Seven-year itch: Japan looks to boost offshore

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Ilaria Valtimora
March 30, 2018
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Seven-year itch: Japan looks to boost offshore

Japan has spent years talking about offshore wind – and with little to show for it. Its government started looking at renewable energy in the aftermath of the Fukushima Daiichi nuclear disaster in 2011. This opened up opportunities for developing offshore wind farms.

In a report published last year, the consultancy Institute for Energy Economics & Financial Analysis identifies the potential for 10GW of offshore wind in Japan by 2030. And in December, the Japan Wind Power Association estimated the potential to install offshore wind farms in Japanese waters with a total capacity of 100GW.

However, the government has been slow to introduce laws and regulations to ease the development of offshore wind, and the nation is far from unleashing its potential.

Despite its renewables push in the last seven years, Japan has installed only 60MW of offshore wind projects so far. This delay is leaving the country lagging behind its neighbours, particularly neighbouring Taiwan, which has set aggressive renewable energy targets and aims to build 5GW of offshore wind farms by 2025.

That isn’t to say Taiwan has got everything sorted. It is taking the steps it needs to build an offshore wind industry, and the excellent wind resources and government commitment have brought in foreign investors including Ørsted, Copenhagen Infrastructure Partners, Macquarie and Wpd. There is a lesson here for Japan.

And this slow growth is despite the fact that Japanese investors have already shown interest in the offshore wind industry. Falling costs and Japanese interest rates at a record low of -0.1% since January 2016, have pushed investors to look at offshore wind investments in Europe for stable, long-term revenues.

For example, this week Japanese conglomerate Mitsubishi has bought a 33.4% stake in the 950MW Moray East in UK waters; and is reportedly looking to invest in the 370MW Norther off the Belgian coast and the 130MW Luchterduinen off the Dutch coast.

Meanwhile, Japanese investment firm Marubeni this week disposed of its stake in the 210MW Westermost Rough, which acquired in 2015, as it seeks to focus more on its home market.

Other key players include Japanese bank MUFG, which in 2017 financed 63 clean energy and energy-smart technology projects, totalling $4.3bn. Its investments in offshore wind include the refinancing of the 288MW Butendiek offshore wind farm, and the financing of the 588MW Beatrice and the 332MW Nordsee One.

These are just few examples but they demonstrate the interest Japanese firms have shown in the European offshore wind industry, and how Japan could make use of their experience if it had a framework that allowed it do so. But it doesn’t.

One reason for Japan's slow growth is that many projects in its waters will need to use floating foundations, which have not yet been proved as commercially-viable for utility-scale projects.

But the main reason for Japan’s slow progress has been a lack of national legislation for offshore wind, which has brought various prefectural governments to implement their own local rules. This means the rules vary substantially between prefectures, and has made the development process long, difficult and confusing.

The country is looking to change this. In January, Prime Minister Shinzo Abe announced that the government would introduce new laws to use Japanese waters for offshore wind.

Following that, the cabinet approved this month legislation to allow developers to place competitive bids to win the rights to develop offshore schemes. The law is due to go through the Japanese Diet by the end of May.

Competitive tenders would help to accelerate the development of an offshore wind market in the country and drive down costs. The offshore wind feed-in tariff is currently ¥36,000/MWh (€274/MWh), which is four times higher than the €65.60/MWh (£57.50/MWh) at which the 1.4GW Hornsea 2 and 950MW Moray East schemes won support in the UK in September. It needs to come down.

It’s good to see that the Japanese government is taking steps to promote offshore wind, but there are years of delay to overcome. The solution could lie in learning from Japanese corporations with offshore experience, and its neighbour Taiwan. After taking seven years to go nowhere, things might now finally start moving.

Japan has spent years talking about offshore wind – and with little to show for it. Its government started looking at renewable energy in the aftermath of the Fukushima Daiichi nuclear disaster in 2011. This opened up opportunities for developing offshore wind farms.

In a report published last year, the consultancy Institute for Energy Economics & Financial Analysis identifies the potential for 10GW of offshore wind in Japan by 2030. And in December, the Japan Wind Power Association estimated the potential to install offshore wind farms in Japanese waters with a total capacity of 100GW.

However, the government has been slow to introduce laws and regulations to ease the development of offshore wind, and the nation is far from unleashing its potential.

Despite its renewables push in the last seven years, Japan has installed only 60MW of offshore wind projects so far. This delay is leaving the country lagging behind its neighbours, particularly neighbouring Taiwan, which has set aggressive renewable energy targets and aims to build 5GW of offshore wind farms by 2025.

