Market News

 June 18, 2013
Marubeni to Set Up Floating Wind Turbine Off Fukushima

 A group led by Marubeni Corp. (8002) is setting up a floating wind turbine off the coast of Fukushima, aiming to commercializing the unproven technology and create an industry in the region ravaged by the earthquake in 2011.

The 11-member group plans this month to tow a Hitachi Ltd (6501).- made turbine mounted to a semi-submersible structure from a dock near Tokyo, said Takahide Soeda, an official at the Ministry of Economy, Trade and Industry. The 2-megawatt turbine, funded by the Japanese government, is expected to start running in mid-October.

"There are test turbines in Portugal and Norway, but there have been no commercial floating offshore turbines in the world," Soeda said in a briefing on June 14. "We are bringing together Japanese technology to make floating offshore wind viable."

For Japan, which is surrounded by deep oceans, floating wind turbines hold the promise of opening up large areas where clean energy can be generated. The technology involves attaching turbines to structures that float in areas too deep for traditional towers that are fixed to the seafloor.

Prime Minister Shinzo Abe's cabinet earlier this month approved a set of science and technology strategies which included a target to make the floating offshore wind technology viable by 2018.

Floating Substation
The project will include a floating substation, the first of its kind. It will be located about 20 kilometers (12.4 miles) from the coastline and in 120 meters (394 feet) of water, according to officials.

The group is planning to install two more turbines with 7 megawatts of capacity each. The trade ministry has said capacity may be expanded to 1,000 megawatts.

"Marubeni is considering turning this into a commercial project," Rentaro Hosoya, an assistant manager at Marubeni's power industry team, said at the briefing. "We'll make our decision on capacity based on the results of" the project.

Marubeni and Innovation Network Corp. of Japan in 2012 bought Seajacks International Ltd., the North Sea operator of self-propelled vessels used to install and maintain offshore wind turbines. A Seajacks unit in Japan was established to develop the offshore wind installation market at home and in other Asian countries, Marubeni said in a June 3 statement.

The trade ministry has earmarked a total of 22 billion yen ($232 million) for the five-year undertaking, exceeding the original estimate of 18.8 billion yen, according to Hiroyuki Iijima, a ministry official in charge of the project.

Development Costs
Some costs were unforeseen, Iijima said. For example, engineers found that geological formations in the area were two layers rather than the single layer they initially thought, requiring extra tests before anchors could be set to fix floating structures, he said. Officials are reviewing costs before requesting a budget for the next fiscal year, he added.

Existing offshore substations in European countries such as the U.K. and Denmark are mounted on the bottom of the sea while the Fukushima version will float, according to Iijima.

"The challenge is cost, not technology," Justin Wu, Hong Kong-based head of wind analysis at Bloomberg New Energy Finance, said in an e-mailed response to questions. "With some testing and refinement, it can work well, but it will be extremely expensive. So by 2018 Japan can have commercial models of floating foundations ready, but they'll probably cost a lot more than the other types of foundations being used."

Green Jobs
Fukushima prefecture expects to create clean energy jobs and seeks to become a hub in the wind industry with the pilot project, the group said in a statement in March 2012 when it was picked by the ministry to conduct the pilot project.

Japan has a separate floating offshore wind project near the southwestern prefecture of Nagasaki. A 100-kilowatt turbine was installed last year and a 2-megawatt windmill will be added this year, according to Ministry of the Environment official Satoshi Yoshida.

Japan's offshore wind market -- 31 megawatts in cumulative capacity -- lags countries including the U.K. and Denmark, which have 3,093 megawatts and 923 megawatts of capacity, respectively, according to 2012 data compiled by Bloomberg.

"If Japan wants to commercialize it, it would have to create it's own home market by 2018, manufacture enough to reduce its costs and test it extensively so that it gains enough experience to be deployed successfully," BNEF's Wu said.