwan, has made significant strides within the past year in an effort to close the offshore wind gap. For example, Japan held its first offshore wind competitive auction in 2020 after legally formalizing the auction process in 2019.  He also points out that the government aims to increase the domestic share of wind power to 60% by 2040, and to reduce the cost of power generation to 8 and 9 JPY/kWh in the next 30 to 35 years.

According to Kobayashi, Japan is considering floating wind, which moors turbines to anchor lines in the seabed in waters deeper than 60 metres.

Nonetheless, he explains that a significant reduction in the cost of floating wind technology must occur if the country is to achieve the 45 GW target.

“The development of next-generation technologies surrounding floating wind is expected to be carried out with the realisation of a ‘technology development roadmap’ by the end of this fiscal year and a 2 trillion JPY fund to support research and development toward decarbonisation.”

Exhibit: Key Asia Pacific offshore wind markets

Japan’s Ministry of Economy, Trade and Industry (METI) has issued guidance on future feed-in tariffs for offshore wind.

The procurement price committee met on 15 September 2020.

A draft ceiling price of 29 JPY/kWh (approximately 0.28 USD/kWh) was proposed by the chairman of the advisory panel for the reverse auctions planed for later this year. This price covers the four Round 1 projects:

• Noshiro City, Mitane Town and Oga City in Akita Prefecture
• Yurihonjo City – North in Akita Prefecture
• Yurihonjo City – South in Akita Prefecture
• Choshi in Chiba Prefecture

This is a reduction on the 36 JPY/kWh (approximately 0.34 USD/kWh) that was set for the period ending 2019. The 59th advisory panel for procurement price approved the price.

The new lower price reflects cost-reductions that METI believes are achievable, based on analysis of latest OPEX and CAPEX assumptions and global comparisons. METI has calculated a pre-tax IRR of 10%.

The table below summarizes the outcome:

Details of the projects are available in RCG’s GRIP offshore wind data base. Click here [↑]

If you would like to know more about this announcement or more information about how RCG could assist you in the Japanese offshore wind farm market generally, please contact one of our team.

Tokyo, Japan – Sector-specialist advisory firm, The Renewables Consulting Group (RCG), today announces the continued expansion of the firm’s business in Japan through new recruitment and a move to a larger office to accommodate future growth.

RCG has been highly active in the Japan renewable energy sector for over three years. The firm established an office in Tokyo in 2018.

RCG’s team of specialist engineers and management consultants have been working with both local developers and Japanese utilities, as well as international players on strategic topics, market assessment, and transaction related assignments. Of particular note, RCG has been providing owners’ engineer services on an advanced-stage offshore wind project, is serving as advisor to a confidential Government agency on their offshore wind programme, and recently provided technical due diligence (TDD) for the successful acquisition of a mixed wind and solar development platform for an institutional investor.

This week, Raizo Kobayashi joined RCG’s Tokyo office as an Associate. Mr Kobayashi has practical experience in data analytics, marine and terrestrial ecology, oceanography and hydrology. He is also practiced in working on environmental due diligence projects of a global scale.

Further local experts are lined up to join during the second half of 2020. RCG has plans to expand the Asia Pacific region team to ten people by the end of the trading year, through a combination of local experts, and experienced European offshore wind expatriates, who have either already relocated to Japan, or will do so when travel restrictions are eased.

To accommodate this planned growth, RCG this month also confirmed a larger office space in the Marunouchi district, which will serve as a base for our local team and provide space for clients and visitors from Europe.

Commenting on the news, Akio Hasegawa, RCG Director and General Manager for Japan said:

“We are tremendously pleased to welcome Raizo to the Tokyo team. We have already provided advisory services for numerous Japanese offshore wind projects since last year and we strongly believe that his joining RCG will accelerate further business expansion in Japan’s renewables market.” – Akio Hasegawa, Director, Tokyo.

Dr Steve Freeman, RCG Director and Deputy General Manager, Tokyo office, continued:

“We are seeing continued growth in Asia Pacific for offshore wind, and it is testament to the great work of the whole RCG team that we continue to be able to recruit, despite the current climate. Raizo brings a great balance of environmental and marine experience to the team, which is essential for the current development phase of the Japan offshore wind market.” – Dr. Steve Freeman, Director, Tokyo.

It is widely expected that Japan will issue new rules shortly and support infrastructure that will result in large-scale offshore wind development at multiple sites during the next decade. This follows on from the passing of the Offshore Wind Promotion Act last year.

RCG’s continued growth means the firm is able to put an experienced team – including senior personnel – on any renewable energy engagement in Japan and the broader Asia Pacific region.

Raizo Kobayashi, the latest recruit to The Renewables Consulting Group’s Tokyo office.

Japan’s Ministry of Economy, Trade and Industry (METI) and Ministry of Land, Infrastructure, Transport and Tourism (MLIT) issued on 3rd July 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.

Ten areas were announced as already 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”.

This follows a period of consultation and data gathering with the prefectures from 13th December 2019 to 14th February 2020, on 3rd July 2020.

Under the Act on Promoting the Utilization of Sea Areas for the Development of Marine Renewable Energy Power Generation Facilities, the national government sets the basic policy, and at the end of each fiscal year, designates an area for promotion.

Areas that have progressed to the “certain preparatory stages”

10 Potential areas

• 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
• 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.

Four promising areas

• Offshore Aomori in Japan sea (North), Aomori prefecture
• Offshore Aomori in Japan sea (South). Aomori prefecture
• Happou-town and Noshiro-city, Akita prefecture
• Saikai-city, Nagasaki prefecture

Remaining six areas with matters to be considered

For the remaining six areas the following matters need to be considered in order to progress development:

It is necessary to secure grid capacity and identify and coordinate with stakeholders.

Hiyama, Hokkaido

It is necessary to secure grid capacity and identify and coordinate with stakeholders.

Mutsu bay, Aomori prefecture

Stakeholders must be identified and coordination must occur.

Katagami-city and Akita-city, Akita prefecture

Similarly, it is necessary to identify and coordinate with stakeholders.

Yuza-town, Yamagata prefecture

Grid capacity must be secured.

Murakami-city and Tainai-city, Niigata prefecture

It is necessary to secure grid capacity and identify and coordinate with stakeholders.

 

If you would like to know more about this announcement or more information about how RCG could assist you in the Japanese offshore wind farm market generally, please contact one of our team.