That isn’t to say Taiwan has got everything sorted. It is taking the steps it needs to build an offshore wind industry, and the excellent wind resources and government commitment have brought in foreign investors including Ørsted, Copenhagen Infrastructure Partners, Macquarie and Wpd. There is a lesson here for Japan.

And this slow growth is despite the fact that Japanese investors have already shown interest in the offshore wind industry. Falling costs and Japanese interest rates at a record low of -0.1% since January 2016, have pushed investors to look at offshore wind investments in Europe for stable, long-term revenues.

For example, this week Japanese conglomerate Mitsubishi has bought a 33.4% stake in the 950MW Moray East in UK waters; and is reportedly looking to invest in the 370MW Norther off the Belgian coast and the 130MW Luchterduinen off the Dutch coast.

Meanwhile, Japanese investment firm Marubeni this week disposed of its stake in the 210MW Westermost Rough, which acquired in 2015, as it seeks to focus more on its home market.

Other key players include Japanese bank MUFG, which in 2017 financed 63 clean energy and energy-smart technology projects, totalling $4.3bn. Its investments in offshore wind include the refinancing of the 288MW Butendiek offshore wind farm, and the financing of the 588MW Beatrice and the 332MW Nordsee One.

These are just few examples but they demonstrate the interest Japanese firms have shown in the European offshore wind industry, and how Japan could make use of their experience if it had a framework that allowed it do so. But it doesn’t.

One reason for Japan's slow growth is that many projects in its waters will need to use floating foundations, which have not yet been proved as commercially-viable for utility-scale projects.

But the main reason for Japan’s slow progress has been a lack of national legislation for offshore wind, which has brought various prefectural governments to implement their own local rules. This means the rules vary substantially between prefectures, and has made the development process long, difficult and confusing.

The country is looking to change this. In January, Prime Minister Shinzo Abe announced that the government would introduce new laws to use Japanese waters for offshore wind.

Following that, the cabinet approved this month legislation to allow developers to place competitive bids to win the rights to develop offshore schemes. The law is due to go through the Japanese Diet by the end of May.

Competitive tenders would help to accelerate the development of an offshore wind market in the country and drive down costs. The offshore wind feed-in tariff is currently ¥36,000/MWh (€274/MWh), which is four times higher than the €65.60/MWh (£57.50/MWh) at which the 1.4GW Hornsea 2 and 950MW Moray East schemes won support in the UK in September. It needs to come down.

It’s good to see that the Japanese government is taking steps to promote offshore wind, but there are years of delay to overcome. The solution could lie in learning from Japanese corporations with offshore experience, and its neighbour Taiwan. After taking seven years to go nowhere, things might now finally start moving.

Japan has spent years talking about offshore wind – and with little to show for it. Its government started looking at renewable energy in the aftermath of the Fukushima Daiichi nuclear disaster in 2011. This opened up opportunities for developing offshore wind farms.

In a report published last year, the consultancy Institute for Energy Economics & Financial Analysis identifies the potential for 10GW of offshore wind in Japan by 2030. And in December, the Japan Wind Power Association estimated the potential to install offshore wind farms in Japanese waters with a total capacity of 100GW.

However, the government has been slow to introduce laws and regulations to ease the development of offshore wind, and the nation is far from unleashing its potential.

Despite its renewables push in the last seven years, Japan has installed only 60MW of offshore wind projects so far. This delay is leaving the country lagging behind its neighbours, particularly neighbouring Taiwan, which has set aggressive renewable energy targets and aims to build 5GW of offshore wind farms by 2025.

That isn’t to say Taiwan has got everything sorted. It is taking the steps it needs to build an offshore wind industry, and the excellent wind resources and government commitment have brought in foreign investors including Ørsted, Copenhagen Infrastructure Partners, Macquarie and Wpd. There is a lesson here for Japan.

And this slow growth is despite the fact that Japanese investors have already shown interest in the offshore wind industry. Falling costs and Japanese interest rates at a record low of -0.1% since January 2016, have pushed investors to look at offshore wind investments in Europe for stable, long-term revenues.

For example, this week Japanese conglomerate Mitsubishi has bought a 33.4% stake in the 950MW Moray East in UK waters; and is reportedly looking to invest in the 370MW Norther off the Belgian coast and the 130MW Luchterduinen off the Dutch coast.

