Tuesday, October 29, 2013

No. 87: Increasing the purchase price to foster off-shore wind power generation (October 29, 2013)

The government will increase the purchase price of electricity by wind generation next year to correct overreliance on photovoltaic generation and foster off-shore wind generation. The purchase price of off-shore wind generation will be 1.5 to 2.0 times higher than that of electricity by land wind generation. 

Purchase price of renewable energy per one kW/h

2014 (Planned)
Photovoltaic generation
(Capacity more than 10 kW)
36 yen
30-35 yen
Wind generation
(Capacity more than 20 kW)
22 yen
Increase the purchase price of off-shore wind generation to 30-50 yen
Medium-sized hydraulic generation
24-34 yen
Remain unchanged
Biomass generation  
13-39 yen
Remain unchanged
Geothermal generation  
26-40 yen
Remain unchanged
The government introduced the system that asked electric power companies to purchase renewable energy at a fixed price. Because it fixed the purchase price of electricity by land wind generation at 22/kW, private companies hesitate to participate in the off-shore wind generation business because off-shore wind generation costs more than land wind generation to construct facilities. Unlike in Europe where wind generation accounts for 20-30% in power generation, wind generation accounts only for 0.5% in Japan. All renewable energies have a combined share of merely 1.6% in power generation. Marubeni plans to construct a large-scale off-shore wind generation plant with a capacity of 240,000 kW that will start operation in 2016. The total investment is estimated at 100 billion yen. 

 Marubeni plans to construct an off-shore wind generation plant