No. 8: An increasing number of companies get involved in geothermal generation (October 6, 2011)

No projects were planned for geothermal generation since the last project ended in 1999. It is estimated that Japan has a potential capacity of more than 20 million kW in geothermal generation that is equivalent to the total capacity of 20 nuclear power plants, but only 0.5 million kW is being utilized because of the strict regulations governing national parks and the difficulty to sell generated electricity. However, the situation is changing very rapidly. The buyback system of all electricity generated by renewable energy will be enacted next July.

Taking the opportunities of the deregulation, an increasing number of companies plan to start the geothermal generation business. Marubeni will build geothermal plants in the northern part of Japan with a view to selling all generated electricity. JFE Engineering, IdemitsuKosan, and INPEX are planning to enter into the business. Mitsubishi Materials has already started to excavate wells for geothermal generation in alliance with Tohoku Electric Power.

Unlike photovoltaic generation and wind generation, geothermal generation is not affected by weather conditions. In addition, the cost of geothermal generation is 20 yen per kW, while that of photovoltaic generation is as much as 40 yen per kW. At the same time, the Ministry of Environment is scheduled to deregulate the development of geothermal generation on the condition that a special construction method is used. Japan has the world’s third largest resources of geothermal generation following Indonesia and the U.S. The Ministry of Economy, Trade and Industry supports the spread of geothermal generation. It has asked the Diet to appropriate more than 10 billion yen for the research on geological structure and the amount of geothermal energy resources.