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Author InfoLink
Updated November 17, 2021

Overview: renewable energy in Japan

To realize carbon neutrality, the Japanese government released a new energy plan this year aiming to raise the share of renewable energy to 36-38% in the electricity generation mix by 2030, and increase the ratio of non-fossil energy sources (renewables, nuclear power, and hydrogen) to 60%.

Installed renewable capacity in Japan in 2020
 

Solar energy accounts for 66% of Japan’s total installed renewable energy. Wind accounts for 4% and the remaining sources account for 30%. Of the 4,204 MW of installed wind energy capacity, only 65.6 MW are contributed by offshore wind energy. 
 

Estimated offshore wind potential in Japan

Presently, Japan’s cumulative installed offshore wind capacity stagnated at 65.6 MW, with more than 14.4 GW of projects undergoing environmental impact assessment and inspection. Judging from the government’s latest target, Japan is likely to be more active in the coming decade. InfoLink projects Japan’s installed offshore wind capacity from 2021 to 2030 in three scenarios.

Japan cumulative installed offshore wind capacity
 

In the optimistic scenario, Japan will achieve nearly 10 GW of installed capacity by 2030, in accordance with target set by the government. 

In neutral forecast and pessimistic scenario, tedious and complicated environmental impact assessment processes, a factor of potential delays, are taken into account. According to official announcement, the government will approve three to four promotion zones each year and releases 1 GW of capacity. Given that, 8.4 GW and 6.5 GW of offshore wind capacity will enter commercial operation by 2030 in Japan under neutral and pessimistic scenario, respectively. 

Wind farms at the Akita Port and Noshiro Port, with a total capacity of 143 MW, will enter commercial operation in 2022 as expected. They become Japan’s first commercial-scale wind farm. Meanwhile, wind farms in promotion zones will enter construction, with one to two wind farms being completed each year. The future of Japan’s offshore wind development gradually clears. 

Japan cumulative installed offshore wind capacity
 

Offshore wind policies and developments in Japan

Japan passed the “Offshore Wind Industry Vision” in December 2020, renewing installed offshore wind capacity target, and setting goals for the industry. The country plans to achieve 10 GW of installed offshore wind capacity by 2030, and 30-45 GW by 2040. In terms of supply chain, Japan will focus on localization, with an aim to have local content accounted for more than 60% by 2040, thereby driving down fixed foundation offshore wind power generation costs to around JKY 8-9/kWh (NTD 2/kWh) during 2030-2035.

In June 2021, Japan revealed tender outcome of floating wind farm off Goto Islands. This was the first offshore wind farm tender after the Bill for the Act of Promoting Utilization of Sea Areas in Development of Power Generation Facilities Using Maritime Renewable Energy Resources came to effect in April 2019. Tender outcomes expected to be released in recent terms include those for the 480 MW Noshiro-Mitane-Oga wind farm, the 700 MW Yurihonjo wind farm, both in Akita Prefecture, and the 370 MW wind farm off the coast of Choshi City, Chiba Prefecture.

In September 2021, the Japanese authorities approved the fifth promotion zone in Happo Town, Noshiro City, Akita Prefecture and designated four new promising zones and ten preparation zone. Based on that, Japan will release tenders and initiate a series of offshore wind development programs.

Promotion zones of offshore wind development released
 

Incentives

Presently, Japan adopts feed-in tariff (FIT) mechanism. For offshore wind power, the FIT rate is JPY 36/kWh. Since 2020, an integration of FIT and tender mechanism has been applied for fixed foundation wind farms, with JPY 34/kWh of FIT rate, whilst that of floating wind turbines sustained at JPY 36/kWh.

Japan has approved feed-in premium (FIP) mechanism for renewables, providing premium on top of regular market for businesses. The FIP mechanism will come into effect in April 2022.
 

Offshore wind-hydrogen potentials

Besides raising share of renewables, Japan aims to produce green hydrogen through wind energy. In Hokkaido, one of Japan’s potential offshore wind farm sites where abundant wind resources dwells, four local businesses jointly developed an offshore wind-hydrogen project, planning to install 110 MW of wind farm and equipment producing hydrogen through water electrolysis in Ishikari, Hokkaido. The project is expected to enter commercial operation in March 2024, producing 550 MT of hydrogen per year and raise hydrogen production capacity to 2,500 MT.
 

Conclusion

In Japan, the development of offshore wind energy used to be less active, as compared to other renewables, with slower policy promotions. In recent years, the Japanese government’s targets and local regulations showed its determination in developing wind energy, which sees promising future for the next decade. 

Currently in Japan, both investors and developers are Japanese businesses, mostly local utility companies, such as Kansai Electric Power and Chubu Electric Power.

In recent years, Ørsted taps into the Japanese market proactively. The Danish power company plans to develop two offshore wind projects with local businesses, and participates in first round of wind farm tender. This not only means more international exposures of the Japanese market, but underscores potential structural changes in the composition of developer groups. The dominance of local business may falter, whilst foreign developers hold better chances, as Japan sees clearer offshore wind policies and releases more capacity.