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Japan

Japanese sights on Germany and Britain

Investors in Japan have been quick to put their money into Japan Wind Development, a wind project company keen to expand its activities to the European markets

Having netted around JPY 3 billion ($28.1 million) from share sales since its public listing last year, Japan Wind Development Company (JWD) is better positioned to meet its target of developing 700 MW of wind power plant by the end of the decade, says the company's president, Masayuki Tsukawaki. The company hopes to develop projects both at home and abroad, notably in Germany and the United Kingdom.

The four year old venture company listed its shares on the Mothers stock exchange for smaller companies in Tokyo in March last year. It was the first public listing of a company in the wind power business in Japan -- and it turned out to be a smart move. The initial stock market placement price was JPY 200,000. The price immediately soared to JPY 600,000 ($5630). The company then sold an additional 3500 shares in October 2003. Structural reorganisation of the stock has since seen the share price strengthen still further.

The success of the listing "proves that Japanese people believe in the wind business," says 44-year-old Tsukawaki, although he notes the share issue has not raised all the money needed to "cover our investment target." That target seeks a tenfold increase in wind capacity in just five years, up from the 67 MW the company had online by the end of 2003.

Most of this existing capacity is in Japan, the biggest developments being a 30 MW wind farm consisting of 20, 1.5 MW turbines in Aomori, and a 15 MW wind farm in Kyushu of ten, 1.5 MW turbines. JWD also has a dozen stand-alone 1.5 MW turbines in various locations throughout the country. In addition, it has two turbines in Germany rated at 1.5 MW and 2.5 MW. Operational since 2001, they were the company's first venture into wind power.

"The main purpose was to gain knowledge from the advanced European wind market," says the former oil man, who started his career with Mitsui Trading Company, a post which included an extended secondment in Europe. Here he became interested in wind energy -- and concerned over Japan's reliance on energy imports. He left Mitsui to start JWD with JPY 10 million ($93,500) and a group of co-founders who, like him, were drawn from the ranks of big industry, as are JWD's bosses today. "Our way of doing business in Japan is, in many ways, based on what we learned in Europe," he says.

Indeed, he gives much credit to Christoph Kuhrt, now with JWD's European representative, EOS Energy in Salzbergen, but formerly of German turbine supplier Tacke Wind. Tacke was later owned by Enron Wind before it was bought by GE. Kuhrt, says Tsukawaki, was instrumental in helping JWD better understand the wind industry resulting in a strong bond between Tacke and JWD, which lasts to this day. To date, JWD has only used Tacke (GE) turbines for its projects and has no plans to change that, according to Tsukawaki. "Of course we are open to other offers, but so far Tacke has given us the best support," he says. "We have checked prices at other manufacturers in Japan, but they mostly sell via agents, and we prefer to buy directly."

Loyalty is important to the company, he underlines. "Although we are an independent energy developer, I believe in forging a strong relationship with a turbine manufacturer." He continues: "In Europe, I learned the importance of involving employees and local partners in your business." Keeping this in mind, JWD normally sets up local wind project development companies in which the local government, local business and local citizens are invited to become partners. "This way the local community constantly benefits from the wind business," he says.

JWD's first Japanese project was constructed without any government subsidy. The 1.5 MW turbine was installed in Chiba prefecture. At that time the going rate for wind power was around JPY 11.5/kWh, but JWD accepted JPY 9.5/kWh ($0.089/kWh). "We wanted to prove that wind power is competitive compared with other energy resources," explains Tsukawaki. "A lot of people in Japan thought that wind power is not competitive. We wanted to break that mind-set."

Activity this year

For 2004, the company has five projects with a combined capacity of 30 MW lined up so far. These are either already under construction or in planning. Further projects are also under discussion. While much of the world is turning to offshore wind development, JWD's focus is onshore for the time being, both in Japan and overseas. The relationship with Kuhrt remains strong -- as JWD's European representative, he is working on securing a site for a 25-30 MW wind farm in Germany, near the Dutch border. "We basically do business in Germany, because we have a partner we can trust," says Tsukawaki. But he adds: "We would like to be active in Britain, if we can find a good partner."

Taking on partners for wind project development is also on the horizon at home in Japan. The company is already in discussion with both Eurus and Electric Power Development Company about the possibility of co-developing projects in the future, he says. In any event, Tsukawaki foresees a bright future, having made its first profit last year. Turnover for the current business year, ending March 31, is forecast to be around JPY 5.4 billion ($50.56 million) -- a 30% increase on last year -- while net profit after tax is forecast to double to JPY 250 million ($2.34 million).

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