Tuesday, April 30, 2013

No. 79: Realities of the wind generation business in Japan (April 30, 2013)

Business trend:
A large wind turbine about 100 m high floating on the sea 20 km offshore of Fukushima Prefecture will start generating electricity on September 9 this year. This is a national project participated by such shipbuilding companies as Mitsubishi Heavy and Mitsui Engineering and Shipbuilding. The technology they accumulated contributed to setting a structure weighing several hundred tons afloat on the sea. Offshore wind turbines running in Europe are fixed on the seabed, whereas Japanese offshore wind turbines are floating structures. Japan wishes to take the lead in the floating offshore wind generation. It seems that offshore wind generation helps Japan establish a distinguished position in wind generation.

The story, however, is quite different in the land wind generation business that companies plan to start independently. It takes long to clear the environmental assessment. J-Power plans to construct a wind generation plant with a generation capacity of 19,500 kW in Aomori Prefecture scheduled to put into operation in March 2015, but it takes longer than anticipated to clear the environmental assessment. Although Japan Wind Power Association asked for a shorter procedure to clear the environmental assessment, it currently takes three to four years to obtain approval from the government. As a matter of fact, total capacity of the wind generation plants approved by January 31 this year is 570,000 kW, less than one tenth of the total output of photovoltaic generation. As of January 31 this year, only 37,000 kW is generated by wind generation, as against 1,329,000 kW by photovoltaic generation.

Wind generation offers 8% internal rate of return that is 2% higher than photovoltaic generation. In addition, the former has higher generation efficiency than the latter, and it is easier to build a larger wind generation plant to build a large photovoltaic generation plant. Nonetheless, environmental assessment is a big issue to clear. The Fukushima offshore wind generation project mentioned above will start operation in only 18 months after the project was approved. This is because it is an offshore plant and because the government took the strong initiative. The land wind generation plant with a capacity less than 7,500 kW is not subject to environmental assessment. This may be one of the solutions for land wind generation.   

Floating axis wind turbine

Monday, April 29, 2013

No. 78: Realities of the mega solar business in Japan (April 29, 2013)

Business trend:
The system to purchase renewable energy like sunlight and wind was put into effect 10 months ago, and renewable energy seemed to have a bright future. However, various problems have come to the fore. Some operators of mega solar builders plan to start construction later, while securing a quota from the government before the closing date. They apparently anticipate a price decrease of materials necessary for the construction. Government officials of the related ministries are glum about the strategy of the builders. The purchase price of photovoltaic generation reduced 10% beginning in April this year. The builders who got a quota before April can sell electricity for 42 yen per kW for 20 years. The current purchase price in Japan is more than two times higher in Germany. It is quite natural that many companies rush to participate in the mega solar business.

The number of mega solar plants planned as of the end of January 2013 was 1,024, and the total generation capacity is 5,750,000 kW that is equivalent to that of six nuclear power generation plants. Total investment is estimated at 1,500 billion yen excluding land price. However, another risk was brought to the surface. One of Japan’s electric power companies declared that they could purchase only one quarter of the electricity that the mega solar operator plans to sell because of the shortage of transmission capacity. In addition, places available for mega solar construction will face shortage soon or later. Because the purchase of renewable energy will be transferred to the electricity bill consumers receive every month, there is a fear that the burden consumers have to bear will increase dramatically.

The Japanese mega solar market remains very promising despite the above facts, CEO of Gestamp Solar of Spain said. His company invests 90 billion yen in Japan. And Chinese investors are keeping close watch on the Japanese mega solar business as an investment with low risk and high return. It seems vital to work out measures to prevent bubble burst in the mega solar business.  

Japan’s largest mega solar

Monday, April 8, 2013

No. 77: Growing popularity of biomass generation among paper companies (April 8, 2013)

Business trend:
Nippon Paper will launch biomass generation totally dependent on unused woods like thinnings. The company will build equipment inside its plant and start selling electricity to Kyushu Electric Power in March 2015. The equipment to be built is a fluidized bed boiler with a capacity of 5,000 kW. The annual output will be about 40 million kW, and investment will be 3.0 billion yen. The company expected to get annual sales of 1.3 billion yen from the mass generation.

The fuel for the biomass generation is totally wood chips made purely of unused woods, and Nippon Paper’s plant will consume about 71,000 tons of unused woods per year. The company tries to increase the generation efficiency by circulating both wood chips and air together inside the boiler. A total of 20 million cubic meters of unused woods are produced annually, whereas 10 million cubic meters of recycled woods are produced annually in Japan. Despite this fact, the application of unused woods is not widespread because it takes much to recover unused woods. Promoting the applications of unused woods is important because leaving unused woods in forests is said to deteriorate ecosystem.

The Japanese government promotes biomass generation dependent on unused woods. The purchase price of electricity generated by unused woods is set at 33.6 yen per kW, 2.5 times higher than the purchase price in the case of recycled woods. Demand for such paper products as print sheets and cardboards has been decreasing, and it is estimated to decrease 1.5% from the previous year to 27,350,000 tons in 2013. To prepare for the decreased demand, paper companies are strenuously increasing the generation capacity. In fact, the paper industry has the second biggest generation capacity of 1,700,000 kW, following the power generation industry. 

 Woody biomass generation equipment

Activities on renewable energy of major paper companies
The company sells electricity at its plants around the country, and it currently has a total capacity of 150,000 kW. It has already introduced a biomass boiler that uses unused woods.
The company has already introduced biomass generation at its 12 plants nationwide. 
The company has already introduced a gas cogeneration system in its plant. It has also introduced photovoltaic generation equipment in four plants inside Japan.

The efforts to apply unused woods for 
biomass generation are in progress.


Thursday, April 4, 2013

No. 76: A Japanese electric power company goes to Indonesia for geothermal generation (April 5, 2013)

Business trend:
Kyushu Electric Power will start the geothermal generation business in Indonesia in alliance with Itochu. A special purpose company (SPC) will be founded, and each of the two companies invests 25% in the SPC. Total cost of the project is estimated at 100 billion yen, 70-80% of which will be financed by Japan Bank for International Cooperation. Revenue from power selling will be used for reimbursement. The construction will start in April 2014. The generation capacity will be 330,000 kW, and the planned geothermal power station will be the largest one in Indonesia. Three generators will start operation on after another toward the end of 2016, and all generated amount will be sold to the Indonesian state-run electric power company PLN. Indonesia has about 150 active volcanoes and the second-largest resources for geothermal generation following the U.S. The Indonesian government has laid down a plan to increase the capacity of geothermal generation seven times over the level in 2012 to 9,500,000 kW in 2025.

Kyushu Electric Power is currently operating a geothermal generation plant with a capacity of 110,000 kW in Oita Prefecture. It has an integrated technology in geothermal generation, and one of its subsidiaries is excellent in technology to explore the resources and extract steams effectively and efficiently. Demand for electric power development has been growing bigger in Asia and Africa, and Kyushu Electric Power plans to develop foreign market with its accumulated technology and know-how. Three Japanese companies, Mitsubishi Heavy, Toshiba, and Fuji Electric, has 70% in the world geothermal generation power plant market. It is likely that they can get orders for equipment in the Indonesian project. It has become an important issue for electric power companies how to develop the market in developing countries that have growing power demand.   

The project site 

 The geothermal generation plant 
operated by Kyushu Electric Power