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Agency for Natural Resources and EnergyThe Study Group on the Procurement Price for Offshore Wind Power Compiled the Results of the Meetings

In November 2013, the Ministry of Economy, Trade and Industry (METI) established a study group on setting the procurement price for offshore wind power as a key effort to expand the introduction of renewable energy to Japan, where the potential of land-based wind power is limited. Since then, the study group has been discussing the estimated cost of offshore wind power generation and other issues to achieve the goal, and finally compiled the results of the discussions. METI hereby publicizes the compiled results as shown in Appendix.

1. Background

Under the Feed-in Tariff Scheme for Renewable Energy, procurement prices of energy are set by the type of energy source, namely, photovoltaic power, wind power, geothermal power, hydropower and biomass power. Among these sources, the wind power procurement price is currently set with an eye on land-based wind power generation, which has already been commercialized.

Offshore wind power generation is an essential technology to expand the introduction of renewable energy to Japan, where the potential of land-based wind power is limited. However, as it was determined to discuss such technology when its cost data becomes available, the procurement price of offshore wind power has not been set until now.

Concerning fixed-bottom type offshore wind power generation, prospects for collecting data from demonstration projects and overseas examples are now getting brighter, and METI established a study group of external experts organized by the Director-General of the Energy Conservation and Renewable Energy Department, Agency for Natural Resources and Energy (ANRE), and the study group streamlined data with respect to the reliability of various types of data resulting from demonstration projects and cost trends of overseas examples.

After streamlining the data, the results will be discussed at a meeting of the Procurement Price Calculation Committee to be held this winter to determine whether or not it is appropriate to reflect the possible procurement price of offshore wind power in the FY2014 list of procurement prices (tariffs) based on the provisions of related laws.

2. Members of the study group

See the Japanese language press release.

3. Highlights of the compiled results

The study group ascertained data resulting from the two demonstration projects and examined the cost estimated to be required for introducing offshore wind power generation to Japan in an efficient manner.

In the demonstration projects, only one wind turbine was built and operated at each site, but the study group expanded the scope of the cost estimate to a wind farm consisting of 20 to 50 wind turbines and found that the cost is estimated to 1.07 million yen or 1.12 million yen per kW for capital cost, and 23,000 yen or 31,000 yen per kW for annual operation and maintenance costs.

This estimation shows the data obtained simply by expanding the results calculated by the cost structures applied in the demonstration experiments under the demonstration projects, including costly foundation structures that are able to meet extremely challenging conditions, such as large-scale wind turbines and offshore deepwater areas, and existing facilities and construction methods that are currently available during the construction process. However, the study group evaluated that it is possible to reduce such cost levels if referring to overseas examples, data that is under consideration by business operators for commercializing offshore wind power generation.

While ascertaining the results of the demonstration projects, the study group comprehensively analyzed the results of interviews with business operators who are considering commercializing such power generation, the results of feasibility tests in which business operators participated as well, overseas examples and other data. Following the analysis, the members stated their opinions mainly focusing on three representative options for estimating the cost that is required in the process of commercializing such power generation:

  1. Regarding a report submitted by a business operator who is considering commercializing offshore wind power generation
    • Capital cost: 450,000 yen per kW; annual operation and maintenance costs: 21,000 yen per kW
    • The following points were raised by the members:
      1. The cost for negotiation will become lower in the projects executed within existing harbors because interested parties are easily identified.
      2. This report is not sufficient to forecast potential commercialization risk and facility utilization rates.
  2. Regarding a sample case that assumes construction of foundation structures in sea areas with better conditions* at the lower cost, which are already commercialized inside and outside Japan
    • Capital cost: 540,000 yen to 590,000 yen per kW; annual operation and maintenance costs: 15,000 yen to 30,000 yen per kW
      • *Note: Sea areas with better conditions refer to those with a fine seabed condition, where it is expected that the facility utilization rate will be relatively high.
  3. Regarding a report that assumes introduction of foundation structures at the higher cost, which are expected to be adopted for installing offshore large-scale wind turbines
    • Capital cost: 750,000 yen or 790,000 yen per kW; annual operation and maintenance costs: 21,000 yen or 23,000 per kW
    • Some members stated that as for this option, it is necessary to set the procurement cost with an eye on offshore large-scale wind turbines, which some European countries have started developing.

Experts who participated in the meetings shared the view that the cost levels between options [ii] and [iii] appear promising in particular. However, the study group agreed that the appropriate cost level could be evaluated differently depending on the geographical environments to which wind turbines are assumed to be introduced, or with which kind of wind turbines and on what kind of foundations they will be installed.

These evaluations should be connected to future efforts to set the procurement price for offshore wind power, while also considering the potential risk of commercializing such wind power generation as a whole. ANRE expects that the Procurement Price Calculation Committee will develop discussions on how well the evaluations could be connected to such efforts, including discussions on whether or not the evaluation itself is appropriate.

Reference

For details of the Feed-in Tariff Scheme, visit the following websites:
URL: http://www.meti.go.jp/english/policy/energy_environment/renewable/index.html

Appendix

Full text of the report(PDF:473KB) PDF File (in Japanese)

Release Date

January 7, 2014

Division in Charge

Energy Efficiency and Conservation Division, Energy Conservation and Renewable Energy Department, ANRE

Related Information

Renewable Energy

Ministry of Economy, Trade and Industry
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