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German Wind Power Returns to Japan
By Brad Frischkorn

Japan's aggressive alternative energy policy is pushing some foreign companies to rethink business strategy in the island nation. A few, like Germany's Senvion GMbh, have done a U-turn.

One of the world's biggest wind turbine manufacturers, the Hamburg-based firm announced in March its return to the Japanese market just a few years after pulling up stakes there. In addition to opening a new Tokyo office, it secured the go ahead to deliver three new turbines to a wind farm with a generating capacity of over 6 megawatts (Mw), bringing its presence in the country to 68 units and 115.5 Mw.

The company racked up a number of sales in Japan from 2003 to 2011, but then saw investor interest fall dramatically. The year of Senvion's departure was marked by the worst natural disaster in modern Japanese history, the 2011 Tohoku earthquake and tsunami, which knocked out critical cooling systems at the Fukushima Daiichi nuclear facility in the northeast, causing a series of devastating nuclear meltdowns that threw the nation into an energy crisis.

Three years later, Japan adopted its first comprehensive national renewable energy policy aimed at shifting its entire grid to become 30% dependent on renewable sources by 2030, including 2% on wind. The Ministry of Economy, Trade and Industry (METI) set up the current FIT (Feed-In-Tariff) scheme requiring utilities to purchase energy from a renewable producer at a fixed price and for the duration of a long-term contract. The FIT tariff was originally set at 57.75 yen per kilowatt hour (kWh) for wind turbines of up to 20 kilowatts (kW) in size, and at 23.1 yen for larger output, for 20 years.

"Japan's policy move set the stage for a huge national push establishing wind power as a component of the overall energy strategy," says Paulo Fernando Soares, executive vice president of global sales at Senvion. "Japan is not big enough to have a great amount of wind power compared with larger countries, but it can build enough it to complement other emerging and existing systems."

The company's Japan turbine fleet includes multiple turbine sites stretching from Akita Prefecture in the northwest to Kagoshima in the south, and on both the Japan Sea and Pacific Ocean coasts. Its major clients include Japan Wind Development Co. (JWD), and the major regional electric utilities companies.

Japan has great wind power generating potential, but its rigid licensing system, peculiar geography, and underdeveloped infrastructure all pose obstacles to further windfarm buildouts, say experts.

Of these, the regulatory permitting process is the most cumbersome, says Mr. Soares, citing requirements to prove hardware robustness and safety in the event of earthquakes, lightning strikes and wind gusts. The whole process can easily take years before approval is granted -- up to twice as long as in other countries.

Further complicating the issue is the fact that Japan's best wind-generating conditions lie in the far north in Hokkaido, while the vast bulk of consumption is 1,300km south. There is currently no transmission infrastructure to link the two regions. Additionally, Tokyo and higher latitudes run on a 50Hz grid, while the rest of the country uses 60Hz, posing compatibility issues.

"We believe in offshore wind turbines, too, and this is an area where Japan might seem to have a theoretical advantage," Mr. Soares adds. But it actuality, the challenges are quite daunting, as generators must also be typhoon-proof, and have very sophisticated floating foundation technology to allow for safe deep sea mooring."

Still, solving most of these concerns is likely more of a matter of mustering political will than anything else. Encouraging signs continue to emerge. In April, JWD, along with the Development Bank of Japan, kicked off a 50 billion yen joint fund to help foster wind power. In mid-May, the Diet passed new laws designed to foster offshore wind power, including a bidding system for developers in port areas. And in late May, a 5MW floating turbine for Fukushima was completed, part of the second phase of the government's "Fukushima FORWARD" project which calls for 12MW in offshore wind turbines to be installed this year.

Analysts expect 450-500Mw in new installations already approved to be completed in 2016, the country's biggest one-year total.

While all of this is certainly commendable, wind power progress abroad may be even more encouraging. The Netherlands, with 1/7 of Japan's population, has several times the cumulative generating capacity, while the UK leads the world with over 5,000MW worth of wind stations, according to data provided by the Global Wind Energy Council (GWEC).

Finally, Japan's FIT remains relatively high for wind power (at 55 yen kWh) for systems under 20kW, while it has fallen by over 1/3 (to 24 yen kWh) for solar systems greater than 10kW, meaning that the financial incentive for smaller would-be wind power investors is still attractive. The new rates were announced in April.

"Prospects remain large for wind power in regions such as China, India, Chile, and Norway, but if grid inefficiencies can be solved, then Japan can start to realize its potential as well," says Mr. Soares. "Adding 200 megawatts of capacity per year would effectively replace a nuclear reactor in five years, and put everyone at ease."

Senvion 3.2 megawatt wind turbine

“Japan is not big enough to have a great amount of wind power compared with larger countries, but it can build enough it to complement other emerging and existing systems.” -- Paulo Soares

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