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