Meanwhile, Japanese investment firm Marubeni this week disposed of its stake in the 210MW Westermost Rough, which acquired in 2015, as it seeks to focus more on its home market.

Other key players include Japanese bank MUFG, which in 2017 financed 63 clean energy and energy-smart technology projects, totalling $4.3bn. Its investments in offshore wind include the refinancing of the 288MW Butendiek offshore wind farm, and the financing of the 588MW Beatrice and the 332MW Nordsee One.

These are just few examples but they demonstrate the interest Japanese firms have shown in the European offshore wind industry, and how Japan could make use of their experience if it had a framework that allowed it do so. But it doesn’t.

One reason for Japan's slow growth is that many projects in its waters will need to use floating foundations, which have not yet been proved as commercially-viable for utility-scale projects.

But the main reason for Japan’s slow progress has been a lack of national legislation for offshore wind, which has brought various prefectural governments to implement their own local rules. This means the rules vary substantially between prefectures, and has made the development process long, difficult and confusing.

The country is looking to change this. In January, Prime Minister Shinzo Abe announced that the government would introduce new laws to use Japanese waters for offshore wind.

Following that, the cabinet approved this month legislation to allow developers to place competitive bids to win the rights to develop offshore schemes. The law is due to go through the Japanese Diet by the end of May.

Competitive tenders would help to accelerate the development of an offshore wind market in the country and drive down costs. The offshore wind feed-in tariff is currently ¥36,000/MWh (€274/MWh), which is four times higher than the €65.60/MWh (£57.50/MWh) at which the 1.4GW Hornsea 2 and 950MW Moray East schemes won support in the UK in September. It needs to come down.

It’s good to see that the Japanese government is taking steps to promote offshore wind, but there are years of delay to overcome. The solution could lie in learning from Japanese corporations with offshore experience, and its neighbour Taiwan. After taking seven years to go nowhere, things might now finally start moving.

Japan has spent years talking about offshore wind – and with little to show for it. Its government started looking at renewable energy in the aftermath of the Fukushima Daiichi nuclear disaster in 2011. This opened up opportunities for developing offshore wind farms.

In a report published last year, the consultancy Institute for Energy Economics & Financial Analysis identifies the potential for 10GW of offshore wind in Japan by 2030. And in December, the Japan Wind Power Association estimated the potential to install offshore wind farms in Japanese waters with a total capacity of 100GW.

However, the government has been slow to introduce laws and regulations to ease the development of offshore wind, and the nation is far from unleashing its potential.

Despite its renewables push in the last seven years, Japan has installed only 60MW of offshore wind projects so far. This delay is leaving the country lagging behind its neighbours, particularly neighbouring Taiwan, which has set aggressive renewable energy targets and aims to build 5GW of offshore wind farms by 2025.

That isn’t to say Taiwan has got everything sorted. It is taking the steps it needs to build an offshore wind industry, and the excellent wind resources and government commitment have brought in foreign investors including Ørsted, Copenhagen Infrastructure Partners, Macquarie and Wpd. There is a lesson here for Japan.

And this slow growth is despite the fact that Japanese investors have already shown interest in the offshore wind industry. Falling costs and Japanese interest rates at a record low of -0.1% since January 2016, have pushed investors to look at offshore wind investments in Europe for stable, long-term revenues.

For example, this week Japanese conglomerate Mitsubishi has bought a 33.4% stake in the 950MW Moray East in UK waters; and is reportedly looking to invest in the 370MW Norther off the Belgian coast and the 130MW Luchterduinen off the Dutch coast.

Meanwhile, Japanese investment firm Marubeni this week disposed of its stake in the 210MW Westermost Rough, which acquired in 2015, as it seeks to focus more on its home market.

Other key players include Japanese bank MUFG, which in 2017 financed 63 clean energy and energy-smart technology projects, totalling $4.3bn. Its investments in offshore wind include the refinancing of the 288MW Butendiek offshore wind farm, and the financing of the 588MW Beatrice and the 332MW Nordsee One.

These are just few examples but they demonstrate the interest Japanese firms have shown in the European offshore wind industry, and how Japan could make use of their experience if it had a framework that allowed it do so. But it doesn’t.

One reason for Japan's slow growth is that many projects in its waters will need to use floating foundations, which have not yet been proved as commercially-viable for utility-scale projects.

But the main reason for Japan’s slow progress has been a lack of national legislation for offshore wind, which has brought various prefectural governments to implement their own local rules. This means the rules vary substantially between prefectures, and has made the development process long, difficult and confusing.

