Japan

Japan

Market Status: Japan - Geography and economy lead to missed targets

JAPAN: It is now clear that Japan will fail to meet its target of installing 3GW of wind power generation in the year ending March 31. Fingers point to nature and the economy.

Ushiyama Izumi, president of the Ashikaga Institute of Technology, says obstacles to faster deployment of wind include typhoons, winter lightning and turbulence caused by the country's mountainous terrain - all making long-range targets of 10GW for 2020 and 20GW in 2030 appear difficult to attain. As of April 2010, Japan had just 2.19GW of wind, up from 1.85GW in 2009. Although the announcement of official statistics is weeks away, Ushiyama is convinced that Japan will fall short of its goal.

On a brighter note for the sector, there are plans for the installation of offshore wind turbines with fixed foundations this year and for floating turbines in 2013, Ushiyama says.

In July, the industry ministry announced feed-in tariffs (FITs) - government-mandated prices - of Yen48/kWh ($0.58/kWh) for solar power, to be gradually decreased, and Yen15-20/kWh for other types of clean electricity, including wind power. The contract periods are to be ten years for solar and 15-20 years for others.

But construction of wind power capacity is likely to be slow due to confusion over the timing of the introduction of FITs. Critics say the policy has not been adequately calibrated with the phasing out of an existing system of capital subsidies for wind turbines.

Japan's targets for installation of wind power

Government measures designed to cut waste in expenditure led to subsidies being withdrawn from the year beginning April 1, even though FITs will not be introduced until April 2012. That means developers will receive no subsidies for at least a full year, damping enthusiasm for new construction, says Uchida Yukinobu, managing director of energy consultants GL Garrad Hassan's Tokyo office.

"Even if FITs are introduced on schedule, there are practical issues such as the lead time needed in development projects," says Uchida. "My view is that it will be difficult for any construction to begin in the year beginning April 2012."

Despite this setback, wind power has the potential to help lift Japan out of two decades of deflation. In June, the Japanese government announced a ten-year growth strategy to boost the environment-related industry by more than Yen50 trillion ($608 billion), create 1.4 million jobs and produce 10% of Japanese primary energy from renewable sources by 2020.

Ushiyama says the large number of components in utility-scale wind turbines create business opportunities for Japan's world-class manufacturers of electrical machinery. Makers of megawatt-class turbines, such as Mitsubishi Heavy Industries, Fuji Heavy Industries and Japan Steel Works have succeeded in developing some of the most robust wind turbines in the world, he adds.

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