New energy creates gale of goodwill

Japan's New Energy Development Organisation is encouraging wind development at nearly every level, with subsidies on offer to small private producers, local governments and foreign companies. The country's wind capacity is expected to more than triple--and new long term power purchase contracts could mean the current breeze of opportunity becomes a veritable gale. The wind industry, it seems, need only ride the storm.

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Four months after the United Nations and the world's energy lobbies descended upon Kyoto to debate the state of the climate and greenhouse gases, the Japanese government has turned to wind as a means for reducing the country's carbon dioxide emissions. The New Energy Development Organisation (NEDO), a department steered by the Japanese Ministry of Trade and Industry (MITI), has pledged at least JPY 2.2 billion in subsidies for wind and other renewables in this fiscal year, which began in April.

NEDO will subsidise up to 33% of the cost of private sector projects and 50% of public project costs, all of which must be larger than 800 kW in capacity, says Masanori Higashino of NEDO in Tokyo. The money, he adds, has not yet been distributed between different renewable sectors. "But I expect ten private wind turbine projects to get subsidies this year," he says.

The most likely developers of wind energy to receive funding will be local governments and private companies who can erect turbines on their own land, Higashino says. While small, private wind producers do not yet exist in Japan, they will be allowed to offset their own production against their electricity bills, selling off any excess to the utility.

"We hope that the offer to subsidise wind turbine projects will advance the wind business in Japan," Higashino says. He estimates it costs about JPY 300,000 to install one kilowatt of wind power in the country, which he claims is two to three times more expensive than in Europe. Import costs for the wind turbines are partially to blame, he says, jacking up the price at least 20%. More yen are needed to build roads or establish power grids in remote areas where the wind is good.

In NEDO's world, wind turbines will produce power for JPY 10-15/kWh at sites with wind speeds of 7 m/s and thus cannot compete with oil, coal and nuclear power, which cost around JPY 7-8/kWh. "If we can start a wind energy movement the price of the turbines will fall and this will help cut the total investment," explains Higashino. "We would also like to see more larger turbines, as this would also reduce cost." But current regulations governing the height of structures in Japan require those higher than 60 metres to be painted with warning stripes. This adds to the cost once again, though one wind developer, Nippon Kokkan KK, has been researching a way to combine a warning dummy pole with too-tall wind plant (Windpower Monthly, April 1998).

In Japan today 77 wind turbines are turning, with a capacity of 17 MW. The numbers will increase to 156 turbines with a capacity of 60 MW by March 1999, when several projects under construction or in the planing pipeline are expected to be completed, according to the most recent information from MITI. Some 13 MW of the new capacity is to be developed with financial support from NEDO. The remaining 30 MW or so largely consists of one commercial project still cloaked in secrecy.

Last year, NEDO subsidised wind projects totalling 12.8 MW of generating capacity. Three of them are headed by Japanese wind developer Ecopower Co Ltd, using turbines from Danish company NEG Micon (table). NEDO paid about JPY 220 million, or 33% of the total project costs.

NEDO is also subsidising five projects for a total 10 MW where local governments teamed up with private companies. To be eligible for funding for this type of "third party sector" project, the wind plant must be at least 1.2 MW in size. NEDO puts up 33% of the total project cost. One 3 MW project in Hisai-city in Mie prefecture will boast the largest turbines to be installed to date in Japan -- four 750 kW turbines from Dutch manufacturer Lagerwey (Windpower Monthly, April 1998). The other projects have not yet ordered their turbines, but the sizes have been determined and construction is slated to begin this year (table page 37).

In the field

NEDO has also set aside JPY 1.5 billion in its budget this year for subsidising wind energy field tests, an ongoing program that began two years ago (Windpower Monthly, January 1996). NEDO pays the full cost of wind data collection and analysis, half the costs of environmental assessment and wind plant design, and half of the installation cost. Four local governments were given field test subsidies last year, and all will begin to erect the machines this year, Higashino reports. The names of the manufacturers who will supply the turbines were not scheduled to be released until late in April, but other details have been issued (table). Data from these projects will be collected over a four year period. If the generated electricity is sold to electric utilities during the test period half of the profit will be paid to NEDO.

NEDO has subsidised two additional field test projects that date back to 1995. One project, a Mitsubishi 490 kW turbine, is run by three local governments in Iwate prefecture under the name Tabashine Sangyo Kumiai. The other project, using two NEG Micon 400 kW units, is jointly run by NEDO, wind consultants Arco Corp and Nichimen Corp, an international trading group with interests in wind development overseas, most recently in Canada, where it is jointly developing a 100 MW wind farm with NEG Micon (story page 16).

Enron interest

So far Japanese utilities have not shown much interest in tapping into wind energy, Higashino notes, and it is difficult to predict whether they ever will. Okinawa Electrical Power Co Inc is the exception, part of a joint venture working to build enough wind plant to cover 9% of Okinawa's electricity consumption in the future (Windpower Monthly, April 1998).

Meanwhile, American energy giant Enron Corp has announced it will set up an office in Japan. Higashino says Enron officials have inquired whether their company will be able to apply for NEDO wind project subsidies. Enron has two wind subsidiaries -- Enron Wind Corporation in California and Tacke Windenergie in Germany. Like anyone else applying for the funds, says Higashino, Enron must have a physical presence in Japan and develop projects in the country. "It is possible if they live up to the same conditions as Japanese developers," he says.

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