Stirring up the competition

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With the government continuing to pave the way for ever faster wind development, Japan could well reach its 300 MW target for installed wind power capacity by 2010 already next year

Competition among wind power technology suppliers to Japan's booming renewable energy market is growing ever fiercer, fuelled most recently by NEG Micon's decision to start manufacturing turbines there. As the first foreign wind company to open a manufacturing subsidiary in Japan, the Danish firm is positioning strategically in a country in which it sees increasing market potential. The move has stirred up competition and there is talk of the arrival of a powerful line of Japanese-made NEG Micon turbines at cheaper prices than those offered by domestic competitors. Combined with the government's now official support for wind, the market is posed to expand drastically, says NEG Micon Japan's director, Koichiro Kani. "No, it will probably explode," Kani corrects, as he scans the skyline of Tokyo from the company's new office in a tall skyscraper in the capital.

NEG Micon, which has recently begun production of towers and nacelles in Japan (Windpower Monthly, May 2000), holds about a 35% share of the Japanese wind market. But the best is yet to come, says Kani. So far most of the NEG Micon turbines installed in Japan are 400 kW units, with the occasional 600 kW machine. The company sold a total of 20 of these units last year, mostly as stand alone turbines or small clusters of wind plant. This year NEG Micon predicts it will sell around 20, 750 kW units as it takes its 400 kW model off the Japanese market.

Kani points out that so far installed wind capacity in Japan is still modest, consisting of around 300 turbines -- of which about half are smaller than 100 kW -- with a combined capacity of 68 MW. "But this will change this year," says a confident Kani -- and he has several arguments to back his prediction.

Price war

The first is lower prices. As the first manufacturer to openly disclose its prices in Japan, NEG Micon has recently listed its 750 kW turbine at ´71.5 million on its Japanese web site. Coupled with an average cost of ´70 million in transportation and installation, this means a total project cost of ´141.5 million, or about ´189,000/kW. In comparison, Kani says the generally accepted price of a new installed wind turbine of this size in Japan is ´187 million, or ´250,000/kW.

"Our aim is to create competition in the wind market, which was not really there before," he says. "Our strategy is to support a society which can use wind energy in a reasonably economical way. Until recently a lot of agents for wind turbines made a lot of money in Japan. We think it is better to make a reasonable profit and to expand the use of wind turbines. Although wind energy is still more expensive than conventional energy sources, the gap is getting smaller."

The gap is shrinking as more turbine makers introduce bigger turbines in Japan, Kani adds. Mitsubishi Heavy Industries has built a 2 MW machine, while Ishikawajima-Harima Heavy Industry Co will start selling a 2.5 MW Nordex turbine, though this will be made in Germany. Enercon has begun to offer its 1.5 MW turbine in Japan, and the same goes for Vestas with its 1.65 MW. NEG Micon is receiving a number of inquiries for 1.5 MW and 2 MW units, which will go on sale in Japan this year. Kani says that even utilities, which have generally been hesitant to buy wind energy (Windpower Monthly, October 1999), have been asking for quotes on the megawatt machines.

The government is also making the market more attractive as it shifts its attention from nuclear power to wind, spurred by a growing unease for atomic power among the general public following the country's most serious nuclear accident last year.

New development areas for wind, including shore line and commercial ports, are being opened up. There is no need to deal with fishermen at commercial ports, Kani says, which makes this area attractive. The shoreline is interesting not only because the wind is good, he adds, but it is much easier and cheaper to transport big turbines by ship than by truck in Japan, whose mountains are criss-crossed by narrow winding roads. The government has also recently opened specific areas in national parks for wind development of wind farms. With about 80% of the land covered by mountains, this will help the siting squeeze, says Kani.

The major hurdle, he points out, is the lack of understanding or social acceptance for the higher cost of wind among the general public. He suggests that a chance for citizens to buy into co-operative projects as in Denmark would be one way to build acceptance.

Kani believes that by 2020-2030, around 6000 MW of wind energy will be operating in Japan, translating to 3% of the country's total installed electricity generating capacity. The government's official plan calls for 300 MW of wind energy to be installed by 2010. With 135 MW installed or approved, he says, this goal might be reached already next year.

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