The country is looking to change this. In January, Prime Minister Shinzo Abe announced that the government would introduce new laws to use Japanese waters for offshore wind.

Following that, the cabinet approved this month legislation to allow developers to place competitive bids to win the rights to develop offshore schemes. The law is due to go through the Japanese Diet by the end of May.

Competitive tenders would help to accelerate the development of an offshore wind market in the country and drive down costs. The offshore wind feed-in tariff is currently ¥36,000/MWh (€274/MWh), which is four times higher than the €65.60/MWh (£57.50/MWh) at which the 1.4GW Hornsea 2 and 950MW Moray East schemes won support in the UK in September. It needs to come down.

It’s good to see that the Japanese government is taking steps to promote offshore wind, but there are years of delay to overcome. The solution could lie in learning from Japanese corporations with offshore experience, and its neighbour Taiwan. After taking seven years to go nowhere, things might now finally start moving.

Japan has spent years talking about offshore wind – and with little to show for it. Its government started looking at renewable energy in the aftermath of the Fukushima Daiichi nuclear disaster in 2011. This opened up opportunities for developing offshore wind farms.

In a report published last year, the consultancy Institute for Energy Economics & Financial Analysis identifies the potential for 10GW of offshore wind in Japan by 2030. And in December, the Japan Wind Power Association estimated the potential to install offshore wind farms in Japanese waters with a total capacity of 100GW.

However, the government has been slow to introduce laws and regulations to ease the development of offshore wind, and the nation is far from unleashing its potential.

Despite its renewables push in the last seven years, Japan has installed only 60MW of offshore wind projects so far. This delay is leaving the country lagging behind its neighbours, particularly neighbouring Taiwan, which has set aggressive renewable energy targets and aims to build 5GW of offshore wind farms by 2025.

That isn’t to say Taiwan has got everything sorted. It is taking the steps it needs to build an offshore wind industry, and the excellent wind resources and government commitment have brought in foreign investors including Ørsted, Copenhagen Infrastructure Partners, Macquarie and Wpd. There is a lesson here for Japan.

And this slow growth is despite the fact that Japanese investors have already shown interest in the offshore wind industry. Falling costs and Japanese interest rates at a record low of -0.1% since January 2016, have pushed investors to look at offshore wind investments in Europe for stable, long-term revenues.

For example, this week Japanese conglomerate Mitsubishi has bought a 33.4% stake in the 950MW Moray East in UK waters; and is reportedly looking to invest in the 370MW Norther off the Belgian coast and the 130MW Luchterduinen off the Dutch coast.

Meanwhile, Japanese investment firm Marubeni this week disposed of its stake in the 210MW Westermost Rough, which acquired in 2015, as it seeks to focus more on its home market.

Other key players include Japanese bank MUFG, which in 2017 financed 63 clean energy and energy-smart technology projects, totalling $4.3bn. Its investments in offshore wind include the refinancing of the 288MW Butendiek offshore wind farm, and the financing of the 588MW Beatrice and the 332MW Nordsee One.

These are just few examples but they demonstrate the interest Japanese firms have shown in the European offshore wind industry, and how Japan could make use of their experience if it had a framework that allowed it do so. But it doesn’t.

One reason for Japan's slow growth is that many projects in its waters will need to use floating foundations, which have not yet been proved as commercially-viable for utility-scale projects.

But the main reason for Japan’s slow progress has been a lack of national legislation for offshore wind, which has brought various prefectural governments to implement their own local rules. This means the rules vary substantially between prefectures, and has made the development process long, difficult and confusing.

The country is looking to change this. In January, Prime Minister Shinzo Abe announced that the government would introduce new laws to use Japanese waters for offshore wind.

Following that, the cabinet approved this month legislation to allow developers to place competitive bids to win the rights to develop offshore schemes. The law is due to go through the Japanese Diet by the end of May.

Competitive tenders would help to accelerate the development of an offshore wind market in the country and drive down costs. The offshore wind feed-in tariff is currently ¥36,000/MWh (€274/MWh), which is four times higher than the €65.60/MWh (£57.50/MWh) at which the 1.4GW Hornsea 2 and 950MW Moray East schemes won support in the UK in September. It needs to come down.

It’s good to see that the Japanese government is taking steps to promote offshore wind, but there are years of delay to overcome. The solution could lie in learning from Japanese corporations with offshore experience, and its neighbour Taiwan. After taking seven years to go nowhere, things might now finally start moving.

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Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.