March 26, 2018 Read More →

Japan, a Longtime Laggard in Offshore Wind Development, Sees an Opening

Analysts believe offshore wind could benefit from a renewables diversification plan announced last month by Japanese energy giant Tokyo Electric Power Company (Tepco).

While offshore wind “is still not in the plan” for Tepco, according to Bikal Pokharel, principal analyst for Asia-Pacific power and renewables at Wood Mackenzie, “they are looking at investments.” Tepco’s major acquisitions in Japanese renewables will be a mix of solar and offshore wind, he predicted.

Tepco President Tomoaki Kobayakawa in February pledged “a dramatically new path for the company as it navigates the challenges posed by deregulation of Japan’s energy markets, the country’s declining population and the need to continue cleanup work at Fukushima.”

The company’s youngest-ever leader promised the moves would transform Tepco from a local utility to an innovative global energy and technology company. Pokharel said many of the changes had been underway for the last few years.

Japanese lawmakers have been mulling how to develop offshore wind for some years, and this month the cabinet approved legislation that would allow developers to place competitive bids on selected zones in Japan’s territorial waters.

Simon Nicholas, energy finance analyst at the Institute for Energy Economics and Financial Analysis, said he expected changes in legislation to prompt Tepco to invest in wind as well as solar.

Wind power development has been subdued in Japan due to planning restrictions, he noted.

“The future for wind power in Japan looks more positive,” he said, “as some regulations have been relaxed, particularly for offshore wind, which is only just beginning development in Japan but can play a significant role going forward.”

Renewable energy today still makes up just a tiny fraction of Tepco’s domestic electricity generation, although the utility already has some exposure to renewables in international markets through its investments and through JERA, a joint venture with Chubu Electric Power.

Apart from investigating solar and offshore wind in Japan, Tepco would likely step up its presence in international renewable energy markets, Nicholas said, “as this can help replace lost revenue at home.”

Tepco has enormous costs relating to the Fukushima disaster and also has to cope with the fact that its nuclear power plants are offline, he said.

More: Could Tepco’s New Strategy Spur Offshore Wind in Japan?

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