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Wind potential in Japan not being realized

Japan is likely to end up having installed 92MW-worth of new wind-power capacity in the financial year ending 31 March, the Japan Wind Power Association (JWPA) said this week.
That represents an 8.2% increase on the 85MW of wind added in the preceding 12 months.  It has a total of about 2.5GW installed.

Japan introduced a new feed-in tariff for wind projects on 1 July 2012 of 23.1 yen ($0.26) per kWh for 20 years, up from the roughly 15 yen being paid on contracts previously.

JWPA estimates that this offers an IRR of 7.7% before tax.

However, a limited amount of space for new onshore installations, issues related to grid access, time-consuming environmental impact assessments and lengthy project construction times have weighed on the growth of the country’s wind industry.

“Wind is actually not too popular under the new feed-in tariff when compared to solar,” says Dean Enjo, research analyst at CLSA Japan Equities.

Japanese developers are instead backing larger projects overseas. Mitsui this week announced it would take a half-share in a 164MW wind-power project in Mexico, while Eurus Energy, Japan’s largest pure-play wind farm operator, added 14MW to a 60MW project in Norway last month.

“We’ll consider taking up wind projects in Japan based on the characteristics of each project,” says Mitsui spokesperson Toshie Kyo. “We don’t have any specific (plans for) Japanese wind projects, but if there are good projects, we’re interested.”

The JWPA claims there is potential to develop up to 519GW of floating offshore wind and 94GW of fixed offshore wind, as well as 169GW of onshore wind, in Japan.

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