Japan

Japan

Japanese wind industry criticises offshore tender price cap

The Japanese wind power sector believes the proposed JPY 29,000/MWh ($274/MWh) price cap for upcoming tenders is too low

Japan's previous offshore wind tariff was JPY 36,000/MWh (pic credit: Nesnad/Wikimedia Commons)
Japan's previous offshore wind tariff was JPY 36,000/MWh (pic credit: Nesnad/Wikimedia Commons)

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The Japanese wind power industry has expressed concerns about plans for a price ceiling for the country’s first tenders for fixed-bottom offshore wind projects.

An advisory panel of Japan’s ministry of economics, trade and industry (Meti) proposed a price cap of JPY 29,000/MWh ($274/MWh) for upcoming tenders in Akita and Chiba, according to electric power industry newspaper, Denki Shimbun.

This price cap includes the cost of connecting to the grid – an extra fee not always paid by developers in other countries.

It is subject to a public consultation before being finalised, the Japanese Wind Energy Association (JWEA) advised Windpower Monthly.

However, its members believe the cap is too low, and had expected a ceiling price of about JPY 33,000-36,000/MWh. This upper end of the range was the original offshore wind tariff.

Meanwhile, renewable energy analysts Aegir noted that tariffs above €100/MWh (JPY 12,290/MWh or $116/MWh) would be needed to make bottom-fixed projects viable in Japan’s first tenders.

A JWEA board member told Windpower Monthly that although the organisation had no official position, it believed the costs of Japan’s first major offshore wind farms would be high as the country does not have the necessary infrastructure. 

They added that costs would likely come down after the first few projects.

Successful bids in offshore wind tenders have typically fallen due to cost reductions as individual markets gain experience, use better technology and build infrastructure that can be leveraged for future projects.

In 2015, offshore wind projects were successful in the first UK and Danish rounds with bids worth $156.90/MWh and $114.30/MWh respectively. However, in each of these auctions, developers did not pay grid connection costs

However, these prices do not include the costs of connection to the grid, which were instead paid by transmission system operators.

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