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Iberdrola-led consortium proposes 600-MW Japanese offshore wind project

07 April 2021 Bernadette Lee

An Iberdrola-led consortium became the latest developer to add to the pipeline of proposed Japanese offshore wind projects ahead of a capacity auction later in 2021 or in 2022.

The 600-MW Seihoku-oki wind project would be built off the northwest coast of Japan by the Spanish renewables giant, Cosmo Eco Power, and engineering firm Hitachi Zosen.

The announcement of the project followed swiftly behind the unveiling of plans by Japan's largest power provider, JERA, to develop its own 600-MW offshore wind project in waters off the northern tip of the country's main island of Honshu.

Those plans now depend on whether the two projects are chosen in the capacity auctions, the timeline for which is currently somewhat hazy, according to Tokyo-based IHS Markit Associate Director, Climate and Sustainability, Kaori Tachibana.

"The Seihoku-oki offshore wind project aims to utilize the recently enacted [Act of Promoting the Utilization of General Sea Areas]. Within this act, the Aomori-Sea of Japan (south) area has been flagged as one of the potential areas for offshore wind promotion, but it has yet to be designated. Therefore, we don't see any time schedule for bidding in this area yet," she said.

Like the Seihoku-oki facility, the JERA project would be located off the coast of Japan's northern Aomori Prefecture, if it wins selection.

The Aomori-Sea of Japan (south) region has been identified as an area with strong potential for developing wind projects, according to Tachibana. The official bidding process will likely commence in 2022, she added.

Industry sources say the law is too complicated, but Tachibana said the act has a comprehensive process for grid selection and contractor selection which, while it may be lengthy, provides a structured process.

"The act also serves as a standardized platform for communicating and coordinating with local stakeholders, particularly the local community, which is essential for the development of large-scale offshore wind projects. We are just seeing the first bidding process being finalized this summer," she said.

Second Japanese offshore wind venture

The proposal is Iberdrola's second Japanese project, following a joint venture the company entered into with Macquarie's Green Investment Group (GIG) to acquire a 100% stake in Acacia Renewables to develop a 3.3-GW offshore wind portfolio, announced on 17 September 2020.

Acacia Renewables has two offshore wind farms currently under development, with a combined capacity of 1.2 GW, and the facilities are expected to be operational by 2028. It has four other projects in its pipeline, with a total capacity of 2.1 GW.

"Iberdrola will hold an equal share in the six projects alongside GIG, and the partners will develop the portfolio," the company said.

Iberdrola operates 32.7 GW of renewable generation across the globe and has a pipeline of more than 58 GW of renewable projects.

The Seihoku-oki project is Cosmo Eco Power's first offshore wind project, following Cosmo Energy Group's recent announcement that it would include renewable energy in its core businesses and that it planned to develop other offshore wind projects. Cosmo Eco Power is a subsidiary of Cosmo Energy Holdings, Japan's third-largest oil company.

National target 45 GW by 2050

The Japanese offshore wind market is in the early stages of development, with an installed capacity of 70 MW. That total is expected to reach 10 GW by 2030 and up to 45 GW by 2050, according to the Japan Wind Power Association (JWPA).

The latest data from the trade group shows that as of September 2020, approximately 4.3 GW of wind generation capacity was feed-in-tariff approved, of which just 4.4 MW was offshore wind.

The lack of a national implementation scheme has hindered growth in offshore wind projects in Japan despite an attractive subsidy being place, said Indra Mukherjee, IHS Markit senior research analyst, power, coal, gas and renewables in Gurgaon, India.

The 45-GW offshore wind goal is part of government plans to reduce emissions and achieve carbon neutrality by 2050, the JWPA said during the second government-industry dialogue on offshore wind in Japan on 15 December 2020.

A strategy titled, "Offshore Wind Industry Vision (1st version)," was released by the trade group following the dialogue. The plans include creating an attractive domestic offshore wind power market; promoting investment and shoring up the domestic supply chain; as well as developing next-generation technology while enhancing international cooperation across Asian markets.

Posted 07 April 2021 by Bernadette Lee, Principal Journalist, Climate and Sustainability, OPIS, IHS Markit

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