Japan - Environmental rules hinder development

JAPAN: The prospects for wind power in Japan during 2014 can only be described as poor.

The 2MW offshore wind turbine for Fukushima
The 2MW offshore wind turbine for Fukushima

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According to Yoshinori Ueda, leader of the International Committee of the Japan Wind Power Association, the biggest problem is the "notoriously strict" environmental impact assessment (EIA) law, which came into effect in October 2012.

Only five wind power projects, with a total installed capacity of 174MW, have completed EIA procedures, which, said Ueda, are likely to delay developers' plans by up to four years and cost them "millions of dollars".

New installations during 2013 amounted to just under 50MW from 27 turbines at 14 sites, although four turbines with a combined capacity of 2.1MW were decommissioned. Almost half the new capacity was made up from offshore projects, the largest of which is the Kamisu project in the Ibaraki Prefecture, which consists of eight 2MW Hitachi turbines on monopile foundations.

The net increase of just 47.5MW in 2013 was the lowest Japan has recorded since 2003.

Some 88 projects with a potential capacity of nearly 4GW are in the pipeline according to Ueda, but it is unlikely that more than 300MW will actually be installed over the next two years. Meaningful growth in Japanese wind power will not take place until 2016 when projects start to clear the environmental hurdles.

Key tariff decisions

A shift to offshore development is emerging, but its future will depend on pricing decisions in relation to onshore wind and solar power. Onshore tariffs have been maintained at JPY 22/kWh, while solar tariffs were lowered from JPY 40/kWh to JPY 36/kWh.

Offshore wind requires a greater investment from developers and the consensus view in Japan is that the price will need to be 50% higher than onshore, and that solar tariffs will need to be lowered to level the playing field for new participants in the renewable energy field.

A decision is expected imminently; some sources indicate the offshore wind tariff will be set at around JPY 35/kWh, with solar falling to around Yen30.

Grid issues are likely to be a hot topic in Japan during 2014, as suggested by prime minister Shinzo Abe in a keynote speech to the World Economic Forum annual meeting at Davos on 22 January, when he announced his commitment to liberalise Japanese power systems.

Current political backdrop The conservative-centrist Liberal Democratic Party government is aiming to prompt muchneeded economic growth through deregulation, hopefully including that related to electrical power grids

High point of 2013 Expanded offshore wind operations taking advantage of sixth-largest Exclusive Economic Zone

Low point Environmental testing burdens continue to put the dampers on development

Key influencer Prime minister Shinzo Abe, whose party now decisively controls both upper and lower houses of parliament, making it easier to shepherd through legislation

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